In this month's edition the team look at: • a case of evaluation gone wrong – lessons learned from assessment of tenders • devolution - the game changer? A look at the Cities and Local Government Devolution Bill 2015 • the cost case to end all cost cases - or was it! Coventry and other v Lawrence and others • new procurement guidance for EU grant recipients • changing a cost budget: it's not that easy! • a look at the Trade Union Bill - consultation.

1. Birmingham Exeter London Manchester Nottingham
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2. Birmingham Exeter London Manchester Nottingham
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A case of evaluation gone wrong
Anja Beriro
2 – 6
Devolution – the game changer?
Angela Konteas
7 – 8
Coventry & others v Lawrence & others
John Appleyard
9 – 12
Procurement guidance for EU grant recipients
Emma Graham
13 – 15
Changing a cost budget: it’s not that easy!
Nichola Evans
16 – 19
Trade Union Bill – consultation
Sarah Hooton
20 - 23
The articles in this newsletter are for general information only. They do not represent legal advice. You
should always take legal advice before pursuing any course of action discussed in this newsletter. If you
would like to discuss any of this issues raised in this newsletter please call us +44 (0)115 976 6000.

3. 2
Introduction
The case of Woods Building Services v Milton Keynes Council [2015] EWHC 2011 (TCC) is now concluded
following the remedies hearing on 14 July 2015 (Woods Building Services v Milton Keynes Council [No.2
Remedy] [2015] EWHC 2172 (TCC)) . The case was brought after Woods, the incumbent contractor, was
unsuccessful in a procurement exercise for a single-supplier framework for the removal of asbestos for Milton
Keynes Council (the Council). The Council awarded the framework to European Asbestos Services (EAS)
following a MEAT (most economically advantageous tender) evaluation process under the Public Contract
Regulations 2006 (the Regulations). Woods had, by far, the cheapest tender but the framework was awarded
to EAS on the basis of a greatly superior quality score.
Woods claimed that:
 the tender evaluation process was unfair because the Council didn’t treat responses from Woods and
EAS equally
 the tender evaluation process was unusual because there was almost no written evidence from the
period of the evaluation which led to a lack of transparency. Once the evidence was reviewed,
Woods submitted that there were manifest errors in the Council’s application of the evaluation
methodology, and
 some parts of the EAS tender was plagiarised from previous Woods tenders by a previous employee of
Woods, now employed by EAS.
Of particular interest to the judge was that there had, in essence, been three stages to the evaluation of the
tenders. Firstly, an officer of the Council and an asbestos specialist (previously employed by Woods)
evaluated the tenders. The question of a conflict of interest was not raised. Following this evaluation, the
Council’s Head of Major Works was asked to review the evaluation. He did this simply by looking at the
original scores awarded and commenting on the outcomes. On a number of occasions, he increased Woods’
score and decreased EAS’ but EAS still came out ahead. Finally, there was a meeting between the people
involved in the first and second stages of evaluation. The judge was very troubled by the lack of written
evidence from the period when the evaluation was carried out. He was also critical of the fact that the
evaluation process had not followed the Council’s own, internal, guidance on how to complete the
evaluation documentation.

4. 3
The substantive judgment is helpful in a number of ways. It:
 gives an excellent summary of the key cases that are relevant to challenges based on incorrect
evaluation of tenders, anda very detailed analysis of the responses given, and the numerous manifest
errors committed, by the Council. Interestingly, for a number of the tender responses, the judge
goes as far to suggest which scores should have been awarded. It is unusual for a judge to go to this
level of detail when reviewing an evaluation process
 analyses the meaning of the phrase ‘manifest error’, and
 looks at what a contracting authority must do to act transparently and treat bidders equally.
What is a manifest error?
The judge used the definition in the Lion Apparel case as the starting point: a manifest error is one that is
clear and obvious, but there doesn’t have to be any ‘exaggerated description of the obviousness’. The judge
went on to confirm that, when assessing whether a contracting authority is in breach of its obligations under
the Regulations, it is not for a judge to re-score the tender responses based on his or her own interpretation
of the evaluation methodology. Instead, it is for the judge to decide whether there were clear errors in the
way that the tenders had been evaluated and whether those errors would have affected the outcome of the
evaluation.
In this case, Woods claimed that the bar for manifest error was not as high as that for Wednesbury
reasonableness. The judge held that there was a ‘broad equivalence’, based on other recent case law,
including one case of his own! Despite this broad equivalence between manifest error and the high bar of
Wednesbury unreasonableness, t, as we will see, the court held that a manifest error had occurred in this
case.
However, the court also held that not all clear and obvious errors are manifest. To be so, an error must,
have a central and material effect.
What were the manifest errors?
The manifest error that the judge found, in the scoring of a number of EAS’s responses, was that a response
by EAS did not seem to match the quality of response required by the Council’s scoring methodology for a
particular score. For example, the judge looked at Question 2.1 in the tender alongside EAS’s response and
the scoring methodology. EAS had been given a score of 10 (the highest mark available) for their response.
The judge noted that EAS failed to deal with the reinstatement element of the work required under the
framework. This was likely to be about 40% of the overall value of the framework. The question also carried

