Costs Budgeting And The Effect Of CPR 46.9(3)(c)

To avoid the presumption applied by CPR 46.9(3)(c) the solicitor is required to explain to the client that the costs may not be recovered because they were unusual. “Unusual” must therefore be read in the context of a between the parties assessment. That is not to be equated with costs which are merely “unreasonable”. A solicitor is not required to inform the client that particular costs may not be recovered because a court may conclude that they were not reasonably incurred or reasonable in amount.


Costs Capping, Budgeting, Proportionality And Cases Of Wider Importance

“In my judgment, the Claimants are right that it is wrong in principle for a party to use the CCO regime, in effect, as a proxy for the abuse of process jurisdiction. Similarly, it would be wrong for the court to impose a CCO in order to punish a party who has lawfully brought proceedings in this jurisdiction because the court thinks that they should have issued their proceedings in a different jurisdiction…. the imposition of a CCO would almost certainly have the effect of forcing the Claimants to abandon their claims. If the Defendant considered that the various reasons put forward … meant that the continuation by the Claimants of these proceedings would be an abuse of process, then the Defendant should have persisted with its strike out application.”


Costs Budgeting, Proportionality and Incurred Costs

In the course of the costs budgeting exercise the Claimants had complained, in particular, about the level of the Defendant’s incurred and estimated disclosure costs and asked the court both comments on those incurred and significantly curtail, if not disallow altogether, the costs of disclosure going forward.

Costs budget revisions

CPR 3.15A | Costs Budget Revisions | A Significant Development Need Not Be A Specific Event

The Claimant in this case applied to revise an approved costs budget. The application to revise (made soon after the transfer to the High Court took place) was based not on value alone but on the argument that the case had turned out to be more complex and more demanding of legal time and cost than was reasonably anticipated when the budget was drafted. It was said that the case had developed in the period following the initial realisation that the value had increased, and that it was not really feasible to seek to revise the budget before the District Judge in part because the impact of the new medical evidence, other than on value, was not at the time of the budgeting hearing clear.

Don't Wait

CPR 3.15A | Costs Budget Revisions | Significant Developments And The Need To Act Promptly

Master Kaye has refused an application by the Claimant to revised an approved costs budget under CPR 3.15A. Her lengthy decision provides some useful guidance to parties seeking to vary a costs budget and highlights in stark terms the mandatory requirement to act promptly.

Significant Developments

Significant Developments And The New Precedent T

The Civil Procedure (Amendment No. 3) Rules 2020 and the 122nd Practice Direction Update come into effect on 1 October 2020… the most notable change is the introduction of the new formal procedure for varying your costs budget and imposition of a mandatory duty on parties to do so where there is a significant development in the litigation.

Kings Security Systems Ltd v King & Anor

Costs Budgeting And Incurred Costs | To Comment Or Not To Comment

In Richard v The British Broadcasting Corporation (BBC) & Anor [2017] EWHC 1666 Chief Master Marsh urged a “degree of caution” when considering whether to make a comment about incurred costs at a costs management hearing, saying “To my mind there is little or no value in the court recording a general comment about incurred costs along the lines that the incurred costs are “substantial” or they are “too high”. If the court wishes to record a comment that the incurred costs are “excessive” or they are “unreasonable and disproportionate” it will wish to be sure that the comment is made on a sound footing, rather than impression, because commenting is quite unlike the exercise of approving a figure per phase for future costs. The court will also wish to consider the utility of making a comment unless it is specific and well-founded.”

These sentiments have been echoed by Master Kaye in a decision handed down last November, but only just published.

Marbrow v Sharpes Garden Services Ltd

The Cap On Recoverable Costs Of Costs Budgeting And Other ‘Interesting’ Points

Master Gordon-Saker determined three issues which arose in the course of a detailed assessment, namely:

i) whether the caps on recoverable costs of budgeting provided by sub-paragraphs 7.2(a) and (b) of Practice Direction 3E of the Civil Procedure Rules 1998 include or exclude value added tax;

ii) whether the Claimant was entitled to recover the sum of £2484.48 in respect of interest paid under a disbursement funding loan; and

iii) whether the Claimant’s entitlement to interest should run from 3 months after the date of the order for costs.

Utting v City College Norwich

CPR 3.18(b) | Underspend Does Not Constitute Good Reason To Depart From An Approved Budget

Master Brown (costs judge) has joined the debate about the effect of an underspend in a costs budgeted case.

“I agree with [DJ Lumb] that if an underspend were to be a good reason for departing from a budget it would be liable to substantially undermine the effectiveness of cost budgeting. As the Judge effectively observed, solicitors who had acted efficiently and kept costs within budget would find their costs subject to detailed assessment, whereas less efficient solicitors who exceeded the budget would, absent any other “good reason”, receive the budgeted sum and avoid detailed assessment…

“even if ‘underspend’ were a “good reason” for the purpose of CPR 3.18 it does not follow that there should be a deduction from the sums claimed. Plainly, the fact that a party has spent less than its budget for a phase does not mean there is therefore in fact a good or appropriate reason for any further reduction and I was not satisfied that there was any additional “good reason” for any such reduction.”