Cost budgeting in multi-track cases
Ivan Goodsell explains when a cost budget is required and how submissions function in multi-track cases.
There are a strict set of rules and regulations for late cost budget submissions and they are clearly laid out for legal professionals to refer to. Yet, there are many cases that still miss the deadline and budgets will be filed or served late. Cases with a pleaded value of £50,000 or less will be filed and exchanged with the directions questionnaires. All other cases should be filed and exchanged 21 days before the first CMC, unless otherwise stated by the appointed court.
What is a multi-track case?
The multi-track usually deals with very complicated cases with a value of £25,000 or more, but it also gives the court the ability to deal with cases in the most suitable way according to the needs of that case. Thus, unlike the other tracks, there is no standard procedure for multi-track cases.
Cost budgets and Precedent H
A cost budget is a document detailing all of the base costs incurred to date and all costs that may occur for the entirety of the case, up to and including the trial. It’s important to note VAT and any additional liabilities must be excluded when it comes to totalling the budget figures. Cost budgets are important in multi-track cases to give a guide on how the finances should be organised and states a budget should be in the form of a Precedent H. These costs will be subsequently divided into incurred and anticipated costs.
Precedent H is the format in which cost budgets are prepared in legal cases. It clearly lays out a party’s legal costs and estimated costs during a trial. The Precedent H is a formal document and therefore has to be presented in a landscape with an easily legible font and clear, concise format.
When a cost budget is not required
In the instance the value of the claim exceeds more than £10m or if the claim has been presented on behalf of someone who is under the age of 18, a cost budget would not be required. This is known as a minor claim. Another instance to note is if the client has limited or a severely impaired life expectancy, this would be five years or less remaining.
As stated above, the court can choose in exceptional circumstances to display budgeting. In this case, a cost budget would also not be necessary. The court has complete discretion to dismiss the exceptions listed above; the only way of guaranteeing an outcome in this area is to seek clarification. The court holds complete power to make orders in relation to cost management, where deemed appropriate.
Submitting a cost budget
A submission of legal costs budget is required if you are a party to a multi-track case.
This type of budget is also referred to as a Precedent H and is necessary to manage the amount of costs which are recoverable. This is by either party once court proceedings have come to an end.
Late submission
If the deadline for submitting a cost budget is missed, the defaulting party should make an application for relief to prevent potential sanctioning. This must be done as soon as they become aware of the lateness. They should also file the cost budgets in conjunction with the aforementioned relief application.
It should be noted there is no guarantee relief will be granted. However, the case of Denton v White [2014] EWCA Civ 906 clearly lays out the three-stage approach of the process when it comes to granting relief:
- Identify and assess the severity or significance of said breach;
- Consider why the default occurred;
- Evaluate all of the circumstances of the case to allow the court to deal with the application. This includes the need (a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, PDs and orders.
If these three variables have been taken into consideration and the judge is satisfied, the relief should be granted.
To highlight the importance of filing a cost budget late, consider the following case: BMCE Bank International Plc v Phoenix Commodities Pvt Ltd & Anor [2018]. This case involved a late filing of a cost budget. Therefore, the high court refused the defendant relief from the sanctions Civil Procedure Rule 3.14, which led to them only being eligible to recover court fees.
The judge found the defendant lacked good reason for the two-week late submission and therefore “consideration of all the circumstances demonstrates that it is not an appropriate case for relief”. The Honourable Mr Justice Bryan found that the application for relief had not been made promptly and therefore rejected it.
Although filing cost budgets can seem straightforward, mistakes such as the detailed account above are inevitable. This, however, will only negatively impact the claimant. What may seem an innocent mistake can have huge financial consequences from a seemingly insignificant oversight. With a late filing, the likelihood of the judge granting leniency is extremely unlikely and significant penalties will still apply.
It is paramount cost budgets are submitted on time to prevent sanctions and additional charges occurring. The guidelines for these are clearly displayed and if any questions or concerns arise, these should be taken up with your solicitor. They are able to duly advise and prevent late submissions, providing you with correct and accurate information.
Ivan Goodsell is a costs draftsman at IG Legal iglegal.co.uk
