Doubts Surrounding Costs Budgeting Continue until Appeal on Merrix
Since costs budgeting was introduced following the Jackson Report, a soft conflict has existed between CPR3 on costs budgeting (forthcoming costs analysed at an early stage of litigation to set the level of allowable costs for each phase) and the contrary CPR47 on detailed assessment (a review of past costs incurred that are deemed as reasonable and proportional).
Receiving parties argue at detailed assessment that their lesser spend should mean ability to recover monies without being obliged to justify the expenditure of each and every action and resultant penny. Paying parties however highlight that costs budgeting is not an exercise in details, so if amounts were allowed at detailed assessment simply by virtue of being in the budget, the detailed assessment provisions are defunct.
This tension is set to continue unresolved following a High Court decision in a recent case that budgets set at detailed assessment stage are still binding “unless there is good reason not to”. Those opposed to this (and there are many) are hoping this will not become a definitive ruling from the Court of Appeal in spite of a recent ruling in Merrix by Mrs Justice Carr who concluded that as many stays of detailed assessments are already in place, parties should accept her judgment as binding for their purposes.
She continued: “Alternatively, it may be that further stays need to be imposed, to prevenient unnecessary court and judicial time and expense being devoted to a debate which the Court of Appeal is very shortly going to consider.”
That said, it appears there could still be some wiggle room on the meaning of “good reason” in determining Justice Carr’s interpretation of cost management rubrics.
The interpretation of “good reason” is yet to be confirmed, i.e. if it’s positioned as a prohibitive barrier detailed assessments will no doubt become rationalised. However, if it is a lesser principal then it’s possible little may change on the ground at detailed assessment stage with only slight reductions in the arguments received.