During the Costs and Management Conference (CCMC), the Court will typically make a costs management order.
Such an order is imposed unless the judge is satisfied that the litigation can be conducted justly and at proportionate cost. In the order, the Court will:
- Record the extent to which any incurred or budgeted costs are agreed between the parties; and
- In respect of the budgeted costs that are not agreed, record the Court’s approval after making appropriate revisions.
The Civil Procedure Rules Part 3.15(8) states that:
“A costs management order concerns the totals allowed for each phase of the budget, and while the underlying detail in the budget for each phase used by the party to calculate the totals claimed is provided for reference purposes to assist the court in fixing a budget, it is not the role of the court in the costs management hearing to fix or approve the hourly rates claimed in the budget.”
The Court will thereafter control the parties’ budgets in respect of recoverable costs. If at trial one party is ordered to pay another party’s costs to be assessed by the Court on the standard (usual) basis, the Court will not depart from the receiving party’s last approved or agreed budget unless satisfied there is a good reason for doing so (Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] EWCA Civ 792), which is to safeguard against potential injustice in detailed assessments at a later stage.
In the case of Merrix v Heart of England NHS Foundation Trust [2017] 1 Costs LR 91, the Court stated that:
‘[t]he fact that hourly rates at the detailed assessment stage may be different to those used for the budget may be a good reason for allowing less, or more, than some of the phase totals in the budget’.
However, in the case of Jallow v Ministry of Defence [2018] EWHC B7, the Court did not take this argument very far and considered that the costs budget, which had been approved/agreed, would not be relevant to the subsequent detailed assessment because:
1. The solicitor who had conducted the case for the first two years left the firm and the case had to be reallocated to a more experienced solicitor with higher hourly rates. The approved phased costs budget total could be used by fee earners at differing hourly rates as the party considered to be appropriate. Otherwise, application to amend the underlying details to the costs budget would be required, which will incur further costs; and
2. Even if the work is all carried out at ostensibly unreasonable hourly rates, if it comes within the budget that has been set, it will turn individually ‘unreasonable’ items into a reasonable proportionate sum overall.
Comments
Notwithstanding these rules having been in place for some time, it remains uncertain as to what amounts to a good reason. In reality, however, it is safer to ensure that the budget reflects a likely estimate of future costs as opposed to a hopeful one so as to not need such a good reason for departing from the budget.
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