We use cookies to improve our site and your experience. By continuing to browse on this website you accept the use of cookies. Read more...

Costs budgeting vs detailed assessment – Merrix v Heart of England NHSFT [2017] EWHC 346 (QB)

Where the Court has set a costs budget, can a successful party expect to recover the costs set out in that budget? Following the decision in Merrix, the answer seems to be yes – unless there is a good reason to depart from it

Since costs budgeting was introduced following the Jackson report, there has been a perceived tension between CPR 3, on costs budgeting (a prospective exercise, intended to be carried out at an early stage of the litigation to set the level of allowable costs for each phase) and CPR 47, on detailed assessment (an entirely retrospective exercise, looking at costs already incurred to ask if they were reasonably and proportionately incurred). Receiving parties have argued, at detailed assessment, that where they have spent less than they had been allowed for a particular phase, they should be able to recover the lot, without being obliged to justify the expenditure line by line. Paying parties, by contrast, have pointed out that costs budgeting is specifically not a detailed assessment exercise, so if amounts were allowed at detailed assessment simply because they were in the budget, the detailed assessment provisions would become a dead letter.

First instance decisions have gone either way. In Merrix, an appeal from a decision of Birmingham’s Regional Costs Judge, the High Court reviewed the authorities (such as they are) in an attempt to set out a unified approach. Carr J decided, at [92], that:

“where a costs management order has been made, when assessing costs on the standard basis, the costs judge will not depart from the receiving party's last approved or agreed budget unless satisfied that there is good reason to do so. This applies as much where the receiving party claims a sum equal to or less than the sums budgeted as where the receiving party seeks to recover more than the sums budgeted”.

She also commented that the issue seems ripe for appeal, with an appeal on a similar point apparently already listed in the Court of Appeal in May. Merrix may not be the last word.

Ross Beaton / 22nd Mar 2017


The information and any commentary on the law contained on this web site is provided free of charge for information purposes only. Every reasonable effort is made to make the information and commentary accurate and up to date, but no responsibility for its accuracy and correctness, or for any consequences of relying on it, is assumed by any member of Chambers. The information and commentary does not, and is not intended to, amount to legal advice to any person on a specific case or matter. You are strongly advised to obtain specific, personal advice from a lawyer about your case or matter and not to rely on the information or comments on this site. No responsibility is accepted for the content or accuracy of linked sites.

Download as PDF

Back to News