The biannual updates to the CPR almost always contains something that gets missed, or of which the significance is not fully appreciated until it is too late, and the danger of this occurring with the 122nd update coming amid the blizzard of temporary and short notice amendments forced upon us by the COVID pandemic is higher than ever.

The 122nd update contains some significant changes and clarification over the way the process of Costs Management proceeds. These are mainly in relation to the amending of costs budgets which practitioners need to take note of, and which also serve as an important reminder of some key principles which costs professionals have been urging since the inception of Costs Budgeting. The main changes come in the Practice Direction itself firstly the Guidance Notes, which used to be an addendum to the PD along with the precedents, have now been incorporated wholesale (with some changes) into the PD itself. This makes it even harder to explain away any inappropriately phased work in a Costs Budget or Bill of Costs to the Judge/Master at the CCMC or Costs Judge on Detailed Assessment. That being said the Guidance is still (as to some extent it has to be) very broadly drawn and does not provide specific guidance on a number of common situations. This is why it remains incredibly important to have Costs Budgets drawn by costs professionals who deal routinely with these sorts of situations and are aware of how the Courts (and in some cases, different Courts deal differently!) with them.

The main change, however, comes with the (long needed) clarification on how the process of amending an approved budget to take account of a “significant development” should proceed. There is a new Precedent, Precedent T, appended to the guidelines which can be completed as a starting point for the process of amending an approved budget. This enshrines in practice the dicta established by Chief Master Marsh, after hearing detailed and lengthy submissions from senior Costs Barristers, in Sharp v Blank & Ors [2017] EWHC 3390 (Ch). In simplified terms what this means is the line between “incurred” and “estimated” cost remains always at the position it was when the initial Costs Management Order was made, any further approved amendments are made to the “estimated” (post CMO “budgeted”) costs, and this remains the position even after the possible tension between the court retrospectively approving “estimated” costs which have actually already been (in part at least) “incurred” by the time the revision to the budget is taken into account. The new Precedent T is relatively straightforward to understand and complete (and we at R Costings are particularly gratified that it bears considerable similarity to the document we prepared ourselves as early as 2014 and have been using with success to obtain amendments to approved budgets since then).

These changes only serve to reiterate what has been the central tenet of good practice since budgeting started, which is that the getting your budget drawn properly, with accurately phased costs (both “incurred” and “estimated”) and well thought out case-specific protective assumptions and thereafter ensuring it is properly monitored as the case progresses are just as important as they always have been. Just about the greatest source of significant reductions on Bills of Costs we now see is budget overspend, and many times the root of this is in a budget drawn inaccurately in-house which could not be properly explained at CCMC and gets reduced excessively as a result, or a budget which has been shoved to the back of the file once approved and not thought about again which is not amended when it could have been.

The solution to these issues is of course to use professional expert costs assistance which R Costings can provide on a completely costs neutral basis by keeping our charges within the allowance of 1&2% of budgeted costs which remain unchanged within the amended PD3E.

For any queries or budget matters please contact or call 01480 463499

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