In 2024 there were a number of notable Cases on the issue of Cost Budgeting which is also on the Agenda for the CJC in 2025, and a ‘hot topic’ for potential reform with discussions relating to a new Precedent H and a Cost Budget light, as well as expanding the application of Cost Budgeting to name a few.
With the potential for such significant change in 2025 concerning Cost Budgeting, we have prepared a summary of the key cases from 2024 which set the tone for what we believe will be a significant year for Cost Budgeting.
2024 saw a trend of emphasising the importance of Budgets being reasonable and proportionate and the consequences for not doing so, the issue of proportionality being addressed in this article by our Matthew Waring.
The Clinical Negligence matter of Worcester –v- Hopley [2024] EWHC 2181 (KB) came before Master Thornett who reduced the Claimant’s initial estimate of costs from £342,263.00 to £159,675.00 equating to a reduction in the Claimant’s estimated costs of 53.35% (3.58% above the amounts offered by the Defendant). Master Thornett noted that “the overall impression and conclusion I reached was that the Claimant’s Precedent H was unreasonable and unrealistic in terms of proportionality.” The Defendant’s Budget had already been agreed in advance of the Hearing.
In view of the substantial reductions, the Defendant argued that this warranted a departure from the standard “costs in the case” being awarded, which the Court agreed to making an Order that there would be no Costs in relation to the initial Hearing and the Claimant was ordered to pay the Defendant’s costs for the subsequent Hearing as well as a 15% reduction to their overall Costs Management Costs due to the inflated Budget. Master Thornett concluded that “Parties must be prepared to account for not just what work justifies their estimated costs but why the figure claimed is also proportionate.”
A further ‘unrealistic’ Budget in Jenkins –v- Thurrock Council [2024] 2248 (KB) was also the subject of a costs Order being made in the Defendant’s favour building on the principles considered in the above case. Master Thornett again held that the Claimant’s approach to the issue of Budgeting had been “unrealistic” and held that the Claimant should pay the costs of the Budgeting Hearing as well as a further 35% reduction to the Claimant’s overall Case Management Costs.
The above emphasises that if your Budget is not prepared with reasonableness and proportionality in mind, then you run the risk of significant reductions to your projected costs as well as adverse costs Orders as a result.
Further, the application of Cost Budgeting has also been an issue considered by the Court as after all, the purpose of Cost Budgeting is so that Parties to any litigation are aware of their potential Costs liability.
In PXT –v- Atere-Roberts [2024] EWHC 1372 (KB) involving a high value personal injury claim for a child to which Cost Budgeting would not normally apply, the Claimant had been directed throughout to file estimates of costs owing to concerns relating to the escalation of the Claimant’s figures during the course of the Proceedings. The Defendant raised a number of concerns in relation to the accuracy of the information provided and applied for Costs Budgeting to be directed under CPR 3.13 which the Claimant opposed due to the uncertainties and complexities of the case owing to the Claimant’s condition. Master Brown considered the utility, practicality and expense of costs budgeting and ordered that it was appropriate for the claim to be Budgeted.
This again emphasises the importance of incurring proportionate costs, even in matters where there are complex medical issues and uncertainties over prognosis. The Claimant’s costs had almost doubled, and there were concerns as to the Claimant’s Solicitor’s involvement in non-litigation related matters such as day-to-day care and rehabilitation. Cost Budgeting is therefore a useful tool in ensuring that costs are incurred proportionately, even in the most complex of claims.
At the start of 2024 there was also an unusual Appeal in the case of Woolley –v- Ministry of Justice [2024] EWHC 304 (KB). This was a Personal Injury matter where the Defendant’s future costs had been agreed pre-CCMC Hearing at £37,727.00. At the CCMC, the Claimant’s future costs were allowed in the sum of £26,225.00, approximately £11,500.00 lower than the Defendant. During the course of the Hearing, the Judge did not allow the Claimant’s Advocate to refer to the figures contained in the Defendant’s Budget in relation to arguments on reasonableness and proportionality.
In its Precedent R, the Defendant had made arguments that the Claimant’s Cost Budget was disproportionate, and a recording in the Costs Management Order was made that the “Claimant’s budget appeared disproportionate” after Hearing representations from the Defendant on the same. The Claimant sought to appeal the Cost Management Order on the basis that the Judge had failed to take into account the Defendant’s Budget and that the Court was required “to have regard to any available budgets of the parties.”
The Appeal was allowed with the Court finding the Judge should have heard arguments about the comparison to the Defendant’s budget as some comparison may be informative. The matter was remitted back to the County Court to be considered by an alternative Judge if the Parties were unable to agree the Claimant’s Budget in advance of the next Hearing.
Whilst parties should be cautious when drawing comparisons between budgets, the Court accepted that an agreed Budget is not necessarily a reasonable one and that budgets are sometimes drawn and agreed at levels influenced by tactical considerations, but that is not to say that the other side’s budget is intrinsically irrelevant.
It will therefore be interesting to see how the above cases impact the anticipated changes for Budgeting in 2025; there are plenty of uncertainties, although as the above demonstrates, the importance of preparing a reasonable and proportionate Budget remains of vital importance.