Approved Costs Budget does not avoid detailed assessment – Second Judge agrees

A second regional costs judge has ruled that an approved budget does not hinder a detailed assessment. Agreeing with District Judge Lumb in Merrix v  Heart of England NHS Foundation TrustDistrict Judge Hale outlined that an approved costs budget will be a strong indicator as to the costs to be allowed on assessment, but that those costs will still be open to the normal arguments on assessment.

Mirroring Merrix, the Claimant had argued that given the costs being claimed did not exceed the approved costs budget, that those costs should be allowed in full. The Defendant argued that the approved budget did not replace the Costs Judge’s powers on detailed assessment. In Bhojani v University Hospitals of Leicester NHS Trust, DJ Hale said that budgeting was not intended to replace detailed assessment, and that whether or not the case management judge recorded an opinion that incurred costs were disproportionate, those costs must always be subject to a line-by-line detailed assessment.

The rules explicitly state (at CPR 3.18) that:

In any case where a costs management order has been made, when assessing costs on the standard basis, the court will –

(a) have regard to the receiving party’s last approved or agreed budget for each phase of the proceedings; and
(b) not depart from such approved or agreed budget unless satisfied that there is good reason to do so.

The Defendant will therefore, on assessment, be required to show good reason to depart from the approved budget. Definition of a ‘good reason’ is not given, but one can imagine a good reason being the reasonableness of hourly rates.

This throws up interesting questions. It seems by this decision that Costs Budgets are effectively only a costs cap on the upper limit, meaning that where a Claimant has come in under-budget, that budget is therefore almost redundant, and that they are of use merely to restrict costs where the costs exceed the approved costs budget.

Surely part of the reason for implementing the costs budgeting regime was to reduce the number of detailed assessments, where approved budgets have not been exceeded. It seems that Defendants now have a ‘free hit’ at a Claimant’s costs claim if they can show good reason on assessment, regardless of whether the budget has been exceeded or not.

 

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