23 January 2014

Cost budget variations: this is not going to end well.

Our senior litigator Myles Hickey has published this letter in the Law Gazette highlighting the negative affects new budget rules will have on the management of claims if courts go by the book:-

DJ Lethem's informed commentary (Variation of budgets - part 1 LSG 18.11.2013) reveals the problem caused by CPR PD3E paragraph 2.4. The court may only approve prospective budget variations. So if the litigator has responded to developments in the case to keep it moving before getting those steps approved, he or she would have to hope for a pragmatic and liberal interpretation of CPR 3.18 on detailed assessment at the end of the case (no departure from an approved or agreed budget "unless satisfied that there is good reason to do so"). As Christopher Lethem notes, such a calculated breach of the budget is a strategy fraught with danger. As a member of the CPRC, he should know.

He develops this in part 2 of his article (LSG 25.11.2013) with the observation that in the post Jackson costs regime, where proportionality trumps reasonableness, it is likely that standard basis assessment will reduce recoverable costs, so only the brave will seek detailed assessment.

Therefore litigators have no realistic alternative to seeking prospective budget variations once the budget is in danger of being exceeded. And they are then faced with the task of showing the variation is warranted through significant developments in the case, rather than oversight (or perhaps optimism that the opponent would cooperate) and all against the elegant and  unpredictable yardstick of “proportionality”. This PD seems to me a recipe for slowing down litigation,  snarling up court lists with applications and denying effective access to justice for those with cases with low or moderate multi-track value.
There is raucous approval in some commentary on the Jackson reforms by judges (though not this one) and defendant costs lawyers at the new powers of the courts to strip out costs. There is much talk of "robust" approaches. What it means in fact is that paying parties are likely to get a windfall, thoroughly undeserved, through the new provisions if they are not applied intelligently. As others have noted, this is an unfair and regressive outcome of changes which surely could not have been intended. The way to ensure justice on costs budgeting is for courts to adopt a low threshold for approving proposed budget variations and tackle paying parties’ objections “robustly”.  Otherwise the “costs wars” of the past 20 or so years will seem like playground games by comparison.


Myles Hickey

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