What Are The New Changes to Budgets?
Our good friend the Costs Budget (or the Precedent H as it is more formally known) has come back to haunt us again. First of all, there’s no need to worry. The changes that have come into force from 6 April 2016 only effect cases issued on or after this date. That means that you need to start looking at changing your practices, but there is no hectic rush.So what is all the commotion about? If you want to see for yourself, the practice making document can be found here.
The changes to costs budgeting are the first amendment starting on Page 2 of the document. In summary, it states:
- Parties must actively engage in negotiations on budgets and file a budget discussion report (Precedent R) atleast 7 days before any CCMC
- Where the budget is under £25,000 or damages of the claim are under £50,000, the party must file and serve the front sheet of a Precedent H only, atleast 21 days before the first CMC. If above and beyond these parameters, you must file the budget with your Directions Questionnaire.
- The new rules specifically state that it is not for the Court to interfere with the hourly rates. This seems interesting in light of recent Court of Appeal guidance in Sarpd Oil International Ltd v Addax Energy SA & Another  EWCA Civ 120, which determined that one could not retrospectively criticise the level of costs claimed in a budget if it had been agreed or approved. This would therefore question whether an hourly rate could be criticised, given that this would have implications for the level of costs that were recoverable.
- General exclusions include: any case issued over £10,000,000 (applies to most cases then ….), any case for a minor issued post 6 April 2016 and any matter in which the Claimant has a severely limited life expectation (under 5 years). The first two are assumed, whereas the latter must be ordered by the Court.
There is also a fancy new Precedent H format which can be found here which is wonderfully restricted so that editing of the document is permissible, but integration of the document itself into other Excel sheets is restricted. If you enjoy using Excel like myself, this will inevitably frustrate you. The Precedent R document is equally as jazzy in colour, and may be found here.
We will wrap-up with the following 3 points;
- Start looking at the changes you need to make to budgeting now!
- To be safe, always file and serve your budgets with the Directions Questionnaire.
- Train your staff to understand how to interpret budgets, and drill in to them the rules on negotiating and filing Precedent R’s.
For any free advice, feel free to contact me at Robert.Collington@legalpracticesupport.co.uk