As of the 6th of April 2016, important new rules affecting costs budgeting come into force.
Amended rule 3.12(1) removes the need for costs budgeting where claims are made “by or on behalf of” a child and so will read in material part:
‘This Section and Practice Direction 3E apply to all Part 7 multi-track cases, except-
(c) where in proceedings commenced on or after 6th April 2016 a claim is made by or on behalf of a person under the age of 18 (a child) (and on a child reaching majority this exception will continue to apply unless the court otherwise orders); or
(d) where the proceeding are the subject of fixed costs or scale costs; or
(e) the court otherwise orders.’
‘(1) Unless the court otherwise orders, all parties except litigants in person must file and exchange budgets—
(a) where the stated value of the claim on the claim form is less than £50,000, with their directions questionnaires; or
(b) in any other case, not later than 21 days before the first case management conference.
(2) In the event that a party files and exchanges a budget under paragraph (1), all other parties, not being litigants in person, must file an agreed budget discussion report no later than 7 days before the first case management conference’
These rules introduce new dates for compliance with the filing and exchanging of costs budgets. These rules speak for themselves (though see below as to what the budget discussion report must include), but practitioners ought to make a careful note of them and avoid the need to apply for relief. The sanction in rule 3.14 does not appear to have been altered.
The new paragraph 2(b) will provide that ‘In cases where the Claimant has a limited or severely impaired life expectation (5 years or less remaining) the court will ordinarily disapply cost management under Section II of Part 3.’
The new paragraph 6(b) will provide that ‘Parties must follow the Precedent H Guidance Note in all respects.’ Paragraph 1 of which (echoing the new paragraph 6(c) of the PD) notes that ‘In cases where a party’s budgeted costs do not exceed £25,000 or the value of the claim as stated on the claim form is less than £50,000, the parties must only use the first page of Precedent H.’ The first part of this rule is nothing new, but the extension to costs budgets under £50,000 will remove the need for lengthy costs budget documents in many cases. I do not anticipate that the costs budgeting assessment itself will be altered drastically in this respect. I have often felt that the need for anything more than the first page of the Precedent H is superfluous (save in larger claims) and this will hopefully serve to remove some of the burden of costs budgeting. Practitioners are advised to note the use of the mandatory “must”.
Paragraph 2 of the Guidance Note provides that ‘Save in exceptional circumstances, the parties are not expected to lodge any documents other than Precedent H and the budget discussion report. Both are available in Excel format on the MOJ website with PD 3E. If the Excel format precedent on the MOJ website is used, the calculation on page one will calculate the totals automatically and the phase totals are linked to this page also.’
The Precedent H Guidance Note can be found here: https://www.justice.gov.uk/downloads/courts/cpr/precedent-h-guidance-note.pdf.
The new paragraph 6A will provide that the budget discussion report required by rule 3.13(2) must set out—
‘(a) those figures which are agreed for each phase;
(b) those figures which are not agreed for each phase; and
(c) a brief summary of the grounds of dispute.’
Note also that “The parties are encouraged to use the Precedent R Budget Discussion Report annexed to this Practice Direction”. So, where, in claims up to £50,000, work on cost budgeting has been removed, it is essentially replaced by the budget discussion report (which will look a lot like points of dispute under Part 47). With one hand they giveth…
The new paragraph 7.10 will provide that ‘The making of a costs management order under rule 3.15 concerns the totals allowed for each phase of the budget. It is not the role of the court in the cost management hearing to fix or approve the hourly rates claimed in the budget. The underlying detail in the budget for each phase used by the party to calculate the totals claimed is provided for reference purposes only to assist the court in fixing a budget.’
Again, this provision does not materially alter the present assessment process. Rather, it codifies the way in which courts should (and most already do) approach costs budgeting assessments.
If you have any queries in relation to an issue raised by these amendments, please do not hesitate to contact me in chambers.
Bernard Pressman / 4th Mar 2016
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