Costs News

16 July 2015
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Finalise budgets after CMC, say Costs Lawyers

Costs Lawyers have backed a change in costs management procedure that would see the budget settled after the case management conference, once the direction of the litigation has been established.

Nearly two-thirds (65%) of ACL members supported the proposal put forward by the association’s budgeting working party in a recent consultation. The findings of the working party, along with the views of members in the survey, have now been submitted to the Civil Procedure Rule Committee sub-committee currently looking at costs management reform under the chairmanship of Mr Justice Coulson.

The report sent to the sub-committee explained: “It was acknowledged that the total amount of each party’s projected costs would likely play a significant part in a judge's determination of what directions it would be appropriate to make. Consequently, it was suggested that draft budgets be exchanged and lodged before the CMC and that, upon giving directions, the judge may then pass comment upon them and instruct the parties to finalise budgets, based upon the directions made.”

It said that advantages could include:

• The preparation of the initial draft budget, while required to be served in a timely manner, would not be subject to tight time restrictions within which the parties are under pressure to agree;
• Any disagreements between the parties over what should or should not appear in the budget may be resolved at the CMC, either by the judge's determination of the directions or in comments made on the draft budgets;
• The judge at the CMC would be able to determine at this stage whether, in accordance with rule 3.15(2), the matter was a case where costs management might be dispensed with;
• There is the likelihood that budgets might more readily be agreed once the parties are better aware of the directions given in the case and the comments made upon the budgets;
• Where budgeting is not agreed, this would encourage the docketing of judges, which experience suggests is not happening despite provision in the rules; and
• Agreed budgets are more likely to lead to agreed costs, thereby avoiding assessment.

Members agreed that any judicial comments should be properly recorded, preferably either in the court order or in an addendum attached to it.

In other findings, Costs Lawyers supported amending Precedent H, but were not united on how this should be done, while nearly three-quarters said contingencies should remain in it.

Members were at odds with the ACL working party’s suggestion that, given the clear indication that judges do not want to deal with hourly rates, they should be removed and the emphasis be placed on time spent/to be spent, with 63% saying hourly rates and time cost should remain as part of the exercise. However, only 27% said they should be set by the judge at the CCMC.

A majority (57%) was against a further breakdown of incurred/pre-action costs with the Precedent H, but 65% wanted better Notes for Guidance, particularly in relation to what goes into which category. “This would assist practitioners and judiciary alike as the degree of interpretation is far too wide,” the report said.

The survey also found a majority against the idea of restricting budgets to the ‘proportionate’ amount of costs to be incurred without reference to costs already incurred, while most were happy that the statement of truth certifies that the budget is not in breach of the indemnity principle.

ACL chair Sue Nash said: “We have worked hard to provide the sub-committee with the views of those at the coal face of costs management. It is fair to say that there is no overwhelming consensus, which reflects the tricky job Mr Justice Coulson and his colleagues have before them. But it is clear that changes are needed to make budgeting a more proportionate and consistent process.”

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