Further changes are underway in relation to CPR Part 3 regarding costs management and the relevant practice direction, CPR PD3E, effective from 1 October 2020. The practice direction has effectively undergone a complete re-write and some important additions have been made to Part 3. The key amendments are outlined below.
The following provisions have been inserted to Part 3 and removed from the Practice Direction:
- Details regarding costs management fees
- The Court’s discretion as to when it may order the parties to file and serve costs budgets
- The Court’s discretion to limit costs budgets to a particular part of proceedings or a particular issue to be extended later to the whole of the proceedings
- The provision which states that the Court may not approve costs prior to the date of any costs management hearing; however it may record its comments on proportionality and reasonableness
- The Court’s general discretion regarding Costs Management Orders
- The provision which states that the Court may not fix hourly rates within a budget
- The provision that interim applications may be considered as additional to the approved budget if it was reasonable not to have included within the budget
Documents lodged for costs budgeting purposes
The practice direction now explicitly specifies that, save in exceptional circumstances, the parties are not expected to file any documents other than Precedent H and Precedent R. The new Precedent T should be used for the purpose of updating or varying a budget.
Part 3 now provides a clear procedure for varying a costs budget and CPR PD3E provides that the new Precedent T must be utilised when seeking to vary a budget upwards or downwards. It stipulates that the revising party must serve the proposed variation on all parties, confine the additional costs within the budget to those occasioned by the significant development and ensure that these additional costs are not included in any previous budget or variation. The revising party must then submit the particulars of variation to the Court, along with the last agreed or approved budget and an explanation of the points of difference on any costs that have not been agreed. The Court will then approve, vary or disallow the proposed variations having regard to the proposed significant developments; or it may list a further costs management hearing. Where the Court makes an order for variation, it may vary the budget for costs related to that variation which have been incurred prior to the order for variation but after the costs management order.
Significant further guidance as to the format of a budget has now been provided as follows:
- In deciding the reasonable and proportionate costs of each phase of the budget the court will have regard to the factors set out at CPR Rules 44.3(5) and 44.4(3) including a consideration of the location, and circumstances, in which the work was done as opposed to where the case is heard.
- The time estimated within your budget may have to be justified along with the grade of fee earner doing the work.
- Allowance should be made within each phase for communicating with all parties and advising the client on matters within that phase
- The time spent preparing the budget or any associated material should not be included within any phase (these should be added after approval of the budget, in line with the relevant 1% and 2% caps)
- The 'contingent cost' sections of this form should be used for anticipated costs which do not fall within the main categories set out in this form. This should also be costs that are more likely than not to be incurred.
The majority of these points are already widely accepted and in practice however the guidance is a little clearer now that it has been codified in the practice direction itself.
The Court has now provided a list of assumptions in relation to each phase which should be taken to apply to all cases and should not be repeated. The guidance now stipulates that assumptions should only be included where the assumption significantly impacts the level of costs claimed (such as the duration of proceedings, the number of experts, the number of witnesses, etc.) This list of assumptions also provides useful guidance as to what tasks the Court expects to see within each phase.
The Court has introduced a new provision regarding oppressive behaviour, which stipulates as follows:
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.
This provision is clearly wide-reaching and appears to give the Court an equally wide discretion as to the appropriate relief for any behaviour that is deemed to be oppressive.