Permission to appeal the judgment of Master Campbell in the matter of RNB v London Borough of Newham, which confirmed that the reduction in hourly rates was enough of a ‘good reason’ to depart from an approved budget, has now been granted.
Master Campbell originally outlined that it was unsatisfactory to allow a higher hourly rate on estimated future costs than that allowed on incurred costs, purely on the basis that the estimated costs had been approved by the costs managing Judge. As such, the hourly rates were deemed a ‘good reason’ to depart, allowing Master Campbell to reduce the budgeted costs, even if they did not exceed the allowances made within the Costs Management Order.
Master Campbell supported his decision by outlining that the budgeted costs were disproportionate in any event, and that he had the power to reduce those costs to a proportionate figure, even if the hourly rates were not a good reason to depart from the costs budget.
It will be interesting to see whether the Appeal Court agrees that hourly rates are a good reason to justify further assessment of approved budgeted costs. If so, it would mean that no Costs Budget is ever ‘stamped through’ on detailed assessment. If hourly rates are not a good reason to depart, then arguably this will have an even larger impact, meaning that hourly rates would require consideration when the Cost Management Order is made at the CMC. This would of course lengthen CMCs as it is likely that significant arguments on rates will be take place at this stage.