Legal Cost Specialists

What to include in a costs budget

I have seen a number of Precedent H costs budgets which include, within the ADR/Settlement phase, the anticipated court fee for the Consent Order recording the settlement agreement. Is this correct?

Costs budgets are predicated on the basis that the matter will proceed to a final trial. That is why there is a Trial phase. The total figure for the budget therefore reflects the anticipated costs that will be incurred if the matter does not settle and proceeds all the way to trial. Given that is clearly correct, surely the court fee for a Consent Order should not be included.

On the other hand, the Guidance Notes on Precedent H include, under examples of the work to be included within the Settlement phase:

“Drafting settlement agreement or Tomlin order”

That would therefore suggest that any corresponding court fee should indeed be included.

What happens then if a budget is approved/agreed that includes the court fee but the matter does not settle before trial? On detailed assessment, does the fact that one of the assumptions on which the budget was prepared (that the matter would settle within the ADR/Settlement phase) did not occur mean that there is a “good reason” to depart downwards from the budget? If so, to what extent?

For example, a claimant’s budget is prepared estimating, for the ADR/Settlement phase, £2,000 profit costs and £100 consent order fee. The budget is approved as drafted. Negotiations are unsuccessful and so no settlement agreement or Tomlin order is drafted and no consent order is filed. The claim succeeds at trial. The claimant serves a bill claiming exactly £2,100 profit costs. The court’s approval of the budget will “relate only to the total figures for budgeted costs of each phase of the proceedings” and the approved figure would have been a global total of £2,100, which the receiving party has not exceeded.

As per HHJ Dight CBE in Barts Health NHS Trust v Salmon [2019]:

“it seems to me that the fact that the phase of the budget relating to experts was … substantially incomplete was capable of being a good reason, and it would have been open to the Master on that basis to consider whether to reduce the figure”

If this applies in this situation, by how much should the approved budget be reduced? It is unlikely anyone will lose too much sleep over the £100 court fee, but what about the additional costs? Will there always be a “good reason” to depart downwards from the ADR/Settlement phase if a matter proceeds to trial?

7 thoughts on “What to include in a costs budget”

  1. The parties have to prepare precedent H to include all known possibilities but if they do not occur they cannot be claimed in the final bill.

  2. Charles Wheatcroft

    That’s not strictly true Judy. The current Precedent H guidance says this:

    “4. This table identifies where within the budget form the various items of work, in so far as they are required by the circumstances of your case, should be included.”

    This bit is the key “in so far as they are required by the circumstances of your case”

    The parties are meant to agree the most proportionate path of proceedings and document the cost of each step of that path in their budgets. The judge will have the final say whether there is agreement or not.

    As long as you follow the planned path you should stay within your budget. If the path diverts you apply to amend the budget or you deal with costs outside the budget with interlocutory orders or by claiming in an assessment at the end of the matter.

    It’s not rocket science but theory is very different to the cluster fudge in which we currently find ourselves.

    I would be interested in the cost of cases since budgeting. I would guess that large cases have reduced in cost whereas small to medium cases have increased considerably. The result would probably be that those who could ill-afford litigation find that it is more out of reach than it was previously.

    Of course, the rising cost might mean that more cases are settled through ADR which would be a success, right?

    1. Hi Charlie

      Your reply to my simplification of the rule is misconceived. You ahve to look at the intention of the rule not just its wording. You appear to assume that the purpose of litigation is to get to court. It isn’t. The purpose of any claim is to reach a settlement or compromise. No-one plans to go to court, unless they are quite mad. You simply have to go to curt if you cannot reach a agreement. Therefore, you will always allow for a compromise agreement or consent order in Precedent H. Equally clearly, in my humble experience, teh court will not allow you to claim a court fee you did not pay.

  3. acue tothejobcentre

    This is a moot point, I bet the NHS are being told by their costs providers that they will save millions with this …..

  4. Lowly Draftsman

    My suggested solution would be for CPR to be amended to exclude Court fees from budgeting entirely. With Court fee remission being something of a lottery, it already gives firms a potential windfall since future Court fees always need to be budgeted for just in case the Claimant returns to work (for example) and no longer qualifies for fee remission.

  5. Court fees are excluded in the Precedent H in the PD to 47. They are not excluded in the Precedent H in PD3E to Part 3. Judges are usually happy to budget with or without them once that is pointed out. It makes more sense to leave them out given that they are unavoidable and not therefore part of any proportionality test a la West & Demouilpied v NHS.

  6. Pingback: COSTS BUDGETING UPDATE | Kerry Underwood

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