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Would you side step costs budgeting if given the chance? A look at the pilot running in the Leeds Chancery Division

The Chancery Division in Leeds is running a pilot for the next six months to enable parties to limit the extent of costs budgeting in any particular case.

The justification for the pilot is to avoid “the expense and inconvenience of cost management and likewise the need to have a Costs and Case Management Conference“. If it proves to be popular and save precious court resources, we can expect this to be adopted more widely.

The pilot works as follows: if when filing their directions questionnaires a) the parties express a wish to limit the extent of cost budgeting, and b) the parties also file agreed case management directions, the parties may file along with their directions questionnaires a simple form of cost budget (being page 1 of Precedent H whether or not a cost budget exceeds £25,000).

If the court considers the cost budgets to be reasonable and proportionate, an order may be made dispensing with costs management in accordance with CPR 3.15(2) and CPR Practice Direction (PD) 3E 1B.

The court will also then consider whether the agreed directions can be approved.

However, if the parties are unable to agree directions or do not wish to limit the extent of costs management, a costs and case management hearing will be listed. For cost budgets in excess of £25,000, a fully completed Precedent H will be required.

It remains to be seen what the take up for this will be given that it is questionable whether, save for in the clearest of cases, any expense to the parties will be saved:

  • In order for a solicitor to produce even the simple form of costs budget (that is, page 1 of precedent H), the detailed calculations which lead to the total figure for each phase need to be undertaken in any event.
  • Given that the client is very unlikely to be able to recover more from the other side than is in the costs budget, a solicitor is well advised to have provided the client with at least some idea as to how the figures have been calculated, to try and reduce the scope for challenges to the amounts charged on a solicitor/client basis that exceed that budget.
  • Equally, save for in the very clearest of cases, it is likely that parties will need to exchange the detailed calculations for each phase in order to be able to come to an agreement on the reasonableness of the amounts being put forward.

The other unknown is the extent to which the pilot will be embraced by parties who have not agreed each other’s costs budgets in advance of the date for filing the directions questionnaire.

  • While it is not necessary for the parties to have agreed each other’s cost budgets in order to put themselves on the pilot (they only have to have agreed case management directions), it is likely that the parties will only agree to limit costs budgeting where they have agreed each other’s budgets. This is because any dispute as to whether the amounts in each phase are reasonable and proportionate will have to be resolved by the judge on the papers with extremely limited information.
  • If the judge decides that the amounts claimed in a disputed costs budget are not, on the face of it, reasonable and proportionate, presumably the consequence will be that a costs management order will be made, the parties will need to file and serve a full Precedent H and the matter will be listed for a costs management hearing. Of course, this is not disastrous for the party whose budget the judge is concerned about, but it is never a comfortable position to be going into a costs management hearing with that as the starting position.
  •  However, if the judge decides that the amounts claimed on a disputed costs budget are reasonable and proportionate, this is presumably the end of it for the challenging party, short of appealing the order. It is therefore a brave solicitor who advises his or her client that this is a sensible way to deal with a disputed budget.

If the parties do agree each other’s budgets, the court is in any event cut out of the costs budgeting process by the wording of CPR 3.15(2)(b), which appears to only give the court the jurisdiction to approve or revise budgets or parts of budgets which are not agreed between the parties. It is therefore far from clear whether the pilot will add anything to the current rules.

 

39 Essex Chambers Katharine Scott

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