Merrix v Heart of England NHS Foundation Trust


HarmansThe issue of costs budgets continues to occupy court time with The Honourable Mrs Justice Carr DBE the latest, and most senior, judge to give consideration to what, if any, weight an approved costs budget had when the bill of costs was the subject of a detailed assessment.

Merrix v Heart of England NHS Foundation Trust was originally heard on 13 October 2016 by District Judge Lumb sitting as a Regional costs judge.

The issue – “to what extent, if at all, does the costs budgeting regime under CPR Part 3 fetter the powers and discretion of a costs judge at a detailed assessment of costs under CPR Part47” ?

The argument – The Paying Party seeking to reduce the bill of costs on assessment was required to show good reason to depart from the approved budget and absent good reason there was no requirement to undertake an assessment

The outcome – The powers and discretion of a costs judge was not fettered by the costs budgeting regime save that the figures should not exceed unless good reason shown.

Irwin Mitchell for the Claimant appealed and the matter came before Mrs Justice Carr DBE 16 February 2017 with her judgment given 24 February 2017 [2017] EWHC 346 9QB).

In a detailed judgement which includes a helpful history of costs budgeting the Court addressed the three grounds of the appeal:

  1. The provisions of CPR 3. 18(a) and (b) shifted the burden to the paying party to show good reason at detailed assessment or summary assessment why the budget should not be departed from;
  2. The provisions of paragraph 7.3 of Practice Direction 3E related to approval of a total phase in order to enable the court to identify what was a reasonable and proportionate amount to spend on each phase of the litigation
  3. The consideration of a costs budget at a costs management hearing was not only to establish an individual fund, but to give the parties an indication as to what was reasonable and proportionate to spend prosecuting or defending their claim. Therefore what was reasonable and proportionate at a detailed assessment, unless the paying party could show good reason as to why it was not the case, should be in accordance with any costs budget set?

You can read the Judge’s conclusion here, along with the thoughts of Partner and Costs Lawyer Gary Knight.

To read more of Harmans’ Cost Brief click here.

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