Tag: budget

The CPRC least worst option! How to resolve the position regarding negotiating budgets

Andrew McAulayLeave a comment

Negotiations

The Civil Procedure Rules Committee has amended the rules to include a new rule 3.13(2), in the event that a party files and exchanges a budget, all other parties will have to file an agreed budget discussion report which set out the agreed and disputed areas for each phase and a brief summary of the grounds of dispute – something many courts have been ordering for some time.  The CPRC have described this as their “least worst option”!

The debate over hourly rates!

The Practice Direction is to be amended regarding hourly rates, it is confirmed that they will not be set and puts an end to this much debated area – “The making of a costs management order under part 3.15 concerns the totals allowed for each phase of the budget. It is not the role of the court in the cost management hearing to fix or approve the hourly rates claimed in the budget. The underlying detail in the budget for each phase used by the party to calculate the totals claimed is provided for reference purposes only to assist the court in fixing a budget.”

That said, consideration will have to be given to the hourly rate, how can the claim be quantified without an hourly rate? I agree with not setting the hourly rate and when I negotiate I don’t agree to the setting of the hourly rate, however, I may agree to the hourly rate for quantification purposes.  My aim is not to have the rate set for the purposes of detailed assessment, unless of course there is no reason for the hourly rate to be disputed.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com

Five Gold Rings!

Joanne ChaseLeave a comment

I have been preparing budgets for over 5 years, during the pilot scheme and onwards. I have prepared budgets in all areas of law and I have drafted well in excess of 1,000 budgets, so I would like to share with you my 5 Gold Rings!

  1. File your budget well in advance of the hearing, this allows parties to negotiate properly.
  2. Mutual exchange.  Agreeing to mutually exchange the budgets may be beneficial, it may assist your case if neither party is aware of the opponent’s budget. This may help strategically and stop parties adapting their budget, following consideration of the opponent’s budget.
  3. Only include foreseeable contingent costs, the rules are clear regarding this. Do not include every eventuality, consider how you think your case will proceed and only include the relevant contingencies.
  4. Filing v service. This is a cute point. The court sanction only relates to failing to file rather than failing to serve. If you are experiencing a tight deadline then file your budget first rather than serve. Obviously I am not condoning a lackadaisical approach to service, however it is something to bear in mind if time is of the essence.
  5. The rules provide for downward revisions of budgets. This is a good point to remember. Defendants often consider budgeting to be a waste of time, simply a box ticking exercise, this is usually defendant insurers or defendants that will be subject to QOCS. However, if there are material changes to the case, then it may be appropriate to seek a revision downwards. This is a good tactic for the defendant because it may reduce their costs liability – so defendants, please do not ignore the budgets.

Incurred Costs – Shifting Change

Joanne ChaseLeave a comment

LJ Jackson has recognised there are problems surrounding incurred costs. As predicted by many, he is concerned that some parties will undertake as much work as possible before the case management conference, thereby putting large swathes of costs outside of the reach of costs budgeting. This tactic of “front loading” goes against the very essence of what costs budgeting stands for.  LJ Jackson in his lecture earlier this year referred to incurred costs, stating that “a residual power to set a global figure for both incurred and future costs for any phase is to be introduced”.

His suggested solutions are sensible ones – (1) the court should have the power to comment on the incurred costs and to summarily assess those costs at the case management conference, if necessary; or alternatively (2) the court should be able to set a global figure for any phase, to include both incurred and future costs. This would be a welcome development in the task of controlling costs via the costs budgeting regime. The clear benefit to parties is that at the conclusion of the case where costs have fallen within limits of the budget, then parties may start to experience their costs being allowed in full, including the incurred costs. At present, when a party has actively managed their case effectively and efficiently, the incurred costs continue to be subject to either detailed assessment or summary assessment. LJ Jackson’s proposal would avoid this expensive and costly assessment process.

If this proposal was to be encompassed into any future revisions to the rules, then the parties to the litigation would begin to encounter some additional benefits. LJ Jackson has also suggested an introduction of pre-action costs management principally for clinical negligence costs. It appears there is a shift towards applying more focus to the issue of incurred costs in the future.

LJ Jackson’s proposal to change the position regarding incurred costs is one of the many steps needed to make costs management work.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com

New deadlines for filing Costs Budgets

Joanne ChaseLeave a comment

The CPRC’s committee has agreed to amend the timeframe for the filing and service of budgets. Claims that are worth less than £50,000, budgets will need to be filed with the directions questionnaire.  Claims worth more than £50,000, budgets will need to be filed 21 days before the case management conference.  They have not released a date yet for the implementation of these changes.

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Pre-budget costs are highly relevant – Redfern –v- Corby Borough Council (QBD 03.12.14)

Joanne ChaseLeave a comment

It is quite clear within the CPR that any costs which have been incurred should be considered when assessing future costs, however as we are all aware, these costs can neither be approved or disapproved, only comments can be recorded (CPR Part 3, para 7.4 of PD 3E). As part of the costs management process the court may not approve costs incurred before the date of any budget. The court may, however, record its comments on those costs and will take those costs into account when considering the reasonableness and proportionality of all subsequent costs.

