Costs News

03 August 2017
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“Now is not the time to remedy the problem of incurred costs”

Lord Justice Jackson’s review said the problem of incurred costs in the budgeting process had been highlighted by both claimant and defendant lawyers, but that now was not the time to implement solution.

 Though it was not a function of the review to “tinker” with the costs management rules or Judicial College modules, he recorded that a review of 191 agreed or approved claimant budgets and 183 agreed or approved defendant budgets showed that, on average, incurred costs represented 35% of the former and 18% of the latter.

 He cited the Personal Injuries Bar Association’s “constructive” proposal that the judge at the CCMC should “positively to take into account the amount of costs already incurred when setting the budget for the future conduct of the case”, and quoted one of his assessors, District Judge Middleton.

 The regional costs judge said: “If appropriate account of incurred costs is taken by the case managing judge under the existing provision at CPR PD 3E 7.4, when approving budgeted costs, then the budgeted costs will reflect both the just and proportionate case management decision and the overall cost determined as reasonable and proportionate for any particular phase.

 “Recent Judicial College training addressed this issue in some detail. In addition, the inclusion of CPR rule 3.15(4) and rule 3.18 (c) from April 2017, has reinforced the ability of the case/costs managing judge to make comments on incurred costs and the obligation on the assessing judge to take account of any comments.”

 Jackson LJ said he also saw “considerable merit” in Master Cook’s proposal that it might be appropriate to fix pre-issue and pre-budget costs. “Clearly any grid of fixed pre-issue and pre-budget costs would not suit every case. Therefore, Master Cook suggested that there could be a rule saying ‘don’t exceed £x without permission’.”

 He continued: “In order to implement this proposal, we would need to look at all areas of litigation, not just clinical negligence. It would be necessary to draw up quite an elaborate grid of pre-issue and pre-budget provisional costs, with different figures for different types of case. It would then be necessary to develop a procedure for pre-action applications to the court for approval of expenditure above the provisional figures.

 “Such a scheme would probably require primary legislation, to give the court appropriate pre-action jurisdiction. The best way to do that would be by amending section 33 of the Senior Courts Act 1981 and section 52 of the County Courts Act 1984.

 “In my view, it would be premature to take this proposal forward now for three reasons: (i) I am already recommending some significant reforms. Those reforms should be allowed to bed in before we take this quite major step. (ii) There will be resource implications for district judges and masters if applications for pre-action costs budgeting are added to their workload. This is not an objection to the reform, but the resource implications must be addressed first. (iii) By definition, this scheme will only apply to cases which are above the proposed intermediate track and are subject to costs management.

 “The experience of a fixed-costs regime in the intermediate track will be highly relevant to the development of any grid of any pre-issue/pre-budget provisional fixed costs for multi-track cases.

“My only recommendation, therefore, is that in the future consideration should be given to developing (a) a grid of FRC for incurred costs in different categories of case and (b) a pre-action procedure for seeking leave to exceed the FRC in the grid.”




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