Deviating from a Precedent H Costs Budget
Demonstrating a ‘Good Reason’
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What is a Precedent H Costs Budget?
If a case is allocated to the Multi Track, a Costs Budget is usually required to be prepared for the Case Management Conference. Often there is a separate Costs and Case Management Conference. The aim of the Precedent H Costs Budget is to advise the parties and Court of the incurred costs to date, and estimated costs which are likely to be incurred for every phase of the proceedings up to Trial. For the guidance notes on Precedent H Costs Budgets see here.
When the matter concludes, the receiving party’s costs will be considered and allowed in line with the Costs Budget submitted at the CCMC. However, there may be times when the final costs can deviate from the Precedent H Costs Budget.
What are the Reasons to Deviate from a Precedent H Costs Budget?
In the case of Harrison v University Hospitals  EWCA Civ 792, the judge set out guidance on deviating from the anticipated costs section of the Costs Budget as allowed at the Costs and Case Management Conference. It was stated that the Costs Judge should only depart from these costs if there was a ‘good reason’ in doing so. However, no guidance was provided in this case on what ‘good reasons’ constituted.
The issue of what constituted a good reason was considered in the case of RNB v London Borough of Newham EWHC B15. Master Campbell held that the assessment of the Bill of Costs was the only time available to dispute the hourly rates claimed. However, there were many other decisions in higher courts which conflicted this finding by Master Campbell and ultimately, it was considered that hourly rates were not a ‘good reason’ to deviate from the Budget.
In Barts Health NHS Trust v Salmon it was held that there was a good reason to depart from the Costs Budget if the sum claimed in the Bill of Costs was lower than the sum stated in the Precedent H Costs Budget however, this was against conflicted in a later decision.
The case of Chapman -v- Norfolk & Norwich University Hospitals NHS Foundation Trust referred to the decision in Salmon, wherein District Judge Lumb found that an early settlement of a case does not amount to a good reason to deviate from the Costs Budget. DJ Lumb stated the following:
“In so far as HHJ Dight at paragraph 36 of his judgment in Salmon has concluded that if a party has not spent the totality of the budgeted figure for a phase that amounts to a good reason per se and the door is, therefore, open for the paying party to make further submissions on an appropriate figure for the phase, I respectfully disagree. If that approach was correct virtually every case would go to Detailed Assessment, and there would be a perverse incentive to a prospective receiving party to overspend and marginally exceed every phase in order to avoid a Detailed Assessment.”
The more recent case of Utting v City College Norwich  EWHC B20 provides further guidance on what constitutes a good reason to deviate from a Precedent H Costs Budget. Master Brown heard the case and ultimately held that it was not reasonable to reduce the amounts claimed in phases which ‘had not been substantially completed’.
The Defendant (the paying party in this instance) submitted that there was good reason to deviate from the Costs Budget where phases had not been substantially completed. If this argument was to be accepted, it would have resulted in a detailed assessment of the anticipated costs of the approved budget.
The Claimant argued that an underspend on the budget was not a good reason to depart from it and opposed reductions to be made to the sums claimed.
Master Brown held that an underspend was in fact, not a good reason to deviate and treating it as such would undermine the costs budgeting process and its effectiveness. He did, however, make clear that the receiving party would not receive the full amount or the anticipated/budgeted amounts if they had only undertaken a small portion of the work for that phase. Master Brown stated:
‘Inevitably budgets are not produced with a degree of precision that can be applied in a detailed assessment, but I do not see that as a justification for having a line by line assessment,’ … ‘[Otherwise] solicitors who had acted efficiently and kept costs within budget would find their costs subject to detailed assessment, whereas less efficient solicitors who exceeded the budget would, absent any other “good reason”, receive the budgeted sum and avoid detailed assessment.’
The findings of Master Brown follow the judgement held by DJ Lumb above.
How Can ARC Costs Assist with Precedent H Costs Budgets?
It is clear that proving a ‘good reason’ to deviate from a Costs Budget can be difficult, and there has been judicial inconsistency on the issue.
Generally a ‘good reason’ to deviate must result from something that could not have been foreseen at the time of preparing the Costs Budgets, and also for which there had not been an opportunity to amend the Budget under the Precedent T process.
ARC Costs can assist with the preparation and negotiation of a Costs Budget to ensure the accuracy of the same. As specialist Costs Draftsmen and Costs Lawyers, we can assist in recovering final costs by way of Bills of Costs, negotiations and representation at assessment. As independent legal costs experts, we also act for paying parties in disputing costs claims.
Should you require our assistance or wish to discuss your query, please complete the online contact form, and one of our costs experts will contact you. Alternatively, you may contact us on 01204 397302, or via email at firstname.lastname@example.org.