Debate over hourly rates in budgeted cases to rage on after RNB appeal is dropped

Hayman: Ruling provides clarity

The debate over whether a costs judge who reduces the hourly rates for incurred costs should then do the same to budgeted costs is set to rumble on after the case that was heading to the High Court settled and another ruling was added to the mix.

Last year, in RNB v London Borough of Newham, Deputy Master Campbell ruled that reducing the hourly rates for the incurred costs meant there was a “good reason” to reduce the budgeted costs too.

However, in Bains v Royal Wolverhampton NHS Trust, District Judge Lumb, sitting as a regional costs judge, expressly disagreed with this position.

RNB was due to be heard this Friday, but Sam Hayman, senior associate in the costs team at London firm Bolt Burdon Kemp, which acted for the claimant, told Litigation Futures that it has just settled.

“The defendant made an offer significantly in excess of the sums in issue in the appeal. While it was important that the principle be clarified by a higher court, the claimant rightly accepted the generous offer.”

However, today Master Nagalingam in the Senior Courts Costs Office has handed down judgment in another Bolt Burdon Kemp case which dealt with the issue, Nash v MOD Approved Judgment.

According to Mr Hayman, he held that an adjustment to the non-budgeted hourly rates was not a good reason to depart from the approved or agreed costs budget.

Master Nagalingam earlier in the detailed assessment had reduced the hourly rates in respect of incurred costs.

But asked by the defendant to do so in relation to the budgeting costs, he said: “Hourly rates hold no special status and are not to be given any elevated status on an assessment of costs with regards to estimated costs subject to a costs management order.”

The master referred to the proportionate total allowed at a case management conference being based upon “a variety of factors, including the incurred costs. A party therefore proceeds with certainty as to what is a proportionate future sum to spend per phase.

“That certainty is entirely eroded if hourly rates are then given a form of special status which requires rates to be assessed in the estimated phases of a bill of costs.”

Mr Hayman said: “This judgment provides a thorough consideration of the relevant law and has given clarity to what is a highly contentious issue of detailed assessment.

“Whilst this is a first-instance decision, the well-reasoned judgment is likely to prove useful for parties on detailed and summary assessment where costs budgeting has previously taken place.”

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