Master calls on rules committee to solve riddle of the costs of budgeting


Gordon-Saker: BP ruling in tension with Precedent H

A High Court Master has called on the Civil Procedure Rules Committee (CPRC) to resolve the “tension” between the need to “spell out in the eventual bill” the costs of costs budgeting and to include them in Precedent H.

Master Victoria McCloud said one “simple solution” would be for the CPRC to amend the guidance to Precedent H so that costs relating to costs budgeting were not included in Precedent H, “other than for the purposes of 1% and 2% caps on budgeting costs” as a percentage of total agreed budgets.

Master McCloud said taking this approach “would mean that CMC budgets would be as their name suggests, budgets for case management conferences and case management, and not the costs management aspects of the case”.

She said that, consistent with the ruling by the Senior Costs Judge, Master Gordon-Saker, in BP v Cardiff & Vale University Local Health Board, these costs  “could helpfully be spelled out in one clear part of the bill to which the relevant percentage cap can easily be applied”.

Master McCloud, sitting as a deputy costs judge at the Senior Courts Costs Office, said it was “perhaps unsurprising” that the point had arisen, given the “relative shortage of decisions” on the practicalities of detailed assessment under the costs budgeting regime.

She said that costs lawyers should follow the guidance when drafting Precedent H, and warned them that “an unspecified sanction could presumably result from breach if the costs judge disapproved of a departure from the guidance”.

Delivering judgment in Woodburn v Thomas [2017] EWHC B16 (Costs), Master McCloud said that in the case before her, the claimant’s costs lawyer drafted the bill in the ‘new’ form, “namely specifying the costs claimed on a phase by phase basis”, with the phases matching those in Precedent H.

In the CMC phase of the bill, the costs lawyer set out “all the CMC costs which did not relate to costs budgeting”.

Those which did relate to costs budgeting were included in a separate ‘non phase’ part of the bill, comprising the costs of drafting Precedent H (capped at the higher of £1,000 or 1% of the agreed budget under Practice Direction 3E 7.2a) and other costs of budgeting (arguably falling within the further cap of 2% of the agreed budget under PD3E 7.2b).

Master McCloud said this meant that some of the claimant’s costs relating to budgeting which were included in Precedent H for budgeting purposes were excluded from the bill’s CMC phase.

“Instead the costs of budgeting and costs management were all grouped together into the separate ‘non phase’ part of the bill and effectively attributed either to the ‘1%’ category or the ‘2%’ category in PD 3E 7.2 as the case may be.”

The master said the motivation behind this approach was a comment from Master Gordon-Saker in his ruling in BP, when he stated that on a detailed assessment it was “both necessary and convenient that the bill be divided” to identify the costs of initially completing Precedent H and the other costs of costs budgeting “unless those costs can be clearly identified in some other way”.

Master McCloud said the defendant’s objection to this approach was that the ‘non phase’ costs included in the ‘costs budgeting’ part of the bill were “to a large but imperfect degree”, costs which had actually been budgeted in the CMC phase of Precedent H.

“This was material since the costs claimed in the CMC phase of the bill had been budgeted and were, even leaving out of account the costs now appearing in the ‘non phase’ section, already somewhat in excess of the budgeted sum allowed for the CMC phase.

“Including the relevant parts of the budgeting costs in the CMC phase consistent with the Precedent H and guidance would mean the total in that phase of the bill exceeded the budgeted total for that phase by a still wider margin.”

The claimant replied that it was correct to have separated out the costs of costs budgeting, in line with Master Gordon-Saker’s approach, and the “costs for every item appeared once and once only in the bill and were not duplicated”.

Master McCloud concluded that there was a “tension” between the requirement to follow the Precedent H guidance and the “very sensible guidance” of the Senior Costs Judge, and “it was difficult for the parties and the court initially to get to the bottom of what the correct approach to assessing the relevant parts should be”.

The master set out her approach, which was that the costs lawyer must follow the Precedent H guidance as to which costs of costs budgeting were included in the CMC phase.

In the case before her, she directed that the items in the ‘non phase’ part of the bill which fell within the CMC phase of Precedent H “should be treated as if they had been pleaded in the CMC phase of the bill”, with the result that the costs claimed in this phase “exceeded the budget for that phase by a somewhat greater amount than they already did in any event”.

Master McCloud said the parties settled the remaining issues in the bill.

She added that her approach was “not ideal”, and that dividing the costs of costs budgeting into two parts caused “difficulties” in the application of the 2% cap.

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