5. 4
50% of the marks for that whole section (of five questions). Therefore, it was a very important question to
score correctly.
When the Council was cross-examined in court, the officer in question agreed that it was ‘unacceptable’ for
the EAS response not to include the reinstatement works. To score 10, the response should have met the
“requirement to a very high standard with clear and credible added value and/or innovation”. A score of 0
would be give when the response did not “meet all the requirements and/or is unacceptable” and where it
had “insufficient information to demonstrate [the] Tenderer’s ability to deliver the services”. The judge
held, on the evidence, that EAS’s response clearly could not meet the requirements to be given a score of
10. He said that lack of response on a fundamental part of the requirements meant that it could only be
given a score of 0. The application of the scoring methodology to give the score of 10 was a manifest error.
Similar reasoning is given for 5 more of the questions meaning that,out of 12 questions, the Council had
committed a manifest error when evaluating half of them. In most cases, the judge’s response was to reduce
the EAS score to 0. In contrast the judge took the view, in the majority of cases, that Woods’ scores should
not be increased. Woods had submitted that they should be. The judge’s reason for this was in line with the
previous case law on this subject. When a court appraises the evaluation of a tender exercise, it is not the
role of the judge to put his or her views in place of the contracting authority unless it sees a manifest error.
While it was clear that giving EAS a score of 10 rather than 0 was a manifest error, deciding whether a
response by Woods should have been given a 10 rather than an 8 came within the ‘margin of appreciation’
that a contracting authority has when making decisions that are, by their very nature, partly subjective.
Transparency and equal treatment
Transparency and equal treatment are both principles set out in the Treaty on the Functioning of the
European Union. They are principles that affect a much wider range of issues than just public procurement,
but come into play to underpin the general requirement of the EU to ensure free movement of goods,
services and people. Particularly when looking at Part B (as they were) and light touch (under the new Public
Contracts Regulations 2015) services they are of particular importance in giving contracting authorities a
good steer as to what is acceptable.
This case highlights a number of breaches of the duty to act transparently and treat all bidders equally. One
example, that covers both of these principles, is that of an undisclosed sub-criterion. One question in the
tender documents asked bidders to “specify the members of the delivery/project team, including their roles
and responsibilities (including CVs)”. EAS were given a score of 8 for their response because their response
was interpreted to mean that their contract manager would be dedicated full-time to the Council’s work.
Woods’ response was given a score of 6 because the Council thought that their project director would have
other duties as well.

6. 5
The reasons given by the Council for their scoring showed that they had had a desire for a dedicated
contract manager. This was not set out in their requirements relating to the tender question. A Council
officer confirmed, during cross-examination, that a bidder would not have been able to know that this was
the Council’s desire from the tender documentation. The judge viewed this as a clear breach of the duty to
act transparently.
In addition, the Council’s evidence showed that they had treated EAS and Woods differently. EAS did not
specifically say in their response to this question that their contract manager would be dedicated to the
Council account. Equally, Woods’ response didn’t say that their project director would not be full time.
When cross-examined, the Council officer admitted that the job titles should not have made a difference to
the scoring of the two responses. This was a clear breach of the duty of the equal treatment of bidders.
There were two other evaluation questions where responses by EAS and Woods were treated differently.
Plagiarism
This part of the claim was slightly less common. Woods claimed that the Council should have refused to
accept EAS’s response because parts of it were taken from previous tenders of Woods that an employee of
EAS had been able to access when employed by Woods. The judge made some rather scathing comments
about the EAS employee but judged that the Council would not have known this when the tender responses
were being evaluated. Therefore, there was no freestanding claim to be made on this basis. However, if the
competition is re-run, the Council were advised to be mindful of this.
Remedies
The remedies hearing was held separately. Woods requested they be awarded the contract. The judge held
that it was not within his gift to do this. He also held that damages should be assessed only after the
competition is re-run, as that may have an impact on the loss of profit claim of Woods. In other words, if
they win next time around, their losses will be considerably fewer than if they lose.

