IMPORTANT CHANGES TO COSTS BUDGETING: THE KEY POINTS
New rules in relation to costs budgeting come into force on the 6th April 2016. They apply to proceedings commenced on or after 6th April 2016.
EXEMPTION FOR CHILDREN
5. In rule 3.12(1), for subparagraph (c), substitute—
“(c) where in proceedings commenced on or after 6th April 2016 a claim is made by or on behalf of a person under the age of 18 (a child) (and on a child reaching majority this exception will continue to apply unless the court otherwise orders);
or (d) where the proceeding are the subject of fixed costs or scale costs; or
(e) the court otherwise orders.”
THIS MAY WELL APPLY TO FATAL ACCIDENT CASES WHERE A CLAIM IS BROUGHT ON BEHALF OF A CHILD, EVEN WHERE THE CHILD IS NOT A PARTY
Note that the rule states “or on behalf” of a child. This may well apply to fatal accident cases where one of the dependants is a child. The action may be brought by the executors, administrators of other dependant, but the claim is brought on behalf of all the dependants.
NORMALLY NO COSTS BUDGETING WHERE THERE IS IMPAIRED LIFE EXPECTANCY
The exemption for children is found in the statutory instrument and is part of the rules. The Practice Direction provides another exemption in that that court will “normally disapply” costs management in a case where the claimant has limited or severely impaired life expectancy. (There does not appear to be a requirement that the impairment is an issue in the litigation. The fact of impaired life expectancy is enough).
“(b) In cases where the Claimant has a limited or severely impaired life expectation (5 years or less remaining) the court will ordinarily disapply cost management under Section II of Part 3.”.
NOTE THESE DATES AND NOTE THEM WELL
These dates are very important.
“3.13.—(1) Unless the court otherwise orders, all parties except litigants in person must file and exchange budgets—
(a) where the stated value of the claim on the claim form is less than £50,000, with their directions questionnaires; or
(b) in any other case, not later than 21 days before the first case management conference.
(2) In the event that a party files and exchanges a budget under paragraph (1), all other parties, not being litigants in person, must file an agreed budget discussion report no later than 7 days before the first case management conference.”.
AMENDMENTS TO THE PRACTICE DIRECTION
There are amendments to Practice Direction 3 – E: Costs Management.
NEW REQUIREMENTS WHERE THE CLAIM IS VALUED BETWEEN £25,000 AND £50,000
“(b) Parties must follow the Precedent H Guidance Note in all respects.
(c) In cases where a party’s budgeted costs do not exceed £25,000 or the value of the claim as stated on the claim form is less than £50,000, the parties must only use the first page of Precedent H.”.
The first of these requirements is as important as the second. The Precedent H Guidance Note must be followed “in all respects”.
THE BUDGET DISCUSSION REPORT
There is a requirement to file a “budget discussion report”
“C. Budget discussion reports 6A.
The budget discussion report required by rule 3.13(2) must set out—
(a) those figures which are agreed for each phase;
(b) those figures which are not agreed for each phase; and
(c) a brief summary of the grounds of dispute.
The parties are encouraged to use the Precedent R Budget Discussion Report annexed to this Practice Direction.”.
NO FIXING OF HOURLY RATES
Cost judges have traditionally refused to set hourly rates at the costs budgeting stage. There is a new Paragraph 3.10 in Practice Direction.
“7.10 The making of a costs management order under rule 3.15 concerns the totals allowed for each phase of the budget. It is not the role of the court in the cost management hearing to fix or approve the hourly rates claimed in the budget. The underlying detail in the budget for each phase used by the party to calculate the totals claimed is provided for reference purposes only to assist the court in fixing a budget.”.
BILL OF COSTS MUST SHOW EACH PHASE
PRACTICE DIRECTION 47 – PROCEDURE FOR ASSESSMENT OF COSTS AND DEFAULT PROVISIONS
1) In paragraph 5.8, after subparagraph (6), insert—
“(7) Where the case commenced on or after 1 April 2013, the bill covers costs for work done both before and after that date and the costs are to be assessed on the standard basis, the bill must be divided into parts so as to distinguish between costs shown as incurred for work done before 1 April 2013 and costs shown as incurred for work done on or after 1 April 2013.
(8) Where a costs management order has been made, the costs are to be assessed on the standard basis and the receiving party’s budget has been agreed by the paying party or approved by the court, the bill must be divided into separate parts so as to distinguish between the costs claimed for each phase of the last approved or agreed budget, and within each such part the bill must distinguish between the costs shown as incurred in the last agreed or approved budget and the costs shown as estimated.
(9) Where a costs management order has been made and the receiving party’s budget has been agreed by the paying party or approved by the court, (a) the costs of initially completing Precedent H and (b) the other costs of the budgeting and costs management process must be set out in separate parts.”.
FINDING THE RULES
The amendment rules are here
The amended Practice Direction is here.
These amendments are summarised more succinctly that I have managed by West Lake Legal Costs in Changes to costs budgeting