Cost budgeting in civil litigation – where are we now?
A "cost budget" sets out the costs a party has incurred and anticipates it will incur in court proceedings up to and including trial.
Save for very few exceptions (including, by way of an example, cases in value of £10 million or more), all legally represented parties engaging in civil litigation on the multi-track must produce a cost budget before the first cost and case management conference (CCMC) unless the court orders otherwise. It is the court's role to consider and, if appropriate, amend and/or approve the cost budget at the CCMC.
On 1 October 2020, rule 3.15A was introduced into Part 3 of the Civil Procedure Rules (CPR). This changed the process for revising cost budgets following the court's approval. Irrespective of any agreement between parties, the court's approval of any revisions to cost budgets must now be sought using the newly introduced Precedent T form, which is now also annexed to Practice Direction 3E of the CPR.
Precedent T contains columns for recording:
- The previously approved cost budget
- Requested variations
- A narrative relating to any "significant development" in the case which has caused additional costs to be estimated or incurred since the cost budget was approved by the court
- The court's comments on the above upon receipt of a party's application to revise its approved cost budget
The new Precedent T serves to highlight the importance of not only getting your budget right the first time round, but treating an approved cost budget as a 'living document' that is referred to, checked against, and updated throughout the life of a case (ie as costs in each phase of the budget are being incurred).
The introduction of Rule 3.15A is only likely to make it harder for parties to argue that costs incurred in excess of an approved budget should be recovered at the end of a case (ie where court permission was not obtained) irrespective of whether or not they are the successful party.
For further information on the applicability of cost budgets, and our views on the definition of "significant developments" in a case, listen to our podcast on the subject, which can be accessed here.