In the case of Redfern –v- Corby Borough Council (QBD 03.12.14), the Judge applied this principle and relied upon the incurred costs in accordance with PD 3E when assessing the future costs.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com

When a Costs Budget is appealed – Havenga –v- Gateshead NHS Foundation Trust

Joanne Chase1 Comment

We now have some guidance regarding the approach which the Court may adopt regarding appealing the amount of an approved Costs Budget.

 In Havenga –v- Gateshead NHS Foundation Trust [2014] EWHC B25 (QB), the Court found that it was ‘not the role of the appellate Court to tinker with Costs Budgets’ and ‘the role of the appellate Court, in these circumstances, is to decide whether the Budget as revised by the District Judge was reasonable and proportionate. Only if I conclude that the revised Budget was outwith what can be described as reasonable and proportionate and that, therefore, the District Judge had exceeded his wide ambit of discretion can I interfere with the overall Budget’.

Although the Judge did feel that he may have been more generous in some areas of the Budget, he considered that as a whole, the Budget was both reasonable and proportionate and the appeal was dismissed.

Perhaps this approach will avoid unnecessary and unreasonable requests for appeals and will ensure a cost effective and pragmatic approach to Costs Budgeting, or will it result in increased costs?  This may encourage more Lawyers to have both Counsel and the Costs Lawyer at the costs management hearing, so that any risk of comprehensive arguments not being made is avoided.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com

The Fate of the ‘Court Fee only Budget’ post April 2015

Andrew McAulayLeave a comment

Lawyers live in fear of having their costs budget reduced to court fees.  If a budget is reduced to court fees, the only solution to minimise the impact of this is to obtain an indemnity basis costs order – approved costs budgets should not be relied upon at any indemnity basis assessment.  Costs Management only applies to standard basis assessments, therefore this is the only way that a somewhat hopeless situation could potentially be rectified.  At the moment, the Claimant has the advantage. The Claimant can secure an indemnity basis award by making a well-pitched Part 36 offer, the Defendant cannot. Either party can secure indemnity awards raising arguments such as conduct, however awards made on this basis are much more difficult to achieve.

The Rule Committee have identified this and have amended the rules, which will be implemented in April 2015, to address this disparity. Cases in which the offeror’s costs have been limited to court fees is now governed by CPR Part 36.23.

(1) This rule applies in any case where the offeror is treated as having filed a costs budget limited to applicable court fees, or is otherwise limited in their recovery of costs to such fees.

(Rule 3.14 provides that a litigant may be treated as having filed a budget limited to court fees for failure to file a budget.)

(2) “Costs” in rules 36.13(5)(b), 36.17(3)(a) and 36.17(4)(b) shall mean—

(a) in respect of those costs subject to any such limitation, 50% of the costs assessed without reference to the limitation; together with

(b) any other recoverable costs.

The intention of the Rule Committee is to ensure that Part 36 still works in such cases and continues to provide an incentive to make a Part 36 offer.  Equally it is important that the innocent party should not regard itself as having a blank cheque to litigate the case.  Sanctions must therefore be imposed for turning down a reasonable Part 36 offer.

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Should the Precedent H Costs Budget be filed after the Court has ordered Directions?

Andrew McAulayLeave a comment

I completely agree with the ideology and concept that Precedent H Costs Budgets should be prepared once the order for directions has been made.  This enables all parties to cost their budget from the same case plan and then draw the correct comparisons when negotiating.  Having an order detailing the directions made avoids parties drafting budgets with assumptions which differ, this naturally makes drawing comparisons a challenging task and negotiations sometimes impossible.  Preparing the budget following the directions order can also avoid the inevitable amendments which will be required to reflect the directions made and also the subsequent hearing which may be necessary, surely a much simpler and more cost effective process – “hear, hear” are the shouts from all the Costs Draftsmen/Costs Lawyers.

Perhaps the reason that this was not adopted is because the Courts are, or should be, guided by the costs of a particular task/aspect when determining the directions, this was certainly the intention of the Jackson Reforms. What a quandary? Should the Courts be implementing a system which results in a more costs effective solution – utopia for the Costs Lawyer, or; should the Courts implement the Jackson Reforms correctly, thus ensuring that the Courts are managing the cases properly by determining the cost of each direction sought before assessing whether it is proportionate to make that direction? This certainly opens up an additional very interesting discussion.

Please see the attached link: https://www.linkedin.com/pulse/its-just-silly-phase-im-going-mark-carlisle?trk=prof-post

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What if your Precedent H Costs Budget has been reduced to court fees?

Joanne ChaseLeave a comment

Will a budget which has been reduced to court fees apply if indemnity basis costs have been awarded?

  • Where a budget is limited to court fees, it is advisable to attempt to secure an indemnity basis costs order – costs budgets only apply to standard basis assessments. The CPR is clear regarding this (CPR Part 3.18) and there is now supporting caselaw Kellie v Wheatley & Lloyd Architects Ltd [2014] EWHC 2866 (TCC).

If your budget has been reduced to court fees, can the budget be revised?

  • If your budget has been reduced to court fees, this does not exclude you from seeking the further costs which may be necessary as a result of any significant developments in the litigation.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com