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Costs management changes in the 83rd CPR update: increased opportunity for agreement

Since costs management was introduced in April 2013, one of its key difficulties has been the strain that it has placed on the court’s resources. In part, this is due to often hotly contested arguments over the party’s respective budgets. The pressure became so great in the RCJ that cost budgeting in clinical negligence matters was temporarily suspended in the latter half of 2015, to allow the court to deal with the backlog.

This fundamental problem with costs management appears to have been at the forefront of the minds of those drafting the 83rd update to the CPR, which came into force on 6 April 2016. Of those changes to the rules which affect costs management, the focus now appears to be on encouraging the parties to reach agreement in so far as is possible, and reducing the level of intervention required from the court.

The amendments to the rules facilitate negotiation and/or agreement in a number of ways. Firstly, the revised CPR 3.13(1)(b) increases the number of days before the CMC for the filing of costs budgets from seven days to 21 days for all cases valued on the claim form at £50k or higher.

Secondly, the parties will now be required, by virtue of CPR 3.13(2), to file an agreed budget discussion report no less than seven days prior to the CMC. This report must confirm the figures for each agreed phase, the figures for each phase not agreed and a summary of the disputes raised against the budget. A new Precedent R is provided reflecting these requirements, which the parties are “encouraged” to use.

The revisions to the rules have, therefore, attempted to provide the parties with the tools to compromise their budgets and have extended the time in which to reach an agreement. The increased time limit is a particularly welcome change, since the seven day limit under the old rules often had the effect that the parties’ first discussions took place in the moments before the hearing, leaving little opportunity to consider objections or put forward proposals. This also provided a convenient excuse for some parties to avoid any negotiation, particularly where it was considered that the court was likely to be particularly generous or harsh (depending on the point of view). It is hoped that this approach will become increasingly less common as the new rules take effect.

Whether the 83rd update has the effect of decreasing the load on district judges and masters, and thus reducing waiting times for CMCs, is yet to be seen. However, all practitioners would be well advised to take the budget negotiation process seriously. It is easy to anticipate that in future the court will take a dim view of a failure to attempt to agree budgets, and may well reduce the allocated time for CMCs on the assumption that at least some of the issues arising will have been dealt with between the parties prior to the hearing.

On those occasions where the procedure is correctly followed but the entire budget(s) remains in dispute, the parties would be well advised to complete the budget discussion report carefully and fully, to avoid any potential sanction from the court. While no specific sanctions are laid down by the rules or practice directions regarding a failure to discuss the budgets, it is easy to imagine a dissatisfied judge taking a very hard line with the parties’ budgets in those circumstances.

Association of Costs Lawyers David Wright

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