Kerry Underwood

COSTS BUDGETING UPDATE

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

Costs of Costs and Case Management Conference Not Subject to Budgeting

The 109th Amendment to the Civil Procedure Rules came in on 1 October 2019.

One of the changes makes it clear that the costs of the Costs and Case Management Conference are incurred costs and thus do not fall to be budgeted.

The new Practice Direction 3E, Paragraph 7.4 reads:

“As part of the costs management process the court may not approve costs incurred up to and including the date of any costs management hearing. 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 budgeted costs.”

 

Anticipated Consent Order Court Fees in Budget

Should a Precedent H costs budget include within the Alternative Dispute Resolution/Settlement phase an anticipated court fee for the Consent Order recording the Settlement Agreement?

Costs budgets assume that the matter will proceed to trial and therefore the total figure for the budget includes the costs to be incurred if the matter does not settle and proceed to trial, which suggests that the court fee for any Consent Order should not be included.

However, the Guidance Notes to Precedent H include, under examples of the work to be included within the Settlement phase:

“Drafting Settlement Agreement or Tomlin order”, which suggests that the court fee should be included.

 

What About Budgeted Costs for Work That Ends Up Not Being Done?

Simon Gibbs, in his excellent blog, poses the dilemma in these words:

“What happens then if a budget is approved/agreed that includes the court fee but the matter does not settle before trial? On detailed assessment, does the fact that one of the assumptions on which the budget was prepared (that the matter would settle within the ADR/Settlement phase) did not occur mean that there is a “good reason” to depart downwards from the budget? If so, to what extent?

For example, a claimant’s budget is prepared estimating, for the ADR/Settlement phase, £2,000 profit costs and £100 consent order fee. The budget is approved as drafted. Negotiations are unsuccessful and so no settlement agreement or Tomlin order is drafted and no consent order is filed. The claim succeeds at trial. The claimant serves a bill claiming exactly £2,100 profit costs. The court’s approval of the budget will “relate only to the total figures for budgeted costs of each phase of the proceedings” and the approved figure would have been a global total of £2,100, which the receiving party has not exceeded.

As per HHJ Dight CBE in Barts Health NHS Trust v Salmon [2019]:

“it seems to me that the fact that the phase of the budget relating to experts was … substantially incomplete was capable of being a good reason, and it would have been open to the Master on that basis to consider whether to reduce the figure”

If this applies in this situation, by how much should the approved budget be reduced? It is unlikely anyone will lose too much sleep over the £100 court fee, but what about the additional costs? Will there always be a “good reason” to depart downwards from the ADR/Settlement phase if a matter proceeds to trial?””

 

I am grateful to Simon Gibbs for his discussion of this issue, and, as ever, with the Civil Procedure Rules, and especially budgeting issues, there are more question than answers.

Written by kerryunderwood

October 8, 2019 at 8:02 am

Posted in Uncategorized

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