Contingencies: Yes or No?

Rob Street Costs Lawyer

Rob Street
Costs Lawyer

The budgeting process was introduced as long ago as April 2013 but confusion as to how the process actually works in practice remains a lively topic amongst those of us at the “coal face”. Various issues remain to be crystallised but one of the main difficulties we regularly encounter is the use (or not!) of contingencies; it is an unfortunate fact that there is a distinct variation of approach up and down the Country.

According to the Guidance Notes on Precedent H, which remains the only guidance upon how to complete a Precedent H, the “contingent cost” sections of this form “should be used for anticipated costs which do not fall within the main categories set out in this form. Examples might be the trial of a preliminary issue, a mediation, application to amend, application for disclosure against third parties or (in libel cases) applications re meaning. Costs which are not anticipated but which become necessary later are dealt with in paragraph 4.7 of the Practice Direction”.

So far so good; however, in the first instance, where is paragraph 4.7 of the Practice Direction?

Turning to the actual meaning of contingencies, or more accurately, the construction applied by the majority of District Judges and Masters I have appeared before. The major difficulty, of course, revolves around “should be used for anticipated costs which do not fall within the main categories set out in this form”. In this regard, a cursory glance at the Guidance Notes, which apparently is the guiding light dictating what goes where and why and what doesn’t go where and why, for example, a Schedule of Special Damages is nowhere to be seen. Therefore, one can obviously be forgiven for concluding that such work is a contingency. Additionally, the various references to interlocutory Applications can only mean that the various other examples of interlocutory Applications should be included in contingencies; apparently not, however. Indeed, the ethos behind a contingency, so I am informed, is, along the lines of something which may well occur but is less certain than that which appears in the Budget proper. I have been given a number of examples but as a general rule if it’s in the directions Order then it goes in the Budget proper; however, again for example, if there is a conflict between the parties’ Experts and a Conference with Counsel becomes required, this is a contingency. Simple perhaps but not, strictly speaking, in accordance with the Guidance Notes.

The story, however, does not end there and whilst most Judges embrace this approach there is a significant element who simply will not allow any contingencies. Indeed, reference is made to 7.6 of Part 3 “Each party shall revise its budget in respect of future costs upwards or downwards, if significant developments in the litigation warrant such revision”. In other words that which is a contingency in one Court is a “significant development” in another. The process of variation is laborious to say the least and can do nothing other than add another layer of costs to a process which, in any event, achieves only half of its aim (costs to the date of the Budget still can’t be budgeted 7.4).

On the 30th September 2014 Alexander Hutton QC was one of the keynote speaker at the Costs Law and Practice Conference 2014 – if it might happen stick it in the Budget, or words to that effect.

In the current environment, wise words indeed