DON’T DELAY – BE PROMPT IF THERE IS A SIGNIFICANT DEVELOPMENT!
Ian Moxon’s thoughts on CPR 3.15A Budget Revision for Injury Lawyers
Last autumn the procedure for revision of an approved Costs Budget was clarified by the introduction of CPR 3.15A. As with all rule changes, the implications can take some time to become apparent:
Procedure (what we know so far)
Okay, first off, there MUST be a significant development in order to revise an approved Costs Budget. There will be more and more case decisions published as to what constitutes a “significant development”, but clearly that will be on a case-by-case basis. Normally, Costs Budgets are predicated upon the case management directions set at the costs and case management conference. If there is a need to then substantially change the case management directions, it is likely that a significant development for costs budgeting purposes has also arisen. A likely example of a “significant development”, during an ongoing injury claim (Clinical Negligence or Personal Injury), is the need for an additional expert (extensions of the directions timetable are unlikely to be significant developments but might be CPR 3.18(b) good reasons to depart from the approved Costs Budget at the detailed assessment stage).
You MUST act promptly – which is the second mandatory requirement (hurdle) before an earlier approved or agreed Costs Budget can be varied. But what does “promptly” mean? Some guidance is available amongst the Judgment in Persimmon Homes Ltd & Anor v Osborne Clark LLP & Anor (2021) EWHC 831 (Ch), but I think, again, every case is different. And I expect in the future, there will inevitably be Court of Appeal decisions on this important point – so I don’t think the Persimmon Homes case is the last word when it comes to the issue of promptness here.
Should I prepare a Precedent T?
If there is (1) a significant development and (2) the significant development is current (“prompt”) then consideration needs to be given as to whether or not to prepare a Precedent T (the applicable Court Form for seeking a revision of an earlier approved Costs Budget). The extra costs being sought will just be those attributable to the significant development (an important point). There is no such thing as Budget repair. Budget over-spends are not a “significant development”. The principle remains, generally, that costs budgeting is a prospective exercise (although there may be some limited scope to include costs already incurred in the Budget revision request).
What to do with Precedent T?
What should you then do with the prepared Precedent T? Firstly, obtain your client’s approval of the Precedent T (and don’t muck about, because of the need for promptness). Secondly, serve the Precedent T on the Opponent in open correspondence and invite agreement. (Service of the Precedent T might also be alongside an Application Notice seeking to depart from the earlier case management directions – in which case staple the Precedent T to the Application Notice and make provision for Budget revision in the Application Notice itself).
Report to the Court by sending the Precedent T to the Court with an explanatory covering letter. If the Precedent T has been agreed, ask the Court to approve those new figures (the Court can make some other determination). If it has not been possible to agree the Precedent T, ask the Court to make a determination on the papers or list the matter for a contested Budget variation hearing, as it sees fit. The new procedure under CPR 3.15A is vague here and, I suggest, if no response is received from the Court to your letter within a couple of weeks, then it would be sensible to make an Application to Court for an Order or hearing on notice.
Significant developments and promptness are buzzwords. However, considerations include (1) is Budget revision necessary – there may be plenty of costs still available to spend under the particular Phase, the risks of overcoming the significant development and promptness hurdles might be too great and it might be that a CPR 3.18(b) argument at the detailed assessment stage is a better course of action. At the first sign of a significant development, please get in touch and we can help with those questions.
Is CPR 3.18(b) dead?
Very important point – variation of an approved Costs Budget, due to a significant development, during an ongoing case is a lower bar than seeking to depart from the approved Costs Budget, using good reasons to depart under CPR 3.18(b), at the detailed assessment stage. Failure to seek Budget variation when a significant development occurs may weaken subsequent good reason arguments under CPR 3.18(b) – in fact, it will probably kill them. Remember always, inter partes costs recovery is part and parcel of your duty, as a Solicitor, to act in your client’s best financial interests and those steps to ensure best inter partes costs recovery are as important, during the live matter, as steps you take to ensure the best recovery of damages – and funding of the case under a CFAlite style retainer is irrelevant to this principle (i.e. you will be in breach of your professional duty to your own client if you do not take steps to ensure best future costs recovery, even if your client’s ultimate liability to pay your fees is somehow limited by reference to a percentage of the damages recovered. The principle always remains that, costs recovered inter partes belong to your client, so that he may then use those costs recovered towards payment of your final Solicitor/ own client invoice – inter partes costs don’t belong to the conducting Solicitors).
It is often the scenario that injury Solicitors, faced with the potential need for an additional expert, after case management directions have been set, will obtain the report from the additional expert and then seek the Courts’ permission to rely on that new report if they like the look of that report. That practice, however, creates a problem in terms of the need to act “promptly” when seeking revision of the earlier approved Costs Budget (the second mandatory hurdle). Did the significant development occur when the need for an additional expert first became apparent or when the Application was later made for permission to rely on the new report?
There is also the question of whether the costs already incurred in obtaining that extra expert’s report can then be retrospectively added to the budgeted costs via the CPR 3.15A procedure? Comments made in the Persimmon Homes case and in the earlier case of Sharp v Blank suggest that revision costs are essentially just those from the date when the Application for revision of the costs management Order was made.
It may well be a better tactic going forward to seek permission for the extra expert first and then to incur the extra costs of that report after the budget has been revised. If the report turns out to be unsupportive, but does not damage the Claimant’s case, then my advice is to disclose that report. Defendant rhetoric says that, if an expert’s report is not disclosed, then the costs of that report shouldn’t be recoverable inter partes – so play the Defendant’s game and disclose the report even though it’s useless to both sides (so that you get paid!).
PIC here to help
Please get in touch as soon as you become aware of any potential significant development in a budgeted matter – so that we can help.
Ian Moxon, Costs Lawyer
03458 72 76 78