The Precedent T – a new Costs Management precedent, watch this space!

The CPRC have released minutes of their latest meeting.  The committee had been asked to consider proposals and options relating to revisions to CPR r3.15 and PD 3E.

Discussions centred around whether the no retrospective costs budgeting rule applies and how it works within the budget variation. It was mooted that a rule change which sets out the factors that the court should take into account may be appropriate.  Proposals were also made regarding a new draft precedent T (in excel format), its intention being to set out the particulars of the proposed budget variation.

It was recognised that there were varying practices currently in play when applying to revise a budget, and  because of that it was proposed that a solution would be to codify the procedure. 

The committee remained alive to the fact that any rule change should not open up parties to attempt to budget repair. More detail regarding the importance of revising the budget can be found in our previous blog here.

The subjective topic of what is a ‘”significant development” was discussed. Currently PD3E paragraph 7.6 provides that budget variations are warranted if a significant development occurs. It was considered critical that the significant development was explained early in the process to avoid any attempt to budget repair.

The committee agreed the Precedent T in principle. It was agreed to re-draft their proposals which cater for ‘retrospective costs budgeting’. We should also see some further guidance which will add clarity between ‘budget variations’ and ‘ood reason to depart from the budget’.

Sue Fox is a Senior Associate and the Head of the Costs Management team in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact her at sue.fox@clarionsolicitors.com and 0113 336 3389, or the Clarion Costs Team on 0113 246 0622.

Court of Appeal finds approved costs budget irrelevant when indemnity basis awarded

The Court of Appeal decision in Lejonvarn v Burgess & Anor [2020] EWCA Civ 114 has determined that an approved costs budget is irrelevant where indemnity costs are ordered.

The appellant’s case was that whilst there was an approved costs budget of £415,000, her actual costs were £724,265.63. To allow this would effectively reward her for failing to keep within the budget. Interestingly the budget was only partially costs managed and therefore was subject to change in certain phases in any event.

Lord Justice Coulson acknowledged The figure produced by an approved cost budget mechanism (CPR r.3.12-r.3.18) is a different thing to the final assessment of costs following the trial. The former is prospective; the latter is retrospective. True it is that, in many cases, the approved costs budget will be the appropriate starting point for the final costs assessment. But that does not detract from the underlying proposition that they are different figures produced by different considerations with different purposes” and in any event “If there is an order for indemnity costs, then prima facie any approved budget becomes irrelevant.

Although Lord Justice Coulson was not persuaded that there was an approved budget in this particular case he made it clear that costs assessed on an indemnity basis are not constrained by an approved costs budget. He even went so far as to say that his obiter comments in the cases of Elvanite and Bank of Ireland v Watts which suggested the contrary, should be disregarded.

Anna Lockyer is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact her at anna.lockyer@clarionsolicitors.com and 0113 288 5619, or the Clarion Costs Team on 0113 246 0622