CHANGES TO THE RULES IN RELATION TO THE COSTS OF COSTS MANAGEMENT: COMPARE AND CONTRAST

There has been a change to the rules governing the costs of costs management. This was introduced by the 93rd Update on Practice Direction Amendments.  The Ministry of Justice have confirmed that these have come into force. *

THE NEW RULE: PRACTICE DIRECTION 3E- COSTS MANAGEMENT

“7.2 Save in exceptional circumstances—

(a) the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% of the total of the incurred costs (as agreed or allowed on assessment) and the budgeted costs (agreed or approved); and

(b) all other recoverable costs of the budgeting and costs management process shall not exceed 2% of the total of the incurred costs (as agreed or allowed on assessment) and the budgeted (agreed or approved) costs.

THE OLD RULE

“7.2 Save in exceptional circumstances—

(a) the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% or the approved or agreed budget

(b) all other recoverable costs of the budgeting and costs management process shall not exceed 2% of the approved or agreed budget.”

IN OTHER WORDS

The  costs  of budgeting are now linked to the incurred costs  eventually agreed or allowed on assessment and not the incurred costs that are budgeted.  Incurred costs cannot be budgeted and there can be a major difference between the costs in the budget and the costs eventually allowed on assessment.

 

  • They appear to have come into force on the 22nd November 2017. That is the date after they were signed by the Minister.