New Costs Budgeting Observations
John Plunkett
Costs Lawyer
Some very interesting Costs Budgeting observations have recently been made by Mr. Justice Warby in Tim Yeo MP -v- Times Newspapers Limited [2015] EWHC 209 (QB).
Although this matter raised interesting issues dealing with pleading allegations of fraud; the costs issues dealt with are of greater interest to us in that Mr. Justice Warby confirmed the following:
• Costs budgeting should not be a lengthy and expensive exercise
• When dealing with issues of costs, correspondence should be used in place of skeleton arguments
• Hourly rates and projected hours may need considering when determining an appropriate sum to allow within a specific Phase. Further; such rates and projected hours will need to be tailored to the case before the Court and should be carried out in the same way costs are determined during the Summary Assessment process
• Contingencies should be excluded unless they are more likely to occur than not and; only if they fall outside of the ambit of any other Phase within the Costs Budget
• Counsel’s brief fees should be claimed in the Trial Phase and not the Trial Preparation Phase
• A Costs Budget can be drafted in such a manner as to deal with specific Phases and need not necessarily deal with the entire action but, that the same may subsequently be extended to cover the entirety of the proceedings
• The last agreed or approved Costs Budget will be the starting point when consideration is given as to whether the same should be increased or decreased. CPR 3.18 states the Court will “not depart from such approved or agreed budget unless satisfied that there is good reason to do so”
• Incurred costs are not subject to any Costs Budgeting approval process and will in all likelihood, in the absence of agreement, need to form part of a Detailed Assessment process at the end of the claim
• Since incurred costs do not form part of the Costs Budgeting process, the Court may “record it’s comments on those costs” and, in line with PD3E 7.4, “take those costs into account when considering the reasonableness and proportionality of all subsequent costs”
• The test prescribed by CPR 44.3(5) determines what costs are both reasonable and proportionate
• Although the Court is not to be carrying out a Detailed Assessment when allowing sums for various Phases within the Costs Budget; PD3E 7.3 does allow that “in the course of its review the Court may have regard to constituent elements of each total “
• Pursuant to PD3E 7.9; costs incurred in dealing with unexpected interim applications will be treated as additional to approved Costs Budgets
• An early Costs Budgeting process can be initiated by the Court or Parties pursuant to CPR 3.13
The most important aspect of the Judgment confirms, pursuant to PD3E 7.2, that the costs of completing the Precedent H are capped at 1% of the agreed or approved Costs Budget; with a further 2% (unless exceptional) being allowed for carrying out any further costs budgeting/management exercises. The total cap for dealing with the Costs Budgeting process is therefore 3% of the approved/agreed Costs Budget.