Detailed assessment…but to what end?

There are a number of amendments afoot in respect of budgeting; these come into force on 6 April 2017. The amendments seek to clarify and address a number of issues that have arisen in various cases, specifically, the case of Sarpd Oil International Limited v Addax Energy SA and another [2016] EWCA Civ. 120. The Court of Appeal held, in this case, that the CMC was the time and place to discuss the level of costs, incurred or estimated, in the budget. Disputes over incurred costs were to be dealt with at the CMC, thereby, negating the need for further future assessment of those costs. This created much controversy and a great deal of satellite litigation.
The amended rules will overturn this decision and reassert the position that the Court’s approval of a budget will relate to the estimated costs only; detailed assessment will, therefore, still be necessary.
The rules currently provide that the Court will record the extent to which the budgets are agreed between the parties. The new rule, CPR 3.15 (4), has been amended to make it clear that the Judge can record his views on the incurred costs but these costs are to be assessed in due course and not at the CMC. The new rule provides:
“Whether or not the court makes a costs managements order, it may record on the face of any case management order, any comments it has about the incurred costs which are to be taken into account in any subsequent assessment proceedings”.
CPR 3.18 is amended in similar terms; subparagraph (c) states that the court will “take into account any comments made pursuant to rule 3.15(4) or paragraph 7.4 of Practice Direction 3E and recorded on the face of the order”. This provision demonstrates that the comments made in respect of incurred costs by the Judge at the CMC will actually hold some weight at a detailed assessment hearing.
The new rules also replace the word ‘budget’ with ‘budgeted costs’, presumably, in an attempt to clarify that it is only the estimated costs that are caught by the provisions of CPR 3 part 2.
If this rule change is successful or has the desired effect of enabling the parties to assess the incurred costs on assessment, what does this actually achieve? The Court will proceed to carry out an item by item assessment and then stand back and do exactly what the Judge at CMC has done; that is to make an arbitrary assessment of what is a proportionate sum for the paying party to pay.

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