7. 6
What can we learn?
This case is a very useful lesson in how to run the evaluation of a tender process and some of the pitfalls to
avoid. The level of detail that the judge goes into when assessing the responses by EAS and Woods to the
different evaluation questions, and his analysis of the Council’s decision, gives real life guidance about the
steps to be taken to ensure that a tender evaluation is watertight.
Anja Beriro | +44 (0)115 976 6589 | Anja.Beriro@brownejacobson.com

8. 7
The Cities and Local Government Devolution Bill 2015 (the Bill) is moving swiftly through the Parliamentary
stages, having had its third reading on 21 July 2015 in the House of Lords. It is a short Bill which makes
provision for the election of mayors and conferring additional functions on combined authorities. However,
such a description does not do justice to the impact the Bill is anticipated to have on the overall political
landscape once it comes into force.
The Bill was published on 28 May 2015 and introduces amendments to the Local Democracy, Economic
Development and Construction Act 2009. It is broadly based on the devolution deal for Greater Manchester
but it provides no devolution directly; rather, it is an enabling framework under which secondary legislation
will deliver deals as they are made. The Bill aims to implement the election manifesto promise of the
Conservatives to devolve power from Whitehall. In her introduction of the Bill to the House of Lords,
Baroness Williams talked of “reversing 150 years of centralisation”, saying that “each city will be
empowered to forge its own path” rather than a ‘one size fits all’ approach.
The functions that can be transferred to a combined authority are no longer limited to ‘economic
development and regeneration’. The legislative amendments now refer to general local authority functions.
With Greater Manchester as the model for the Bill the potential package for devolution is extensive,
including greater control over transport, housing and policing as well as devolution of NHS spending. There
appears to be considerable flexibility in the powers that can be handed down, including the potential for the
Secretary of State to confer a general power of competence on a combined authority.
At a different end of the spectrum the deal announced in July with Cornwall shows that, despite the pre-
election focus on large cities, the government is equally keen to do deals with rural and county authorities.
This goes some way to addressing concerns raised by the Campaign to Protect Rural England that the Bill
would create a ‘two-tier England’, with only the big cities participating in the devolution agenda.
However, this power comes at a price. In Greater Manchester’s case, as has been well documented, a mayor
(to be elected in 2017) will hold a significant proportion of the powers directly, including the responsibilities
of the Police and Crime Commissioner and overseeing the Greater Manchester Fire and Rescue Service.
Although the Bill no longer specifies that appointing a mayor is a pre-requisite, the Chancellor argued in his
first speech in Manchester after the general election that there should be a “single point of accountability”
and that “with these new powers for cities must come new city-wide elected mayors who work with local
councils”.

9. 8
There is no mayor in the Cornwall deal, with powers being transferred to existing bodies such as the council
and the Local Enterprise Partnership. However, the council has signed up to a package of reforms in return,
including an agreement to create new jobs, reduce A&E attendance, grow the local economy and undergo a
boundary review. The Treasury minister, Jim O’Neill, has indicated that while some form of devolution is
available without authorities having to agree to a mayor, the transfer of powers and accountability in these
deals are likely to be limited.
Another sticking point for combined authorities looking to follow in the footsteps of Greater Manchester is
financial devolution… or the lack of it. Despite the media headlines about control of budgets, combined
authorities have little financial autonomy and mayors cannot borrow from the markets to fund plans such as
infrastructure developments. Instead, they have to go back to the Treasury.
This particular issue is to be tabled as an amendment to the Bill by Clive Betts, chair of the Communities and
Local Government Select Committee (the Committee) which is holding an inquiry into the Bill. The
Committee has asked for written evidence to be submitted to it by 1 September 2015. It will examine
whether the Greater Manchester deal is an appropriate model on which to base the Bill and how applicable
the model is likely to be to other areas. The inquiry will consider the range of models available in the UK and
overseas and how these could fit the needs of different authorities. It will also look at the impact of the
devolution of health spending to Greater Manchester on local delivery of health services, and how the Bill
will ensure the appropriate governance is in place for devolved functions.
The programme for devolution is certainly picking up pace since the election, and the Chancellor has set a
deadline of 4 September for any further devolution bids from existing or new combined authorities, in time
for the autumn spending review. Whether it results in a drastically different political landscape remains to
be seen. It may be predicated upon the appetite of the combined authorities to put forward innovative
proposals and that of the Secretary of State to use the powers to be conferred by the Bill. The real question
is whether devolution can deliver expectations or is it, as one MEP put it, “granting local authorities power
to do what they have no money to do”?
Angela Konteas | +44 (0)115 976 6097 | angela.konteas@brownejacobson.com

