The Civil Procedure Rules (CPR) are being updated for the 122nd time, with the changes to the cost budgeting rules coming into force on 1st October 2020.
Practice Direction 3E, which deals with costs budgeting, will be reworked and as such, it’s important for firms to revise the proposed changes and integrate them with their costs budgeting and costs management processes.
If you wish to discuss a query relating to the Civil Procedure Rules update, please contact our team of legal costs experts on 03300 945 100.
What does the CPR update include?
The main point to consider is the introduction of a new process for updating cost budgets, following the initial Costs Management Order. However, there are also clarifications regarding the documentation that is to be lodged with the Court during the cost budgeting process.
Documents to be Lodged for Costs Budgeting
Other than in exceptional circumstances, or where the Court has otherwise ordered, the only documents to be lodged going forwards are:
- Precedent H
- Precedent R
This will effectively streamline the approach to costs budgeting and will save time on administrative tasks. This appears to be a sign that the Courts are moving away from issuing directions for superfluous breakdowns of pre-action costs and composite summaries comparing the budgets of the parties.
In cases where a revision to a previously set budget is required, the only documents required are:
- The new Precedent T document (see below)
- Copies of any previously approved budget
There is no suggestion at this stage that any further underlying documentation will be required.
Variation of an Existing Cost Budget – Precedent T
Variation of costs budgets will now be dealt with via Precedent T. Precedent T contains a brief summary of the costs that have previously been agreed or awarded by the Court, presumably with the intent of allowing the Court to keep an eye on the overall proportionality of the proposed cost budget.
Thereafter, the party seeking to vary their budget will be tasked with providing broad brush figures as to the variations sought; this figure being broken down simply between solicitor’s costs and disbursements. Perhaps most importantly, Precedent T also requires the varying party to submit justification in support of the variations sought.
This is a positive step forward in the cost budgeting process and it is pleasing to see that the process and documentation for variation of cost budgeting has been standardised for the first time.
For more information on how the Precedent T document works, contact our team of legal costs experts today.
NOTE: The statement of truth within the Precedent T differs slightly from that with found in Precedent H, with this requiring a certificate that the costs claimed within the Precedent T document have not been included in any previous budget or variation.
Turning to the underlying rules, it remains the case that a party must revise its budget upwards or downwards where there has been a significant development in the litigation. This in itself is unchanged, although the Practice Direction remains silent on what is considered a significant development, which could undoubtedly lead to requests for clarity.
From my perspective, this will need to be more than an overspend on the budget. Below, I’ve listed some likely areas for budget variation:
- Increase or decrease to the length of trial
- Changes to the number of witnesses
- Changes to the scope of the expert evidence, whether adding or removing experts or changes to the matters to be covered in a report
- Increase or decrease in the scope of disclosure
If the directions are going to need amendment, there’s a good chance that the budget will require variation.
What does the new process look like?
- Precedent T to be prepared and served on the opposing party
- The revising party is required to promptly submit Precedent T with the previous budget to the Court, together with a note of any points of difference between the parties if the variations are not agreed
- The Court will review and can approve, vary or disallow the proposed variations, taking into account the significant developments cited in Precedent T
- The Practice Direction gives the Court power to make these amendments or list the matter for a further Costs Management Conference
- The Court will also now have the power to vary incurred costs solely where those costs relate to the significant development that has necessitated the variation. .
Above all, these are positive changes to the way ongoing costs management and variation of cost budgets are handled. The documentation for variation of cost budgets will now be standardised for the first time since the introduction of the scheme in 2013, and the new Precedent T document is straightforward and uncluttered.
One final point added to the new PD is paragraph 13, which stipulates:
“Any party may apply to the court if it considers that another party is behaving oppressively in seeking to cause the applicant to spend money disproportionately on costs and the court will grant such relief as may be appropriate.”
There is very little commentary or guidance as to when or how this will be applied by the Courts. While this seems rather at odds with the simplified and streamlined process now being adopted for varying budgets, there is an underlying concern that this provision could tie up Court time with satellite litigation through 2021 and beyond.