Legal Cost Specialists

costs budgeting

Costs budgets when costs on the indemnity basis

By on May 26, 2021 | 0 comments

When is it preferable to have a costs order on the standard basis rather than on the indemnity basis?  Potentially, where a costs management order has been made. CPR 3.18(b) provides:  “In any case where a costs management order has been made, when assessing costs on the standard basis, the court will not depart from such approved or agreed budgeted costs unless satisfied that there is good reason to do so” Although the decision in Barts Health NHS Trust v Salmon [2019] took a different approach, the generally accepted position is that, all other things being equal, a receiving party will recover their costs up to the amount of the last approved budget. Therefore, for example, if a budget (in respect of estimated costs) is approved at £100,000 to take a matter to trial, and the case settles at trial, if the receiving party has incurred costs of £95,000 they should expect to recover those costs in full.  The exception is where the paying party can identify a “good reason” to depart from the approved budget.  However, crucially, this only applies to an assessment on the standard basis. If costs are payable on the indemnity basis, CPR 3.18(b) has no application.  On detailed assessment the court will assess the costs on a line-by-line basis applying just the test of whether the court considers the costs claimed to be reasonable.  The receiving party will benefit from the fact that any doubt will be resolved in their favour and proportionality will not apply.  However, the benefit of the doubt conferred by CPR 3.18(b) will not apply if they are within budget.  In the above example, if a court assesses the reasonable costs as being £90,000, that is all they will allow, notwithstanding the approved budget of £100,000. From the paying party’s perspective, there is no “good reason” hurdle to overcome. It is therefore perfectly possible for a receiving party to find themselves at a disadvantage with an indemnity basis costs order in their favour rather than a standard basis one.  Parties might wish to be careful before they push too eagerly for a costs order on the indemnity...

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Requirement to serve costs estimate

By on Feb 1, 2021 | 0 comments

PD 28 para.6.1(4) reads: “Attention is drawn to the Costs Practice Direction, Section 6, which requires a costs estimate to be filed and served at the same time as the pre-trial check list is filed.” Naturally, it is therefore sensible to refer to the Costs Practice Direction to see exactly what it has to say on the subject of costs estimates. Unfortunately, the Costs Practice Direction ceased to exist in 2013 when the Jackson costs reforms were introduced. The closest equivalent to Section 6 of the Costs Practice Direction is now found at PD 44 paras.3.1 to 3.7.  However, that deals with formal costs budgets rather than the earlier requirements relating to costs estimates. I wonder how many more years will pass before the CPR is updated to remove erroneous references to the Costs Practice...

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Costs budgets and experts’ trial fees

By on Nov 13, 2019 | 2 comments

The new Guidance Notes on Precedent H, following the update to PD3E para.7.4 (which came into force on 1 October 2019), moves trial brief fees from the Trial phase to the Trial Preparation phase.  This is presumably on the basis that the brief will be delivered before the trial commences and liability for the brief fee will often be treated (at least as between the solicitor and counsel) as being payable upon delivery. Strangely, the Guidance Notes give no indication as to what phase any experts’ fees for attending trial should be placed into.  Traditionally, these fees have been placed in the Trial phase.  However, the majority of experts will usually expect payment of their fee, or at least a discounted payment, where they have been booked for the trial even if the matter settles early.  Should experts’ fees for attendance at trial therefore not also be placed in the Trial Preparation...

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New Guidance Notes on Precedent H

By on Oct 18, 2019 | 0 comments

The new Guidance Notes on Precedent H have now been published following the update to PD3E para.7.4 (which came into force on 1 October 2019) which now defines budgeted and incurred costs as: “a. Incurred costs are all costs incurred up to and including the date of the first costs management order, unless otherwise ordered. b. Budgeted costs are all costs to be incurred after the date of the first costs management order.” However, there are other significant amendments to the Guidance Notes.  The most important being that trial brief fees are now to be placed in the “Trial preparation” phase rather than the “Trial” phase, although refreshers remain in the “Trial” phase. This amendment is likely to trip up many.  It will be interesting to see how lenient the courts are where the brief fee is placed in the wrong...

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