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Costs: No U-Turns on the Road to Costs Management

From 1 April 2013 costs budgets and costs management orders are introduced for most multi-track claims. They place a limit on the amount of recoverable costs and are part of a raft of reforms introduced following the report of Sir Rupert Jackson on the cost of litigation.

A key question is likely to be whether an approved costs budget can be amended to rectify errors. In Murray & Anr v Neil Dowlman Architecture Ltd [2013] EWHC 872 (TCC) the court (Coulson J) held that it will usually be ‘extremely difficult’ to do so, even where the other party has not been misled or suffered prejudice. The court would be slow to revise approved budgets merely because, after the event, it is said that particular items had been omitted or under-valued. To hold otherwise would make a nonsense of the whole costs management exercise.

Although the application related to the pre-1 April 2013 costs pilot scheme in the TCC, the court held that the new provisions in CPR 3.12-3.18 and 3EPD.1 were ‘very similar’, heralding a tough approach to future applications.

C’s application for relief from sanction was held to be inappropriate because there was no sanction from which C required relief (detailed assessment being months or years away). In any event, changes to CPR r.3.9(1) meant the court would be less ready to grant relief from sanctions for procedural defaults.
However, C’s application to rectify was allowed on the narrow point that Form HB (the then prescribed costs budget form) included a series of tick-boxes which (if ticked) permitted a party to exclude specific items from the costs budget. C had not used the form and so had failed to notice there was a box to be ticked. This feature is cured by new form Precedent H which automatically excludes from the costs budget VAT (if applicable), court fees, success fees and ATE premiums (if applicable).

Derek Kerr / 1st May 2013


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