Costs Budgeting: Major Changes in Force from 1 October 2020
Key Contact: Hugh Hitchcock
Author: Steven Koukos
Following the Civil Procedure (Amendment No.3) Rules 2020, SI 2020/747 and the 122nd update to the Practice Direction, there are major changes in relation to the revision and variation of costs budgets, which come into force from 1 October 2020.
There will be significant updates to PD 3E and CPR 3, with a new costs document, Precedent T, being introduced. Where there have been any ‘significant developments’ in the litigation, the Precedent T is to be used to vary a budget. The new Precedent T can be found at: https://www.justice.gov.uk/courts/procedure-rules/civil/Prec-T-v15.04.2020-003.xlsx.
The updates are intended to rationalise the current structure of the rules on variations to costs budgets and provide clarity to practitioners on the process. The main rules and procedural points in this respect can be found at new rule CPR 3.15(1) onwards and include:
- A party must revise its costs budget upwards or downwards if significant developments in the litigation warrant such revisions, using the Precedent T.
- Any budgets revised must be submitted promptly by the revising party to the other parties for agreement, and subsequently to the court.
- The particulars of the variation must be confined to the additional costs occasioned by the significant development.
- The revising party must certify that the additional costs are not included in any previous budgeted costs or variation.
- The particulars of the revisions must be summited to the court promptly, together with the last approved or agreed budget, and with an explanation of the points of difference if they have not been agreed.
Once the above steps have been taken, the court may approve, vary or disallow the proposed variations. The court will consider any significant developments which have occurred since the date when the previous budget was approved or agreed. The court may also list a further costs management hearing.
Where a court approves a variation, it may do so in relation to costs that have been incurred prior to the date of the order for variation, but after the costs management order.
It is hoped that the changes and the introduction of the Precedent T will streamline the process of revising costs budgets, avoiding the need for unnecessary exchanges regarding the format of the revisions, whilst ensuring that the focus remains on the additional amounts being sought.
For further information or guidance on the subject, please contact our litigation team.