The court has awarded costs against a party who has claimed unreasonable amounts in their budget. In the case of King & Anor v Thipthorp & Ors [2016] EWHC 3859 (COP) the court reduced areas of the budget due to unreasonable claims and disproportionate amounts. Although the budgets appeared overall not to be excessive, the budget was still reduced in relation to particular items. This is contrary to the intended approach of the court, which is to adopt a global approach when considering reasonableness. Furthermore the CPR is to be amended with regards to this global approach, confirming that hourly rates within budgets should not be set – here is a link to my previous blog regarding the yet to be implemented changes Least worse option.
The court ordered that the costs of the challenge could be recovered by the party objecting to those items.
Negotiations are key to successful costs management, avoiding the litigation risk associated with any hearing is certainly beneficial. Furthermore, in view of the amendments to be made to the CPR regarding parties having to file “an agreed budget discussion report which sets out the agreed and disputed areas for each phase and a brief summary of the grounds of dispute schedules of agreed/disputed areas with the budgets”, negotiations have never been so important.
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