Blowing the Budget – An Early Warning

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Colin Richmond

KIM MURRAY (1) JEAN STOKES (2) V NEIL DOWLMAN ARCHITECTURE LTD [2013] EWHC 872 (TCC)

The Costs Management Rules, now set out at Section II of CPR 3, will apply to the majority of multi-track cases issued on or after 1st April 2013. By way of explanation of the purpose of costs management, CPR 3.12 (2) provides that:

“The purpose of costs management is that the court should manage both the steps to be taken and the costs to be incurred by the parties to any proceedings so as to further the overriding objective.”

Perhaps the most significant tool that the court will use in relation to costs management is costs budgeting. The rules regarding budgets can be found at CPR 3.12-3.18, supplemented by Practice Direction 3E. The rules require that the parties, among other things, file costs budgets. Once a budget is approved by the court it is incumbent upon the parties to file amended budgets if it becomes clear that the original is no longer going to be accurate.

So far, so good. But what happens when the parties get it wrong? The High Court considered the issue in the above case, which was dealt with under the Costs Management Pilot as per CPR PD 51G.

The claimant’s budget was approved in the sum of £82,500. It was subsequently noticed that the budget did not state that it excluded an ATE premium and a success fee and the defendant indicated that it intended to argue that the claimant’s costs should be restricted to those set out in the approved budget. The claimant applied for relief from sanction.

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One comment

  1. […] My colleague Colin Richmond considers some dangers on costs budgeting on the Zenith PI Blog in “Blowing the Budget“ […]

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