By Elliot Kay
The Appellant had succeeded against the Respondent in a clinical negligence claim but when the matter came before District Judge Lumb for a detailed assessment of her costs, he was asked to determine as a preliminary issues whether his discretion on costs was fettered by the cots budgeting regime. The case had settled in advance of the trial with the inevitable consequence that the Appellant’s costs were significantly less than those which had been budgeted for and approved pursuant to a previous costs management order made under CPR 3.15(2).
DJ Lumb found that whilst costs budgeting did not replace the detailed assessment process it was intended to be a guide as to the likely recoverable costs so as to reduce the scope for disagreement. Costs budgets were not an advance assessment of the recoverable costs and could not prejudice the discretion of the costs judge.
The question for Mrs Justice Carr (as formulated by District Judge Lumb) was:
“To what extent, if at all, does the costs budgeting regime under CPR Part 3 fetter the powers and discretion of the costs judge at a detailed assessment of costs under CPR Part 47?”
The Appellant’s case, put simply, was where a receiving party seeks to recover costs at or below the approved sum, they should be assessed as claimed unless the paying party can establish a good reason to depart from that as a starting position. In contrast, the Respondent contended that the Court should embark on a fresh assessment of the receiving party’s costs with the approved costs budget being one of several factors to consider in determining the reasonable and proportionate sum.
Mrs Justice Carr held that where a costs management order had been made, a costs judge would not depart from the receiving party’s last approved budget unless there was good reason to do so. That position remained whether the receiving party claimed less, more, or a sum equal to the approved figure in the budget. Carr J found that the clear and mandatory language in CPR 3.18 bound the parties at detailed assessment unless there was a good reason to depart from that position. Carr J also observed that costs budgeting does not set the ceiling for recoverable costs, rather it identifies what future costs are reasonable and proportionate (the test for which is to be applied at the budgeting stage looking forwards rather than at the assessment stage looking backwards).
The Court refrained from identifying “good reasons” which would justify departing from the last approved budget but noted that where a receiving party in fact incurred less than the approved figure, the recovery of a higher figure would plainly offend the indemnity principle.
Carr J observed that clarity in the application of CPR 3.18 will achieve the dual purpose of reducing the costs of the detailed assessment process and also of securing greater predictability as to costs exposure/recovery for the parties. An appeal arising out of the same issue is listed before the Court of Appeal in May 2017. What the future holds remains to be seen but in the intervening period Mrs Justice Carr’s judgment can be found here http://www.bailii.org/ew/cases/EWHC/QB/2017/346.html