The practical implications of changes to precedent H
The new form is likely to make the process of agreeing budgets and conducting CCMCs more challenging, warns Steve Davies
The most recent changes to costs budgeting, which came into force on 6 April 2016, are largely considered to be sensible. However, they have implications which could hinder transparency in the budgeting process.
One of the major changes to budget form precedent H is the removal of 'assumptions' from page 1; they are now within each individual phase. Practice direction 3E B.6(c) states: '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.'
Only having sight of the first page of the budget could make the process of trying to agree budgets prior to the case and costs management conference (CCMC) considerably more challenging. Parties who agree a budget before the CCMC may be in for a shock when there is a disagreement at the end of the claim as to exactly what that budget was assumed to contain at the time of the agreement. Further, there could be nothing in writing to support any agreement as to the exact nature of the costs which were agreed.
This may cause similar issues when a party seeks to file a revised budget to account for further work that was unforeseen at the time of the original budget. If the parties have previously agreed certain phases without a detailed discussion around the assumptions, it could be much easier for the party seeking to revise the budget to persuade the court, given that there will be no reference within the original one-page precedent H to the assumptions.
This will also cause difficulties for judges at CCMCs. In the cases where only the front page is filed, the judge will have no idea what assumptions are contained within the budgets. Nor will the judge know whether the parties are considerably far apart in terms of the case direction, or whether one of the parties has simply filed an 'excessive' budget. The court is more likely to consider the issue of proportionality in the context of both budgets and reduce the higher one to be more in line with the lower one, without considering the extent to which the assumptions may vary.
Practically, the costs lawyers whom you instruct to draft the precedent H and subsequently prepare the budget discussion report must be fully aware of such shortcomings in the process and seek to discuss assumptions with the other side, notwithstanding their absence from the front page.
Further, if phases are agreed, they should seek to include the assumptions in the joint discussion report, to protect against any potential applications to revise the budget or parties seeking additional costs at the conclusion of the claim, on the basis that they were not included within the original budget.
In relation to the CCMC itself,
it would be sensible to ensure that the costs lawyer who drafted the precedent H is in attendance and is able to make full representations to the court so that there is no ambiguity as to what has or has not been claimed. This would also ensure that the judge has the full picture of the perceived future direction of the case and how that ties into the costs which have been claimed within the budget.
Further observations from costs practitioners about the potential shortcomings of the new precedent H form include the assumption that there will be no incurred costs in relation to a number of the phases, including settlement or alternative dispute resolution and trial preparation, even though there may be instances where costs will have been incurred.
Additionally, there is provision for the inclusion of a breakdown of medical expert fees within the budget itself, notwithstanding that there is insufficient space to accommodate the level of evidence which would be required in the majority of high-level multi-track cases, to which this form is primarily intended to apply. Therefore, more often than not, a supplementary sheet will be required in any event, which was what the inclusion of this information within the budget was intended to avoid.
Further, the precedent H document annexed to the Civil Procedure Rules is itself inadequately formatted and cannot be easily printed off without manually adjusting the document, and there are instances where the data and formulas are incorrect, thereby causing potential errors within the budget.
Therefore, litigators must be aware of the potential issues
with the new precedent H document, the shortcomings
and the limitations, and proceed with caution in any cases in which this new form will need to be filed.