Cost budgeting: hourly rates should not be left for detailed assessment

Published: 30/11/2018 | News, Personal Injury

By Peter Savory, Pupil Barrister

Note: Yirenkyi v Ministry of Defence
2018 QBD (Jacobs J) 2nd November 2018
Sources: Lawtel & Westlaw [2018] 11 WLUK 2018

The decisions of a costs master were recently successfully appealed where it was held the master’s original consideration of the budget was inconsistent with provisions of the CPR.

At the original hearing, Master Davison approved both the claimant’s and defendant’s budgets “save that the parties reserved their positions as to incurred costs and as to hourly rates … it remains open to them to dispute those matters (and to that extent the figure for each phase) at a detailed assessment”. The number of hours and individual disbursements were then approved for each budget phase.

The Claimant appealed, suggesting such an approach was wrong in principle and inconsistent with CPR PD 3E paras 7.3 and 7.10 which say: “The court’s approval will relate only to the total figures for budgeted costs of each phase of the proceedings, although in the course of its review the court may have regard to the constituent elements of each total figure” and “It is not the role of the court in the cost management hearing to fix or approve the hourly rates claimed in the budget”.

On appeal, Jacobs J held that Master Davison had erred in approving specific hours and disbursements on a detailed basis and not merely each phase total. The budget review process, as provided for in CPR PD 3E para 7.3, was to give consideration to a range of reasonable and proportionate costs and not a detailed assessment in advance. Any underlying detail provided to the court was for reference purposes only. Further, it was wrong to reserve the hourly rates to later detailed assessment. The purpose of the budgeting exercise is to provide certainty to the parties and to reduce issues for detailed assessment (Harrison v University Hospitals Coventry and Warwickshire NHS Trust [2017] EWCA Civ 792) and latterly the approved budget should only be departed from with good reason (Henry v News Group Newspapers Ltd [2013] EWCA Civ 19).