COST BUDGETING: THE PARTIES MUST KNOW WHERE THEY STAND: LEAVING HOURLY RATES “OPEN” IS INAPPROPRIATE
I am grateful Sam Hayman from Bolt Burdon Kemp to for sending me a copy of the decision of Mr Justice Jacobs in Yirenki -v- Ministry of Defence  EWHC 3102 (QB). The judge allowed an appeal against a cost budgeting order that left hourly rates “open” to be debated on detailed assessment. The judgment is clear that this is an inappropriate approach to budgeting and contained a number of vices.
“The ultimate aim of the cost budgeting exercise is that both the receiving and the paying party should know where they stand: they know the figure is fixed and cannot be changed absent good reason”
- It is inappropriate, when costs budgeting, to leave the hourly rates “open” as an issue for detailed assessment.
- The appropriate approach is to budget a figure for each phase and leave it to the party involved to work within that budget.
A Master had made a costs order in a personal injury case. The order made contained paragraph that stated:-
“Save that the parties reserve their positions as to incurred costs and as to hourly rates, the Master approved the budgets subject to the proviso that it remains open to them to dispute those matters (and to that extent the figure for each phase) at a detailed assessment, the claimant’s cost budget is approved in the total sum of £206,669.72 and the defendant’s cost budget is approved in the total sum of £100,639.”
BOTH PARTIES SUPPORTED THE APPEAL
The claimant appealed. It was argued that the Master should not have approved a budget subject to the possibility of debate of hourly rates (or anything else) at a later stage. The defendant supported the claimant’s appeal.