10. 9
This was supposed to be it. The pinnacle case of the old regime. The costs case to end all costs cases. The
one which, ultimately, would not only conclude that the recoverability of additional liabilities from the
defendants in this case offended their human rights, but the human rights of every defendant who had been
obliged to pay them ever since the introduction of the Woolf reforms in 1998.
However, in the end it was all a bit of a damp squib.
Background
Coventry was a claim, for nuisance, in relation to noise arising from various motor and speedway events at a
stadium located some 800 yards from the claimants’ house.
They succeeded in the High Court and in the Supreme Court, the latter overturning the Court of Appeal. The
claimants recovered £20,000 and an order that the defendant should pay 60% of their costs. These costs
were subsequently quantified in a sum exceeding £660,000 after the discount had been taken into account.
Lord Justice Neuberger, describing the costs as “deeply disturbing”, concluded that it was open to the
Supreme Court to consider whether these disproportionate costs infringed the defendants’ human rights.
The argument
The defendants presented their arguments under article 6 of the European Convention on Human Rights
and/or article 1 of the First Protocol to the Convention.
In presenting their arguments, they identified four ‘flaws’ of the previous regime:
 a lack of focus and a lack of any qualifying criteria for those able to enter into a conditional fee
agreement (CFA)
 a lack of any incentive for claimants to control their legal costs
 the ‘blackmail’ or ‘chilling’ effect of the regime which drove parties to settle early despite good
prospects of defence, and
 the potential to ‘cherry-pick’ winning cases to be run under the regime.
To support their submissions, they also had the decision in MGN v UK Ltd (the Naomi Campbell case) where
the European Court of Human Rights (ECtHR) had already found that paragraph 11.9 of the Cost Practice
Direction (which expressly disallowed any reduction in costs even if the base costs and uplifts when viewed

11. 10
together seemed to be disproportionate) was sufficient to breach MGN’s Article 10 right to the freedom of
speech.
Decision
By a majority of 5 to 2, the Supreme Court held that the Access to Justice Act Regime (the pre-Jackson
regime) is compatible with the European Convention on Human Rights.
How?
Firstly, their Lordships considered whether they were tied to the decision in MGN v UK.
They concluded that they weren’t on the basis that the right to a freedom of speech (Article 10) was always
going to be given more weight than articles 6 or 1. Therefore they did not find that they could conclude that
the ECtHR would have reached the same conclusion in this case.
Then, their Lordships then turned their attention to the ‘flaws’ of the old regime, but failed to positively
identify any alternative regime which would have operated less harshly.
The question for their Lordships was not therefore whether the Access to Justice Act regime had flaws – it
was readily accepted that it did – but whether it achieved the aim it pursued, namely providing access to
justice to potential litigants when faced with the probable abolishment of Legal Aid.
They opined that they had to give “considerable weight to informed legislative choices… where state
authorities are seeking to reconcile the competing interests of different groups of society” and recognised
that a regulatory scheme “may still be compatible with the convention even if it operates harshly in
individual cases”.
Even the prospect of an individual or small undertaking carrying on a modest business without insurance
facing ‘one off’ litigation leading to “eye-catchingly large costs exposure” (as identified by Lord Mance)
would not be safe. The position must be considered as a whole. This being considered, they were satisfied:
“There is a powerful argument that the 1999 Act scheme is compatible with the Convention for the simple
reason that it is a general measure which was (i) justified by the need to widen access to justice to litigants
following the withdrawal of legal aid; (ii) made following wide consultation; and (iii) fell within the wide
area of discretionary judgment of the legislature and rule-makers to make”
Finally, to ensure that all bases were covered, their Lordships indicated that CPD 11.9 (which prevents the
reduction of a percentage increase on the basis that the total of the increase plus the basis costs appears

