Revising Precedent H Costs Budgets – Don’t delay

Revising Precedent H Costs Budgets

Don’t delay in applying to revise your Costs Budget if a significant development has occurred in your litigation, and on those occasions where there may have been a delay don’t shy away from applying.

It is not left to a party to choose whether to revise its budget and to take its chances on a detailed assessment, parties must apply to revise their budget if there has been a significant development in the litigation – Sharp -v- Blank & Ors [2017] EWHC 3390 (Ch) (21 December 2017) (hereafter Sharp).

In the event that there has been a significant development in the litigation, parties are not able to defer the determination of additional incurred costs to detailed assessment – those incurred costs form part of the request for additional costs:

Master Marsh “I do not consider the rules and practice direction intended that only certain elements of the costs relating to significant developments must be dealt with as revisions with the other elements, those pre-dating the hearing or, on another view those pre-dating the application, being dealt with on a detailed assessment. This approach would run contrary to the purposes of costs management and lead to unnecessary fragmentation of the costs dealt with at a detailed assessment.

Master Marsh found that the costs incurred from the costs management order and up to the application to revise the Cost Budget were not incurred costs for the purpose of the revision, they were future costs. Master Marsh focussed on the language of the CPR referring to the choice of the use of “future” rather than “budgeted costs”, as follows:

The language used in paragraph 7.6 is of critical importance because it provides the jurisdiction, on the defendants’ case to make the revisions they seek. It is notable that the language is at variance with the remainder of the rules and PD3E. It refers throughout to the revision of a “budget” (not, in accordance with the new wording, “budgeted costs”). It is explicit, however, that revision is in respect of future costs. The final sentence of this paragraph gives the court a discretion to 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”. On one view, such language points towards the last approved or agreed budget being the jumping off point for a revision because it is the budget that is being revised”.

Master Marsh concluded that the “Costs which have been incurred since the date of the last agreed or approved budget (or the antecedent date) that relate to significant developments are, for the purposes of revision, placed in the estimated columns of the revised Precedent H in one or more phase. In some cases, it may not be obvious where they go (for example a late application for security for costs) but I can see no reason why Precedent H may not be adapted as necessary to accommodate work that does not easily fit in”.

He also considered that there would be a degree of retrospectivity if the costs management regime was to work.

It is essential that you apply to revise your Costs Budget if a significant development has occurred in your litigation, to not do so puts you at risk of not being able to recover any costs that are in excess of your budget.

Sue Fox is a Senior Associate and the Head of Costs Management 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.

 

 

Clarion’s November 2016 Newsletter

Please follow this link for Clarion’s November 2016 newsletter.  In this month’s issue:

Andrew McAulay discusses “Fixed Costs”.

Sue Fox discusses “significant developments in litigation and revising your budget”.

Jo Chase discusses the “Increase in small claims limit”.

 

 

Five Gold Rings!

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.

Failure to update the Budget and failure to serve the Statement of Costs – Simpson v MGN Limited & Anor [2015] EWHC 126 (QB)

In Simpson v MGN Limited & Anor [2015] EWHC 126 (QB), the Claimant failed to submit a revised costs budget to include the costs of a preliminary issue trial and failed to serve a costs statement on the Defendant.

The budget, which the Claimant had filed at the first cmc, included a contingency for a preliminary issue trial. This was not agreed between the parties and the Judge neither agreed nor approved this, simply marking the phase with N/A. The Defendant had also included a contingent phase for the preliminary issue, however the parties had managed to agree the amount, which the court recorded.

The Defendant argued that the costs relating to the preliminary issue trial should not be allowed on the basis that the Claimant had failed to seek a revision. The Judge considered the sequence of events, which included the Claimant providing the Defendant with an updated budget to include the preliminary issue phase. Despite the Claimant failing to request a revision from the court, the Judge found that disallowing the costs would be an unjustly disproportionate sanction, not sufficiently justified by the overriding objective.

The Judge commented as follows:

The application of the wording of CPR 3.18(b) is not so straightforward in the circumstances of this case, where (a) the receiving party has put forward a budget for this phase of the litigation but one that is not agreed or approved, or disapproved but considered inapplicable; and (b) the paying party has prepared a budget for this phase which has been agreed. I am inclined to think that the wording of CPR 3.18 was not aimed at such a situation, but rather at ensuring that once the court has reached a decision on what it is reasonable for a party to spend on a given phase that conclusion should be final in the absence of some good reason. However, that was not a point addressed in argument and I reach no conclusion on it. Assuming that I am wrong in this it seems to me that on the facts of this case there is good reason to depart from the budget approved by Master Yoxall for this phase of the litigation, by allowing recovery of some costs by the Claimant”.

The Judge also applied the principles in the CPR regarding failure to serve a statement of costs and used his discretion to reduce the statement of costs by 10%.

If you have any questions or queries in relation to this blog please contact Sue Fox (sue.fox@clarionsolicitors.com and 0113 3363389) or the Clarion Costs Team on 0113 2460622.