COSTS BUDGETS: PHASES CAN’T BE COMBINED WHERE THERE IS AN OVERSPEND IN ONE BUT AN UNDERSPEND IN ANOTHER

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By Bronia Hartley

Sony Communications International AB (Claimant) v SSH Communications Security Corp (Defendant): SSH Communications Security Corp (Part 20 Claimant) v (1) Sony Mobile Communications AB (2) Sony Computer Entertainment Europe Ltd (3) Sony Europe Limited (4) Sony Network Entertainment Europe Ltd (Part 20 Defendants) [2016] EWHC 2985 (Pat)

 HEADLINE: Each phase of the budget was to be considered separately and two phases could not be combined where one was overspent and the other was underspent.

The court had to determine the costs to be awarded in patent revocation proceedings brought by the claimant and in which the defendant counterclaimed for patent infringement. In the summary assessment of costs the court considered whether to depart from the court-approved costs budget of a successful claimant where the claimant had failed to seek to vary the costs budget on becoming aware of an overspend and where it had sought to combine the two phases of trial preparation and trial to take advantage of an underspend on one. The claimant also sought to change apportionments within some phases where the court had approved the total for the phases and the defendant had agreed the apportionment.

The Court held:

  1. Each phase of the budget was to be considered separately and two phases could not be combined where one was overspent and the other was underspent.
  2. The budget was a guideline which the court could depart from, but only where there were good reasons, and in considering that the court should take into account all the circumstances. One consideration was the function of the budget in ensuring that the costs incurred were proportionate and reasonable. Another function was the value to the opposing party of understanding what was being done and what it was going to cost. Therefore, a factor was whether any requested increase post-trial would be a surprise to the paying party.
  3. The claimant was seeking to combine the two phases of trial preparation and trial to reduce the overspend on the former because it claimed to have underspent on the latter. There was no good reason to depart from the budget for trial preparation and the rules were clear in that each phase was to be considered separately.
  4. The guidance notes to Precedent H stated that the trial phase included “dealing with draft judgment and related applications”. Therefore the post-trial costs should be added to the trial costs, which resulted in an overspend. The post-trial costs were greater than could have been foreseen and there was good reason to depart from the budget on the trial phase.
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