Budgets, they are a changin’

The 109th Update to the Civil Procedure Rules implements an amendment, effective from 1 October 2019, to Paragraph 7.4 of Practice Direction 3E.

By substituting the words “before the date of any” with “up to and including the date of the”, paragraph 7.4, will now read:

“As part of the costs management process the court may not approve costs incurred up to and including the date of the costs management hearing. The court may, however, record its comments on those costs and will take those costs into account when considering the reasonableness and proportionality of all budgeted costs”.

The effect of the change is to draw a line between costs up to and including the CCMC (all such costs being incurred costs) and costs to be incurred after that date (budgeted costs). Formerly this line was drawn in a different place: incurred costs (subject to detailed assessment) were all costs up to the date of the budget; budgeted costs ran from that date.

The former position was, in a sense, simpler as incurred time ended on the date on which the budget was drawn. There was no need to estimate costs between the budget and the CCMC.

In practice what this change is likely to mean is that:

i. budgets, prepared significantly ahead of a CCMC (for example, when the budget is filed with the directions questionnaire), will need to be updated before the CCMC; and/or
ii. budgets in higher value cases, to be filed and exchanged 21 days before the CCMC, should be produced, where practicable, as close to the hearing as possible; and
iii. it will now be necessary to estimate (and treat as incurred) the work between the budget and the CCMC.

In respect of (ii) above, there are obvious (and potentially very serious) risks with leaving this too late and therefore early discussions between solicitors and costs lawyers will be crucial.

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