Budget Discussion Report: Precedent R 



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What is a Costs Budget?

A Precedent H Costs Budget is a document used in civil litigation. It is specifically designed to estimate and control the costs that parties expect to incur during the proceedings. It is a mandatory requirement in multi-track cases (subject to certain exceptions), and its primary purpose is to promote transparency, predictability, and manageability of legal costs

What is a Budget Discussion Report

Following the preparation of their Costs Budgets, parties are encouraged to prepare a Precedent R Budget Discussion Report and engage in discussions on costs 7 days prior to any Costs and Case Management Conference (CCMC)

In many cases, Costs Budgets can be agreed between parties however, some cases remain disputed and require the making of a costs management order at Court.

A genuine attempt should be made to engage in Budget negotiations otherwise there can be consequences. This is outlined in our article on the case of Findcharm v Churchill Group where a disingenuous offer was made on the Claimant’s costs.

What are the Budget Discussion Report Requirements?

As part of Budget discussions/negotiations, CPR 3.13(2) requires the parties to exchange Costs Budget Discussion reports at least 7 days before the first Case Management Conference (CMC).

In April 2019, a new Costs Budget Discussion Report (Precedent R) was introduced. This new Precedent R replaced the previous three columned report.

What should be included within a Precedent R?

Incurred costs were introduced into the updated Precedent R, allowing the parties and the Court to be able to consider all the total costs together for a particular phase at any CCMC, rather than just the budgeted costs on their own.

The incurred and budgeted costs claimed by a party are now also split into time costs and disbursements. This helps to show some distinction as to how the costs are split between both categories.

One of the main benefits of the changes to the Costs Budget Discussion Report is the inclusion of incurred costs. This allows a Judge to see the full landscape of costs for each phase, and of the entire costs budgeting process.

The separation of the disbursements and time costs columns for the ‘costs claimed’ and ‘costs offered’ parts also allow the parties to see more clearly how estimated costs are split, and to allow comparison between parties’ Budgets. The greater scrutiny afforded by this separation is beneficial both in raising submissions to contest the costs claimed, and also in justifying how a total phase figure has been reached.

The additional columns added to the Budget Discussion Report however, require more data to be entered thus making the process more time consuming for the user. The included columns for time costs and disbursements could also be considered over-zealous by some. PD 3E 7.3 states that the Court should not complete a detailed assessment in advance. There is a real risk that the enhanced scrutiny could encourage the Court to focus too finely on the individual elements of the Costs Budget.

What Happens if Parties Cannot Agree Upon a Budget?

If an agreed budget cannot be made between the parties, the court will schedule a Costs and Case Management Conference (CCMC). During this conference, the judge will review the budgets and address any disputed items.

The judge will consider the arguments from both parties regarding the disputed costs. This can include considering whether the costs are reasonable and proportionate to the issues in the case. The judge may ask for further clarification or justification for certain items in the budget.

After reviewing the submissions and hearing the arguments, the judge will make a determination on the disputed costs. The judge has the authority to approve, modify, or disallow parts of the costs budgets. The judge’s decision will form the basis of the costs management order.

How Can ARC Costs Help?

The Costs Budget Discussion Report allows for more depth and information to be shown in respect of a summary of the parties’ Costs Budgets however, dealing with this documentation and the associated negotiations can be difficult and time consuming.

At ARC Costs, our team of Costs Draughtsmen and Costs Lawyers are at hand to assist with the preparation and negotiation of any Costs Budgets, as well as providing a full advocacy service at any CCMC. We typically recover in excess of 80% of any Budget we have drafted, whether via negotiation or at a CCMC.

Get in touch via email at info@arccosts.co.uk, by phone on 01204 397302, or contact us on live chat below.

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