Legal Cost Specialists

Costs budgets and detailed assessment

The Court of Appeal has handed down judgment in the important case of Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] EWCA Civ 792 concerning the correct approach to take to detailed assessment where there has been a costs management order made.

The facts of the case are irrelevant. The four points of principle that emerge are:

· Where a costs management order has been made, in relation to future estimated costs, at detailed assessment the court will not depart upwards or downwards from that approved budget without ‘good reason’. The court declined to provide further guidance on what amounted to ‘good reason’ other than to comment: “Costs judges should therefore be expected not to adopt a lax or over-indulgent approach to the need to find ‘good reason’”. This clearly leaves plenty of scope for argument on detailed assessment.

· No such ‘good reason’ is required in relation to incurred costs. Incurred costs are to be the subject of detailed assessment in the usual way, except to the extent to which the court may take into account comments made in relation to incurred costs by the judge when the costs management order was made.

· Importantly, the making of a costs management order does not close-off arguments on assessment as to what global figure would be proportionate for the case. This is because “the costs judge ordinarily will still … ultimately have to look at matters in the round and consider whether the resulting aggregate figure is proportionate”.

· For the purposes of proportionality and the transitional provisions, a claim is “commenced” when the relevant proceedings are issued by the court, not the date they are sent to the court. This is important for those cases issued around 1 April 2013. Unless the court actually issued the claim form before 1 April 2013, the new proportionality test will apply to post-1 April 2013 work.

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