12. 11
disproportionate) should not be viewed in isolation from other principles of the CPD and without it, lawyers
would be unwilling to enter CFAs for fear of their being disallowed or reduced on assessment.
Was it all bad news?
The saving grace for defendants from the decision, if indeed there is one, is an acceptance that “in a
number of individual cases, the scheme might be said to have interfered with a defendant’s right of access
to justice”.
However, this was as equally as quickly dismissed because “the scheme as a whole was a rational and
coherent scheme for providing access to justice to those to whom it would probably otherwise have been
denied”.
And if it had offended the defendants’ human rights?
Lords Neurberger & Dyson do not consider that it would have made a difference, as they concluded:
“If (contrary to our view) the scheme was incompatible with article 6 and A1P1, we would not read it down
so as to make it compatible and we would not strike the scheme down or disapply it”
Dissent
But not all their Lordships supported this view.
Lord Clarke’s dissenting judgment disagreed with the majority on the applicability of MGN. He held that the
ECHR’s reasoning required the court to hold that the system was also incompatible in this case. His reasoning
was that some defendants were being treated differently from others and that it was not right that they
should then be burdened with costs. His Lordship emphasised the rights of defendants to be able to defend
themselves in litigation at a reasonable and proportionate cost which would need to be considered against
the countervailing interests of claimants’ access to justice. The cost burden placed on some defendants was
in his view disproportionate as it did not treat all defendants in the same way, but chose to impose liabilities
upon a particular class of defendant far beyond what was reasonable or appropriate.
Analysis
That is effectively that.
In the view of the Supreme Court, the government/rule makers did the best they could at the time and
without any alternative to turn to, it was what it was.

13. 12
While it would have been nice to finish the old regime on a positive note, the decision is unlikely to take
anyone by surprise. Coventry was always likely to be a last roll of the dice for defendants against the
additional liabilities they have in most cases become used to paying over the last 14 years and which, in any
event, no longer survive.
Still, one cannot help but wonder what the outcome would have been had the point been raised in 2002…
John Appleyard | +44 (0)115 976 6028 | john.appleyard@brownejacobson.com

14. 13
Background
On 16 July, the Cabinet Office published a procurement guidance document (Guidance) applicable to all
projects in England backed by the European Structural and Investment Funds (ESIF).
The ESIF comprises of five individual funds; the European Regional Development Fund (ERDF), the European
Social Fund (ESF), the European Agricultural Fund for Rural Development (EAFRD), the Cohesion Fund (CF)
and the European Maritime and Fisheries Fund (EMFF). The ESIF procurement compliance guidance, however,
applies only to recipients of ERDF and ESF funded projects in England (Recipients).
Contents of the guidance
At the application stage, all Recipients are required to confirm whether their project would be subject to
the public procurement regime. If so, then that regime must be adhered to. Recipients are also subject to
demanding audits to confirm this, and that the selection process for choosing a supplier for the proposed
project complies with the EU Treaty Principles of equal treatment, proportionality, transparency, non-
discrimination and mutual recognition (Principles).
The Guidance provides direction on procurements both under the Public Contract Regulations 2006 and
Public Contract Regulations 2015 (together ‘the Regulations’) and helps the Recipient to establish if: (i)
there is a procurement to which the Regulations apply; and (ii) if so, what procedure should be used; and
(iii) what the specification, selection and award criteria should include. It also includes information on
advertising, timescales, frameworks, evaluation and awarding the contract.
It also includes some guidance on the Principles including detail on when, to be compliant with them, a
contract should be advertised. In order to provide a sound audit trail, the Guidance lists all the documents
an auditor would expect to see, as a minimum, when assessing compliance.
Why is the Guidance important?
If a Recipient fails to comply it risks up to 100% of the funding being clawed back. Authorities need to
understand the regime, the Principles and how they can demonstrate compliance to ESIF upon audit, and the
Guidance offers assistance in this regard.
Moreover, the possibility of claw back is very real, as was illustrated in the High Court in July last year where
Mansfield District Council was ordered to pay back almost £160,000 of a grant made from the ERDF. It was
held that the district council had breached procurement law by failing to advertise two above threshold

15. 14
contracts. This also constituted a breach of its contract with the Department of Communities and Local
Government.
It should be noted that non-compliance may not only result in funding claw back, there may also be other
consequences such a challenge under the Remedies Directive or an investigation should anyone make a
complaint to the European Commission.
Common areas where Recipients fall down
The opening chapter of the Guidance states that, in the ERDF 2007-2013 programme, approximately “75 % of
all irregularities (by value) related to failures to comply with Public Procurement Law or the Treaty
Principles”. Some of the specific, common irregularities include:
 lack of publication of a contract notice – leading to up to 100% claw back. If the opportunity was
advertised nationally but via a medium that other member states could access then this is reduced
to up to 25%
 artificially splitting contracts to prevent publication in the Official Journal of the European Union
(OJEU) – up to 100% claw back
 failing to state the selection criteria and/or the award criteria in the contract notice – up to 25%
claw back
 lack of transparency and/or equal treatment during evaluation – up to 25% claw back
 substantial modification of the contracts elements set out in the contract notice or tender
specification – up to 25% claw back plus the value of the additional amount of contract resulting
from the substantial modification of its provisions.
The Guidance also provides examples of breaches of the Regulations and Principles, which include:
 inadequate record keeping: it is the Recipient who is responsible for collecting records (from the
contractor) and keeping records to produce during audit
 changing the scope of the contract during the tender process
 underestimating the value of the contract

