Costs News

23 July 2020
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New costs rules and practice direction to come into force on 1 October

A revised rule 3 and practice direction 3E are to come into force on 1 October, the Ministry of Justice has confirmed, with a new Precedent T to be used to vary a budget the most significant change.

The 122nd update to the CPR will reduce the existing structure of three sources of rules – the actual rules, the practice direction and lengthy guidance note – into two documents: a set of rules and a practice direction which is intended only to include practice guidance.

Aside from budget revision, however, the rejig is not intended to make any substantive changes.

Budget revision will need to be done “promptly” in the event of significant developments in the litigation – initially the rule said it would need to be done “without delay”. It will be governed by new rule 3.15A, which will provide:

“(1) A party (“the revising party”) must revise its budgeted costs upwards or downwards if significant developments in the litigation warrant such revisions.

(2) Any budgets revised in accordance with paragraph (1) must be submitted promptly by the revising party to the other parties for agreement, and subsequently to the court, in accordance with paragraphs (3) to (5).

(3) The revising party must—

(a) serve particulars of the variation proposed on every other party, using the form prescribed by Practice Direction 3E;

(b) confine the particulars to the additional costs occasioned by the significant development; and

(c) certify, in the form prescribed by Practice Direction 3E, that the additional costs are not included in any previous budgeted costs or variation.

(4) The revising party must submit the particulars of variation promptly to the court, together with the last approved or agreed budget, and with an explanation of the points of difference if they have not been agreed.

(5) The court may approve, vary or disallow the proposed variations, having regard to any significant developments which have occurred since the date when the previous budget was approved or agreed, or may list a further costs management hearing.

(6) Where the court makes an order for variation, it may vary the budget for costs related to that variation which have been incurred prior to the order for variation but after the costs management order.”

According to the minutes of the Civil Procedure Rule Committee meeting in March, when the changes put forward by the costs sub-committee were signed off, the sub-committee did consider only drafting rules and dispensing with the practice direction and guidance entirely, “but concluded that as this exercise was to address the issue of budget variations, it was sensible to keep the other guidance, but within the PD and not as an additional guidance note”.

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