Costs Budgeting – latest update to CPR heralds new Precedent T, Budget Variation

Costs Budgeting – latest update to CPR heralds new Precedent T, Budget Variation

Since the inception of the CPR in 1999, there have been many and varied amendments to the Rules, such that pursuant to the Civil Procedure (Amendment No 3) Rules 2020 the latest, 122nd Update to the Practice Direction comes mostly into force on 1 October 2020, with some provisions coming into force earlier on 23 August 2020.

In advance of the same, and most pertinent to the realm of costs, the Ministry of Justice has published an update to CPR 3 “in the interests of helpfulness” and so that the profession can be ready for the changes to budgeting which will come into force on 1 October 2020.

CPR 3 has principally been revised to allow for a new process of “revision and variation of cost budgets on account of significant developments” referred to initially in Rule 3.12(2) which then refers to a new paragraph of Rule 3, creating Rule 3.15A, which states

“Revision and variation of costs budgets on account of significant developments (“variation costs”)

3.15A.-

(1) A party (“the revising party”) must revise its budgeted costs upwards or downwards if significant developments in the litigation warrant such revisions.

(2) Any budgets revised in accordance with paragraph (1) must be submitted promptly by the revising party to the other parties for agreement, and subsequently to the court, in accordance with paragraphs (3) to (5).

(3) The revising party must—

(a) serve particulars of the variation proposed on every other party, using the form prescribed by Practice Direction 3E;

(b) confine the particulars to the additional costs occasioned by the significant development; and

(c) certify, in the form prescribed by Practice Direction 3E, that the additional costs are not included in any previous budgeted costs or variation.

(4) The revising party must submit the particulars of variation promptly to the court, together with the last approved or agreed budget, and with an explanation of the points of difference if they have not been agreed.

(5) The court may approve, vary or disallow the proposed variations, having regard to any significant developments which have occurred since the date when the previous budget was approved or agreed, or may list a further costs management hearing.

(6) Where the court makes an order for variation, it may vary the budget for costs related to that variation which have been incurred prior to the order for variation but after the costs management order.”

There has, of course, always been the provision where there are “a significant developments in the litigation” for a party to revise their budget, however this has always involved in application to the court to vary such budget, accompanied by the proposed revised budget. Upon such hearings, the same have been somewhat convoluted by the necessity for the court to be satisfied as to what phases and to what extent revision is sought in each such phase, in respect of which none of the current precedents provided for such information to be easily displayed.

To this end, therefore, the update provides for the introduction of a new precedent, Precedent T, which more cleanly and clearly provides the required information firstly to enable the parties (CPR 3.15A(2)), if possible, to agree the revisions for approval by the court or, if such cannot be agreed, for the adjudication of the court. A copy of the new Precedent T can be found here.

Precedent T, as can be seen, is comprised of two pages, the first being a summary sheet detailing the current approved budget, the proposed variation (either + or -) and thus the total proposed costs after variation, in each phase, and the second being the particulars of each proposed variation, by way of justification.

Assuming that the parties can agree such variations, from the revised, additional rule it would appear to be implied that such would simply be approved by the court without more ado. However it is equally apparent that where agreement cannot be reached, the court may consider such variations either on paper and either approve, vary or disallow the proposed variations or, in the alternative, list the matter for a further costs management hearing; CPR 3.15A(5).

It is hoped that this latest amendment to the Rules will enable the variation of parties costs budgets to be undertaken in a more efficient and less time-consuming manner, which will not significantly increase the overall level of costs devoted to the budgeting process (as is, in many instances currently, the case) and accordingly the revised and updated process has much promise.

The process of cost budgeting, nonetheless, can remain a minefield for the unwary and in this regard we can assist your practice with all aspects thereof. Find out how, or to make an enquiry, please contact us either by email (costs@sphcosts.com) or by telephone ((01772) 435550).

Disclaimer: The content of this blog is provided on a complimentary basis. The opinions expressed do not necessarily represent those of SPH Costing Services Ltd. The content of the blog is not intended to and does not constitute legal advice on any specific matter or generally. Individual Legal advice should be sought from a Lawyer in relation to any specific case or issue. SPH Costing Services Ltd does not accept any responsibility for the correctness of this blog or for any consequences of relying on it.