Cap on costs budgeting process
Claimant serves costs budget totalling £100,000. Defendant serves costs budget totalling £20,000. Defendant’s budget is, unsurprisingly, not disputed and approved by the court. Claimant’s budget is, unsurprisingly, hotly disputed and is dealt with at a costs management hearing.
PD 3E para.2.2 states:
“Save in exceptional circumstances –
(1) the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% of the approved budget;
(2) All other recoverable costs of the budgeting and costs management process shall not exceed 2% of the approved budget.”
The Claimant’s budget is reduced by the court to £60,000.
Each side’s costs of the contested costs management hearing appears to be limited to 2% of their own approved budget (rather than the budget of the other side).
So, the Claimant gets a maximum of £1,200 and the Defendant a maximum of £400, despite the fact the only reason for the costs management hearing is because the Claimant submitted an inflated budget. Fair? And is £400 even going to begin to cover the Defendant’s costs?
This has the appearance of not being very well thought through.