COSTS BUDGETING – ROCK & ROLL BACK AGAIN

COSTS BUDGETING – ROCK & ROLL BACK AGAIN

There is nothing like a dash of celebrity Stardust to act as a reminder of legal principles and the recent headlines about Sir Cliff Richard’s claim against the BBC has brought attention to the costs budgeting regime.

Just like the case of that other rock legend Brian May, the question of proportionality is very much to the fore, although the context is quite different. With Brian May, the issue arose upon assessment of costs at the conclusion of the matter, whereas for Sir Cliff it has arisen at the CMC stage of the proceedings.

The headlines focus on the level of incurred costs in the Pre-Action phase of his budget which are £525,437. However, as practitioners will be aware but the general public may not, that will not be the extent of the incurred costs to this point with other work having been allocated to different phases. It is reported that incurred costs in the CMC stage for example are £24,348 and that the total incurred costs are in the order of £900,000.

It is of some interest of course that this case comes shortly after introduction of changes to the rules in relation to budgeting, the aim of which was to shift the focus on to the estimated, or future, costs. Nevertheless, the headlines serve to remind us all of the equally important changes made in relation to the approach on incurred costs. We have previously blogged about the rule changes here (our blog 24 March 2017) However, we think it is worth just highlighting again the additional paragraph inserted at CPR 3.15 (4):

“Whether or not the court makes a costs management order, it may record on the face of any case management order any comments it has about the incurred costs which are to be taken into account in any subsequent assessment proceedings”.

Which provision supplemented PD3 E 7.4:

“As part of the costs management process the court may not approve costs incurred before the date of any costs management hearing. The court may, however, record its comments on those costs and will take those costs into account when considering the reasonableness and proportionality of all budgeted costs.”

And the importance of which is highlighted at CPR 3.18 (c) which provides that when assessing costs on the standard basis the Court will:

“take into account any comments made pursuant to rule 3.15(4) or paragraph 7.4 of Practice Direction 3E and recorded on the face of the order.”

It is also some interest that the BBC’s issues with the budget have not been limited to the extremely concise wording which would be required in any formal Precedent R, but rather have been the subject of a skeleton argument. It would also appear that there is some discussion as to whether it was appropriate to file 2 budgets in anticipation of there being a split trial rather than a single budget covering the whole action.

No doubt we shall learn of further developments in due course, but in the meantime practitioners are urged to ensure that full and proper consideration is given to an opponent’s budget, both in relation to incurred and future costs. As ever, seeking the assistance of experienced Costs Lawyers will inevitably pay great dividends.