16. 15
 sub-standard advertising: which includes inaccurate or discriminatory advertising as well as utilising
a medium with inadequate scope
 failure to meet prescribed time limits
 mixing up selection and award criteria
 accepting bids which have not met the criteria
 giving additional information to certain bidders but not others, and
 extending deadlines for certain bidders.
Conclusion
This guidance serves as a bold reminder to Recipients that they must get their procurement right otherwise
ESIF can, and will, step in and recover grant funding, in part or in full. Hopefully it will be of help to
Recipients who are not entirely familiar with the procurement regime and the implications of any breach in
the context of grant funding.
Emma Graham | +44 (0)115 948 5641 | emma.graham@brownejacobson.com

17. 16
Whilst there have been a number of judgments dealing with many of the provisions relating to cost
management, there is a dearth of authority on the circumstances under which budgets may be varied.
A recent case, Yeo v Times Newspapers Limited [2015] EWHC 2131 (QB), looked at this issue.
The facts
Articles were published by The Sunday Times in June 2013 about the former MP Tim Yeo. Mr Yeo brought a
claim against Times Newspapers Limited for defamation, with the allegations centring on what Mr Yeo
allegedly telling undercover reporters during a lunch. The matter is due to be heard at trial in October 2015,
and has been hugely contentious with a number of interlocutory applications. The latest hearing before Mr
Justice Warnsby resulted in a judgment being given on 22 July with one of the applications being brought by
Mr Yeo to amend his cost budget.
Both parties had produced cost budgets which were reduced by Mr Justice Warnsby in February 2015 (see
judgment [2015] 1WLR 3031). Mr Yeo’s solicitors produced an amended budget on 10th July and, on 13th
July, made application to the court. One item was abandoned, one was agreed and approved by the judge
and a further item came before the court for further scrutiny.
The item in question came to the sum of £36,120 and was described as “Considering impact of
parliamentary privilege and considering and making amendments to statements of case and witness
evidence of both parties”. £21,000 of the £36,120 was described as already having been incurred.
Mr Yeo’s legal team told the court that the issue had arisen on 6 July, with the amended budget being
produced on 10 July.
The law on making such an application
Practice Direction 3E 7.6 states:
“Each party shall revise its budget in respect of future costs upwards or downwards, if significant
developments in the litigation warrant such revisions. Such amended budgets shall be submitted to the
other parties for agreement. In default of agreement, the amended budgets shall be submitted to the
court, together with a note of (a) the changes made and the reasons for those changes and (b) the
objections of any other party. The court may approve, vary or disapprove the revisions, having regard to
any significant developments which have occurred since the date when the previous budget was approved or
agreed.”

18. 17
This led to the court looking at three issues in order to determine the issue:
1. Can Practice Direction D3E 7.6 be employed to obtain approval for costs that, by the time of the
revised budget, are incurred costs? Paragraph 7.6 does refer to "future costs", and PD3E 7.4 provides
that the court "may not approve costs incurred before the budget".
2. Has there been a ‘significant development in the litigation’? Times Newspapers submitted that there
had been none, and that the approach to parliamentary privilege adopted on Mr Yeo's side was been
both tactical and misconceived.
3. To the extent that there are costs, incurred or future, which it would be reasonable for the claimant
to recover, what mechanism is available other than PD3E 7.6? The answer is of course relevant to
issue (i) above. Two alternative routes were identified:
a. CPR 3.18(b) (a court may depart from a budget where "there is good reason to do so"), or
b. PD3E 7.9 ("If interim applications are made which, reasonably, were not included in a
budget, then the costs of such interim applications shall be treated as additional to the
approved budgets.")
Judgment
Mr Justice Warnsby referred to his previous decision on this case saying:
"If work identified as a contingency is included in a budget but not considered probable by the court no
budget for it should be approved. If the improbable occurs, in the form of an unexpected interim
application, the costs will be added to the budget pursuant to PD3E 7.9, unless the matter involves a
"significant development" within para 7.6 in which case, if time permits, a revised budget should be
prepared and agreed or approved."
As a result this places pressure on solicitors to act quickly to prepare a revised budget. In this case we are
looking at the situation presenting itself on 6th July and the new budget being prepared on 10 July. The
judge had little sympathy for the solicitors concerned saying:
“Mr Browne points out that this puts a high premium on swift action to prepare a revised budget. That
must be right, but I do not see it as a good reason to adopt a different interpretation. Take this case. The
issue is said to have arisen on 6 July. It has not been made clear to me why a revised budget could not have
been prepared sooner than 10 July. There is some force in Mr Browne's submission that the analysis I have
set out is unsatisfactory for an individual paying privately, such as Mr Yeo. It leaves him in undesirable

