Changes to the recoverable costs of budgeting

Details of the 93rd update to the Civil Procedure Rules containing amendments to practice directions are available online. These were signed by authority of the Lord Chancellor on 21 November 2017 and are now in force.

Notably this includes changes to Practice Direction 3E – costs management, at paragraph 7.2 specifically:

“7.2 Save in exceptional circumstances—

(a) the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% of the approved or agreed budget total of the incurred costs (as agreed or allowed on assessment) and the budgeted costs (agreed or approved); and

(b) all other recoverable costs of the budgeting and costs management process shall not exceed 2% of the total of the approved or agreed budget incurred costs (as agreed or allowed on assessment) and the budgeted (agreed or approved) costs.”.  

The change provides clarification to the previously contentious issue of how the costs of completing Precedent H and the costs management process, thereafter, should be calculated. Notably the caveat allowing for judicial discretion to be applied in exceptional circumstances remains – a discretion we have seen exercised before in Richard v The British Broadcasting Corporation (BBC) & Anor [2017] EWHC 1666 (Ch).

As with amendments to the rules and practice directions relating to costs budgeting that have come before this, this change should serve to reduce the number of arguments over their interpretation and, in turn, reduce the time and costs currently being spent. This appears to be yet another mulligan in the ever continuing work-in-progress that is costs budgeting.