Cost Budgeting In Civil Litigation – Where Are We Now? – Real Estate and Construction – UK – Mondaq …

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Cost Budgeting In Civil Litigation – Where Are We Now?


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A “cost budget” sets out the costs a party has
incurred and anticipates it will incur in court proceedings up to
and including trial.

Save for very few exceptions (including, by way of an example,
cases in value of £10 million or more), all legally
represented parties engaging in civil litigation on the multi-track
must produce a cost budget before the first cost and case
management conference (CCMC) unless the court
orders otherwise. It is the court’s role to consider and, if
appropriate, amend and/or approve the cost budget at the
CCMC.

 

On 1 October 2020, rule 3.15A was introduced into Part
3
 of the Civil Procedure Rules
(CPR). This changed the process for revising
cost budgets following the court’s approval.  Irrespective
of any agreement between parties, the court’s approval of any
revisions to cost budgets must now be sought using the newly
introduced Precedent T form, which is now also annexed to Practice
Direction 3E of the CPR.

Precedent T contains columns for recording:

  • The previously approved cost budget

  • Requested variations 

  • A narrative relating to any “significant development”
    in the case which has caused additional costs to be estimated or
    incurred since the cost budget was approved by the court
  • The court’s comments on the above upon receipt of a
    party’s application to revise its approved cost budget

Comment

  The new Precedent T serves to highlight
the importance of not only getting your budget right the first time
round, but treating an approved cost budget as a ‘living
document’ that is referred to, checked against, and updated
throughout the life of a case (ie as costs in each phase of the
budget are being incurred).  

The introduction of Rule 3.15A is only likely to make it harder
for parties to argue that costs incurred in excess of an approved
budget should be recovered at the end of a case (ie where court
permission was not obtained) irrespective of whether or not they
are the successful party.

 

For further information on the applicability of cost budgets, and
our views on the definition of “significant developments”
in a case, listen to our podcast on the subject, which can be
accessed here.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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