19. 18
uncertainty about the recoverability of a large slice of cost until after the assessment stage. But I do not
think that leads to a different conclusion. As I have said, such a litigant will normally have an unexpected
interim application on which to peg reliance on PD3E 7.9. In any event the wording of the Practice Direction
is too clear to allow me to accept that incurred costs can be approved in this way.”
The judge clearly had a difficulty in dealing with incurred costs in this way.
He was also sceptical about whether the application could properly fall within PD 3E 7.6 and whether this
could be described as a ‘significant development in the litigation’. His views on that point were:
“In any event, I am not persuaded that there has yet been a "significant development in the litigation"
within the meaning of PD3E 7.6 which would justify the approval of the additional costs incurred (assuming
for this purpose I am wrong in my above conclusions) or the additional costs forecast in the revised budget.
The "significant development" in the litigation identified by Mr Browne is the repeal of s 13 of the
Defamation Act 1996 in May 2015, and the consequent need to address issues of Parliamentary Privilege
when this could otherwise have been managed by a waiver on Mr Yeo's part, pursuant to that section. I find
it hard to see the repeal of the section as a development of significance for the action. There is no
evidence nor is there any indication that any thought had been given to Parliamentary Privilege, or waiver
pursuant to s 13 before 6 July 2015. It is not a question of whether the claimant's legal team were aware of
the repeal of the section, which had escaped many of us, but whether the prospect of reliance on it had at
any point been a real consideration.”
As a result, the judge refused to allow Mr Yeo’s solicitors permission to amend their budget.
Conclusion
The lessons to be learned from this case are:
 there is a need to properly anticipate what costs are likely to be incurred; the courts will not be
impressed with an applicationrelating to costs which have already been incurred
 if costs are incurred then the more appropriate route is via PD3E 7.9 and via an unexpected interim
application. The fall-back then becomes CPR 3.18 (b)
 if there are likely to be costs incurred in a very short period of time and those costs are not
budgeted for then a solicitor should make an immediate application to the court. Time is definitely
of the essence!

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 if it is going to be claimed that there have been ‘significant developments in the litigation’ then
solicitors need to be prepared to provide cogent evidence that this is the case. The statement will
not be accepted at face value by the court.
This case again demonstrates how nimble lawyers need to be in relation to cost management, and that
lawyers always have to be on top of the costings on a file.
Recent speeches by members of the senior judiciary tend to demonstrate that cost management is here to
stay (although minor tweaks may be made to the system). Lawyers need to be alert to this case or face the
consequences of not being able to recover their costs for quite sizeable chunks of the litigation.
Nichola Evans | +44 (0)161 300 8021 | nichola.evans@brownejacobson.com

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The Conservative Party’s plan to reform strike balloting laws was included in its manifesto. It published the
draft Trade Union Bill on 15 July 2015 and has also issued three separate related consultation documents
which are considered below.
The government states that in the year to March 2015, there were 211 stoppages, totalling around 708,000
working days lost to strike action. This compares with 176 stoppages, totalling around 498,000 working days
in the previous year.
The reaction so far to the Bill has been as expected: the unions have reacted in anger with the TUC claiming
it is “an unnecessary attack on workers’ rights and civil liberties that will shift the balance of power in the
workplace” and the GMB saying that the plans would “poison” workplace relationships. Members of Unite,
Britain’s biggest union, have voted in favour of removing a clause in its rules requiring members to stay
within the law when staging protests. Business group the CBI, on the other hand, has welcomed what it
called “a modernisation” of industrial relations laws.
The key proposals
The main proposals of the Trade Union Bill are:
A 50% turnout for any ballot of those who were entitled to vote
This has been proposed by the government to try to avoid ‘undemocratic’ industrial action which takes place
on the basis of low ballot turnouts and which may not therefore represent the views of all union members. A
simple majority must be in favour to allow the action to go ahead.
An additional 40% support threshold in cases involving ‘important public services’
Fire, health, education (for those aged under 17), transport, border security and nuclear decommissioning
sectors have been identified as those public sectors where an additional requirement that 40% of all those
entitled to vote must vote in favour of the action. This threshold is in addition to the 50% participation
threshold and the simple majority rules. Therefore, for cases involving ‘important public services’, if there
are 1,000 union members in the bargaining unit, at least 500 would need to vote and a minimum of 400
would need to vote in favour. However, if all 1,000 voted, 501 votes in favour would be required.

