Assessment trumps budgeting, says regional costs judge

The budgeting regime does not fetter the powers and discretion of the judge at detailed assessment even if the receiving party comes in within the budgeted figures, a regional costs judge has ruled in a decision that has led some to question the point of budgeting.

District Judge Lumb in Birmingham instead urged parties to co-operate better so that they prepare far more accurate budgets in the first place.

In Merrix v Heart of England NHS Foundation Trust, the successful clinical negligence claimant argued that if her costs were claimed at or less than the figure approved or agreed for that phase of the budget, then they should be assessed as claimed without further consideration – unless the defendant put forward a good reason to depart from the budget.

The defendant submitted that the costs judge’s powers and discretion were not fettered by the budgeting figure, but that the budget was just one factor to be considered in determining reasonable and proportionate costs on assessment.

The judge said that though there was no direct authority on the relationship between the two, there were numerous examples in the CPR and case law to support the contention that cost budgeting was not intended to replace detailed assessment.

But while DJ Lumb ruled that the assessing judge was not fettered by the budgeting regime – save that budgeted figures should not be exceeded unless good reason could be shown – he said the full answer was “more nuanced than the defendant’s position of ‘open season’ and complete discretion to attack a bill on detailed assessment and the claimant’s opportunistic attempt to impose a straightjacket on the costs judge and claim a fixed figure”.

He explained: “There is some merit in elements of both parties’ arguments in the present case. At the same time, their entrenched positions illustrate why some observers consider that costs budgeting has failed to be as successful in practice as it ought to have been. The analysis in this judgment demonstrates that the preliminary issue question itself as posed was based upon a misunderstanding of the objectives and function of costs budgeting which is a different costs management tool from costs assessment.

“If the claimants arguments were correct and that for large sections of a party’s costs the only opportunity to challenge those costs, absent ‘good reason’, would be at the CCMC, those hearings would be at risk of being far lengthier than they already are. That cannot be consistent with the overriding objective of dealing with cases expeditiously at proportionate cost.

“It is the duty of the parties to help the court to further the overriding objective by narrowing the issues between them. By adopting an ADR-like philosophy in negotiation and the preparation of budget discussion reports it should then be possible, in the majority of cases, to produce a proportionate budget that is so accurate when compared to the actual, yet still proportionate costs, incurred at the conclusion of the case that the difference between the parties should be so negligible that it would not be worth the time, trouble or risk to pursue a detailed assessment.

“To get to that ideal position requires a realistic engagement by the parties and by the case managing judge who has not only the experience of effective case management but also of the proportionate sums involved in the efficient conduct of the case. The benefits to all, if this panacea can be achieved, are obvious.”

A spokesman for Irwin Mitchell, which acted for the claimant, said permission to appeal was granted by the regional costs judge and the firm was considering its position.

He added: “There is a tension in the court rules between CPR 3.18 and rule 44 which needs clarifying by the courts. Last week, it was reported that Master Rowley in the Senior Court Costs Office in a costs claim against Peterborough and Stamford NHS Trust had allowed various phases of a claimant’s anticipated costs budget as claimed without undertaking a detailed assessment of these costs. It appears that there is different judicial thinking at the moment on this issue.”

A spokesman for the NHS Litigation Authority said: “We are pleased with the court’s decision in this case. If CPR 3.18 were used by costs judges to ‘rubber stamp’ payment of costs budgets at detailed assessment hearings, this would result in a massive increase in the costs of litigation. The burden of this would ultimately be paid by the taxpayer in NHS cases.

“It would also be contrary to the primary intention of the Jackson reforms, which were implemented to control costs and promote access to justice.”


This post was posted in ACL e-Bulletin

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Costs News
Published date
31 Oct 2016

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