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Court of Appeal deals with the relationship between the costs budget and the detailed assessment

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The long awaited decision in the case of Harrison v University Hospitals Coventry and Warwickshire Hospital NHS Trust [2017] EWCA Civ 792 has today been released following the Hearing on 10 May 2017. Click here for the full Judgment.


This is case which went to a detailed assessment before Master Whalan on 16 August 2016 and has since attracted the attention of the legal profession with various other detailed assessments being 'on hold' pending its outcome. In the first instance Master Whalan found that a budget should not be departed from unless good reason could be demonstrated. He further extended this to be interpreted as relevant to the incurred costs as well as the future costs, making reference to their “certain status” due to their overall feature in the assessment of proportionality of the entire budget.

Future (budgeted) costs

Lord Justice Davis, upon hearing submissions from Alexander Hutton QC for the Appellant (Defendant) and Kevin Latham for the Respondent (Claimant), was content that Master Whalan (and in fact Carr J in the case of Merrix v Heart of England NHS Foundation Trust [2017] EWHC 346 (QB), [2017] 1 Costs) was correct in the confirmation that the future costs of a budget is to be considered definitive and not to be departed from (upwards or downwards) unless good reason was demonstrated. Davis J commented at para 36 that:

“The appellant’s argument has this initial and unattractive, oddity. If it is right, it involves a most unappealing lack of reciprocity. It means that a receiving party may only seek to recover more than the approved or agreed budgeted amount if good reason is shown; whereas the paying party may seek to pay less than the approved or agreed budgeted amount without good reason being required to be shown. It is difficult to see the sense or fairness in that."

Does the budget ‘fetter’ the Judge on assessment

David J made it clear that he agree with Carr J in the Merrix case that approval of a budget does not operate to replace the detailed assessment but rather it influences how the assessment will be approached. He commented that the Court’s empowerment to sanction departure from a budget on assessment if there is good reason to do so will of course significantly fetter their discretion and commented that is it:

“…deliberately designed to be so. Costs Judges should therefore be expected not to adopt a lax or over-indulgent approach to the need to find “good reason”.”

Incurred costs

Davis J heard submissions of the Appellant to the effect that 7.4 of PD 3E makes it clear that the court can not approve costs incurred before the date of any CMC and thus they did not form part of the ‘agreed or approved’ costs referenced in CPR 3.18(b). Davis J agreed that the incurred costs were not within the ambit of CPR 3.18 and therefore are to be the subject of detailed assessment in the usual way, without any added requirement of "good reason" for departure from the approved budget. Reference is made to influencing obiter remarks in the Sarpd Oil case with the matter being distinguished and further reference is made to the amendments to the rules designed to restore the position as was intended (in terms of de-coupling incurred and budgeted costs).


This should offer a degree of certainty and clarity to lawyers following a period of uncertainty as to the interplay between the budget and the assessment. I have to say that, in my view, this is a decision which makes sense and is both logical and sensible and represents what the rules intended in the first place.