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Information requirements
The information unions are required to provide to their members after a ballot would be extended to include
information about the thresholds above. Unions would also be required to include information about trade
disputes and industrial action taken, and the outcome of any ballots, in their annual returns.
Notice periods and time limits
The required notice for industrial action would be increased from 7 days to 14 days. Any ballot would cease
to be effective after four months (an increase from the current period of 4 weeks, or up to 8 weeks if agreed
between the union and the employer).
Supervision of picketing
A picket supervisor must be appointed by the union and be present for any picketing to be lawful. That
person must be familiar with the Code of Practice on Picketing and the union or picket supervisor must take
reasonable steps to tell the police the picket supervisor’s name, where the picketing will be taking place and
how to contact the picket supervisor.
Opt-in required for contributions to political funds
These provisions would require union members to opt in before they could be required to contribute to any
political fund. These opt-in notices would not be open ended but would need to be renewed periodically.
Consultations
The three consultation documents issued by the government cover ballot thresholds in important public
services, hiring agency staff during strike action: reforming regulation and tackling intimidation of non-
striking workers:
Ballot thresholds in important public services
The purpose of this consultation is to help define which roles within the fire, health, education, transport,
border security and nuclear decommissioning sectors would be subject to the 40% ‘important public services’
threshold. Four factors are identified as being potentially relevant, when strike action could:
 risk loss of life or serious injury
 risk public safety or national security
 seriously impair economic recovery
 prevent significant numbers of people from getting to their place of work.
Specific occupations are also provisionally identified, including firefighters, NHS and foundation trust staff
and teachers in state funded provision for statutory school age pupils.

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Views are sought in respect whether the above factors are appropriate and in respect of the particular roles,
including ancillary roles, to which the 40% threshold should apply.
Hiring agency staff during strike action: reforming regulation
Currently Regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003
prohibits employment businesses from providing agency workers to cover the duties normally performed by
an employee who is taking part in a strike or other industrial action, or to cover the work of an employee
who is themselves covering the duties of an employee taking part in a strike or other industrial action.
This consultation seeks views on the proposed removal of this restriction.
Tackling intimidation of non-striking workers
The Statutory Code of Practice on Picketing was last amended in 1992. It is not directly legally enforceable
but its provisions can be taken into account before any court. The Trade Union Bill seeks to make legally
enforceable some of the provisions of the Code. This is stated to be to ensure that workers are better
protected from intimidation.
This consultation also seeks to explore whether there are appropriate protections in place under the existing
legal framework, including where protests take place away from the workplace as these are not specifically
regulated by the Trade Union and Labour Relations (Consolidation) Act 1992.
Views are sought as to whether unions should be required to publish their plans in relation to picketing and
protests each time industrial action is called. This could include where it will be, how many people will be
involved, whether there will be loudspeakers etc, whether social media will be used and whether other
unions are involved.
Lastly, views are also sought on the proposals to require trade unions to set out details of any industrial
action in their annual reports.
Consultation has now opened in respect of each of the above topics and will close on 9 September 2015.
Details including to whom responses should be sent, should you wish to contribute to this consultation, can
be found within each of the documents.
Conclusion
Strikes are already at a low level; 2011 had the highest number of working days lost to strikes since 1990;
however, more working days were lost in 1926 alone than in the 37 years between 1974 and 2011. If the
minimum thresholds do make it into law, legal strike action is likely to reduce further. A number of unions

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involved with the nationwide strike in July 2014 would not have reached the 50% turnout and the NHS strikes
in October 2014 would also have fallen below this threshold.
However, the provisions of the Trade Union Bill and any supporting legislation are a long way off being
finalised. The Bill was presented on 15 July and there was no debate on it at this stage. The second reading
within the House of Commons is yet to be announced and, after the House of Commons, the Bill would still
need to make its way through the House of Lords. It therefore still remains to be seen what changes to
industrial relations will make it into law.
Sarah Hooton | +44 (0)115 976 6033 | Sarah.Hooton@brownejacobson.com