Commenting on incurred costs and meaning of ‘exceptional’ in the context of budgeting

Commenting on incurred costs

In Harrison v Coventry the Court of Appeal confirmed that incurred costs are not fixed through the budgeting process; these are subject to detailed assessment without any restraint under CPR 3.18. However, in accordance with CPR 3.15(4), any comments made by the judge at the CCMC “are to be taken in account in any subsequent assessment proceedings”.

Mindful that costs management is not a detailed assessment in advance, but rather a consideration – often undertaken quickly - of whether the budgeted costs fall within the range of reasonable and proportionate costs, Chief Master Marsh indicated that the court should be wary of making any comment in relation to incurred costs at the budgeting stage, particularly given the limited information available at that time. 

Therefore, although noting that the incurred costs in this case were significant at almost £1.2 million, the Chief Master felt that it was not possible for the court to form any meaningful view as to whether the costs were unreasonable and/or disproportionate on the basis of the very limited information available, let alone that the costs might be significantly or substantially unreasonable and/or disproportionate.

Fee for budget preparation

Upon a request being made to allow more than the fixed percentage allowance for preparation of the budget Chief Master Marsh also provided guidance on the meaning of ‘exceptional’ and whether the cap in PD 3E 7.2 can be overlooked.

The Chief Master took account of the fact that two budgets had been prepared in advance of the CMC on the basis of a potential split trial, and further work had to be undertaken as a consequence of the CMC with the budgets requiring redrafting, this along with the additional work caused by the defendant’s request for comments to be made on the incurred costs. Chief Master Marsh found that it was proper to regard the circumstances in this case as exceptional on the basis that they were significantly out of the norm, and therefore the cap was lifted.

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Sean Chaffe

Costs Lawyer & Senior Legal Costs Draftsman

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