I am grateful to Jodie Davis from Irwin Mitchell for sending me a note of a judgment given in a case relating to non-service of the Budget discussion report.  The note is reproduced in full below.   There is an interesting issue as to the approach the court takes when there is no express sanctions set out in the rules.



The sanction for non or late filing of a costs budget are well know. In relation to filing the budget discussion report the rules, at 3.13, state:

“(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.”

There is no express sanction for non-service or late service of the budget discussion report.


“In the case of Alexandra Handy v Dr Mohammed Azhar Aslam & Linia Limited [2021], Deputy District Judge O’Connell refused the Second Defendant permission to challenge the Claimant’s Cost Budget at the Costs and Case  Management Conference on 3 December 2021, on the basis that they had failed to file and serve a Precedent R budget discussion report.

The Case

The Claimant sought damages arising from an alleged negligently performed lip augmentation, which took place in 2016.  A Case and Costs Management Conference took place on 3 December 2022.  Following the Judge’s Order on directions, DDJ O’Connell turned to the issue of Costs Budgeting, specifically the Second Claimant’s failure to file a budget discussion report pursuant to CPR 3.13(2) and paragraph 11 of Practice Direction 3E.

Procedural Matters

The Claimant filed her Costs Budget on 10 November 2021, which totalled the sum of £272,764.71.  An updated Costs Budget was filed on 26 November 2021, in the revised sum of £298,208.90.  At the CCMC, Miss Badham, Counsel for the Claimant, submitted that given the purpose of the report is to set out the areas of disagreement and noting the Second Defendant’s failure to produce such a report, invited DDJ O’Connell to exercise the Court’s discretion that it would not hear any contest for the Claimant’s costs budget at the hearing.
The Second Defendant’s position was that a budget discussion report had not been filed in relation to original Costs Budget because the Claimant had indicated her intention to file and serve an updated Costs Budget 14 days prior to the CCMC.  The Second Defendant went on to detail that a budget discussion report had not been filed in respect of the updated Costs Budget as there had been insufficient time to do so.
In response, Miss Badham referred DDJ Connell to page 188 in the White Book and the guidance note at 3.12.5 which addresses the fact that parties can, in effect, update incurred phases up to the date of the CCMC.  The obligation is to have filed a Precedent H which, of course, should be as informed and accurate as possible by 21 days prior to the first CMC.  In Miss Badham’s submission, the Claimant had complied with that obligation. Whilst the Claimant had indicated that it was likely that that budget would be updated, a budget discussion report would no doubt still have been helpful because it would take issues as to proportionality, disbursements etc. even if those representations then had to be tweaked at the hearing.
Miss Badham’s submission was that the Second Defendant had indicated their intention to settle the matter prior to the CCMC and that the filing of the updated Costs Budget had been delayed for as long as possible in order to keep costs to a minimum.  When it became apparent that the case would not settle, an updated Costs Budget was filed and served.  The Second Defendant was provided with the document 7 days prior to the hearing, providing ample opportunity for a response and that there was no good reason why a budget discussion report was not before the Court.  Miss Badham reiterated her opinion that in the absence of a budget discussion report, the Claimant’s Costs Budget should be viewed as unchallenged.

The Judgment

DDJ O’Connell stated as follows “I failed to understand why the second defendant could not have put in their discussion report, even fairly late stage, based on the original one, on the original bill that was on the original costs budget which had been served upon her, and then made further arguments today but I have not been forewarned about anything and it would appear, also, that the claimant has been not forewarned about any of the objections, that I am aware of.  I take the view that if there is no objection, no discussion report has been filed; that I am going to allow that budget as it has now been served in the sum of £298,208.90”.


In the absence of a budget discussion report and without a good or compelling reason to mitigate the failure to file, the opposing parties Costs Budget could be viewed as unchallenged and allowed as claimed. The Court commented that it was not unusual for parties to file updated or amended Costs Budgets just before a hearing. This case is a warning to parties that the Court can exercise its’ discretion to impose sanction where a Precedent R has not been filed or served.”



I have some personal experience of similar issues.  The judicial approach appears to vary.


  • In one case a Precedent R was served late. The judge decided that relief from sanctions was required if a party was to challenge the budget.  Relief from sanctions was later refused on the grounds that it was open to the paying part to challenge the figures on assessment in any event.
  • In another a Precedent R was not served at all in relation to the relevant budget.  The judge’s view was that she still had a duty to ensure costs were reasonable and proportional.  She budgeted the case by way of direct discussions with the claimant about the budget, however she did not allow the defendant to make any comments or observations about the budget given the failure to file the budget discussion report.