Merrix V Heart of England NHS Foundation trust deals with a point of considerable importance arising out of the relationship between the costs budgeting regime under Part 3 of the Civil Procedure Rules and the detailed costs assessment regime under Part 47 of the CPR.

The Claimant was the successful party in a clinical negligence claim against the Defendant.

The appeal relates to the determination of a preliminary issue, namely;

“To what extent if at all, does the costs budgeting regime under CPR Part 3 fetter the powers and discretion of a Costs Judge at a detailed assessment of costs under CPR Part 47?”

The Claimant (the Receiving Party) contended that where claiming costs at or less than the budgeted figure, costs should be assessed as claimed unless the Defendant (the Paying Party) establishes a good reason to depart from the budget figure.

The Defendant contended that they were entitled to benefit from a full detailed assessment with the budget being but one factor in determining reasonable and proportionate costs.  Thus the Respondent’s position was that a paying party does not need good reason to persuade a court to depart from an approved or agreed budget downwards, but a receiving party needs a good reason to persuade a court to depart from an approved or agreed budget upwards.

The matter first came before District Judge Lumb sitting as a Regional Costs Judge (“the Costs Judge”) in Birmingham District Registry on 13th October 2016. His “strict” answer was that the powers and discretion of a costs judge on detailed assessment are not fettered by the costs budgeting regime save that the budgeted figures should not be exceeded unless good reason can be shown.  He found that the Defendant must be correct in their submission that costs budgeting was not intended to replace detailed assessment.

The Claimant appealed and the matter came before Mrs Justice Carr on 16th February 2017 with her judgement given on 24th February 2017 [2017] EWHC 346 9QB).

Mrs Justice Carr said that where a costs management order has been made, when assessing costs on the standard basis, the costs judge will not depart from the receiving party’s last approved or agreed budget unless satisfied that there is good reason to do so.  This applies as much where the receiving party claims a sum equal to or less than the sums budgeted as where the receiving party seeks to recover more than the sums budgeted.

In summary the approved or agreed budget will bind the parties at the detailed assessment stage (on a standard basis) whether the costs claimed are for less than, equal to or more than the sums approved or agreed by that budget, unless there is good reason to order otherwise.