Costs News

05 March 2020
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Rule committee looks at codifying procedure for varying budgets

Moves to codify the procedure for varying costs budgets – including a new precedent – are being prepared by the Civil Procedure Rule Committee (CPRC), it has emerged.

However, according to the minutes of the committee’s December meeting, it has decided against introducing a budget variation notice (BVN) as a new preliminary step in the process.

The costs sub-committee, which is chaired by Mr Justice Birss, sought guidance from the CPRC on its approach to budget variation.

The minutes, released last month, said there were two connected issues: “First, the conceptual issues of principle, which centre on the issue of jurisdiction and what Birss J described as including ‘intermediate retrospectivity’; that is, whether the ‘no retrospective costs budgeting’ rule applies and how it works within the budget variation. It may be that a rule change setting out the factors the court should take into account will address the matter.

“Secondly, the need to consider the varying practices currently undertaken by parties with budget variations.”

The sub-committee had considered whether it would assist to introduce a BVN. The arguments in favour were that it may increase the chances of the parties agreeing the extra work and the associated budget implications, as well as serving as a trigger for timely service of the variation details (a new Precedent T), “thus bringing the issue into the open and focusing minds on the timeline”.

In doing so, it would include details of the ‘significant development’ relied on to justify the variation, and an explanation of why it was not covered in the previous budget process.

Committee member Andrew Underwood said it was critical that this reason was explained early in the process because “this should serve to guard against any attempt at ‘budget repair’”.

The main argument against the BVN was its potential to delay the variation details reaching the court.

In the discussion, Master Cook and Senior Costs Judge Gordon-Saker explained their approach to ‘significant development’ and how it addressed the ‘no retrospective costs budgeting’ issue.

The CPRC decided that the sub-committee would re-draft proposals which cater for ‘retrospective costs budgeting’ and to review the drafting to add clarity between ‘budget variations’ and ‘good reason to depart from the budget’.

Following a vote, it resolved not to introduce a BVN at this stage, “but rather to allow the anticipated revised approach to bed in before changing the process further”. However, Precedent T was agreed in principle.

The revised proposals were due to be discussed at the CPRC’s last meeting, but the outcome will not be known for some weeks.

The CPRC also noted that there may be merit in considering whether to move the entire costs practice direction into the substantive rules.

“However, the need to carefully consider the costs precedents and forms as part of that, as well as the content and status of the guidance notes, was readily acknowledged.”

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