Budget should not 'fetter' costs, judge rules

A Birmingham district judge yesterday rejected a claimant’s argument that there was no need for detailed assessment of costs, because the figures claimed were within the budget.

In Merrix v Heart of England NHS Trust, District Judge Lumb was tasked with deciding a preliminary issue regarding the extent to which costs budgeting should ‘fetter’ the powers and discretion of a costs judge at detailed assessment.

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The claimant, represented by barrister Daniel Frieze instructed by Irwin Mitchell, had asserted that a budget fixed the amount of recoverable costs, and can be reduced only if the paying party can show good reason to depart from it.

The claimant’s counsel argued that if everything were to be left to detailed assessment, this would be inconsistent with the ‘time and expense’ of completing Precedent H and undertaking the costs management process.

He noted that costs budgeting had been intended to reduce the need for lengthy detailed assessments and the time and court resources these entail.

However, DJ Lumb rejected the claimant’s arguments and said the defendants, represented by barrister Richard Wilcock instructed by Acumension, must be correct that ‘cost budgeting was not intended to replace detailed assessment’.

He said: ‘There are numerous examples to support this, not least that had that been their intention, the Rule Committee would undoubtedly have made wholesale changes to CPR parts 44 and 47… The receiving party’s last agreed or approved budget is just another factor that the court will have regard to. No special weight is attached to that budget.’

The judge added: ‘What undoubtedly was intended was that effective costs and case management would greatly reduce the need for detailed assessment of some or all of the parties’ costs by ensuring that the costs budgets were within the range of reasonable and proportionate costs for each phase.

‘In so doing, the scope for disagreement should be reduced to a level where a paying party would be unwise to risk incurring the significant costs of the detailed assessment process for what would only be limited potential gains.’

DJ Lumb found that the powers of a costs judge were not ‘fettered’ by the budget.

He added: ‘However, the full answer to the issue is more nuanced than the defendant’s position of “open season” and complete discretion to attack a bill on detailed assessment, and the claimant’s opportunistic attempt to impose a straight-jacket on the costs judge and claim a fixed figure.

‘There is some merit in elements of both parties’ arguments in the present case.

‘At the same time, their entrenched positions illustrate why some observers consider that costs budgeting has failed to be as successful in practice as it ought to have been.

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Budget should not 'fetter' costs, judge rules