A costs judge gave guidance on the practicalities of detailed assessment in budgeted cases last week.

In Woodburn v Thomas (costs budgeting) [2017] EWHC B16 (Costs), Master McCloud, sitting as deputy costs judge, addressed the interplay between current rules and guidance covering the cost of the budgeting process.

The judge identified a ‘tension’ between practice direction PD 3E B(6)(d), and comments made by the senior costs judge Master Gordon-Saker in BP v Cardiff & Vale University Local Health Board.

She said: ‘There is a tension between the requirement in the PD to follow the Precedent H Guidance (which means that some costs of costs budgeting and costs management are placed in the case management conference and pre-trial review phases of the Precedent H and therefore budgeted) on the one hand, and the very sensible guidance of the senior costs judge in relation to the need to spell out in the eventual bill the costs which are claimed as being within the 1% or 2% caps on budgeting costs.

‘In this instance the costs lawyer drafting the bill proceeded on the footing that the senior costs judge’s guidance should be followed and the costs of budgeting and costs management should be separated out.’

She continued: ‘It was [therefore] difficult for the parties and the court initially to get to the bottom of what the correct approach to assessing the relevant parts should be, and for what items in the bill, and whether to treat some or all of the “non phase” costs as being subject to the 2% cap or (alternatively or perhaps in addition) also subject to the budget limit for the CMC phase itself.’

Setting out her decision on how the issue should be approached, Master McCloud said:

‘The assumptions in the Precedent H are the starting point. Those evidence the basis on which the judge has made their budgeting decision or on which the parties agreed the budget. Here the assumptions included in the CMC phase (and PTR phase) included some costs referable to budgeting and costs management, which is as the guidance requires.

‘The costs lawyer drafting the Precedent H must, unless the guidance changes, follow the guidance as to which costs of costs budgeting they include in the CMC (and PTR) phases and which they include in the non-phase elements as being the “other” costs of costs budgeting.’

She concluded:

‘In my judgment (whether or not the guidance has been followed, albeit it was in this case), where a budget is approved or agreed then the assumptions on which it was approved or agreed are the best guide as to how the relevant budgeting costs should be treated in the bill, so as to avoid the difficulty of argument over the extent to which those budgeting costs may be subject to the CMC phase’s budget limit (thereby requiring “good reason” if in excess of budget) as opposed to or as well as the “2%” cap imposed by PD 3E 7.2(b).

‘Ensuring that the bill phases include (wholly and exclusively) the costs which were budgeted in the corresponding identical Precedent H phases could avoid the confusion as to “what goes where and how to treat it” which was encountered here and took some time in court to resolve item by item in the “non phase” part of the bill.’

Master McCloud directed that items in the ‘non phase’ part of the bill that fell within the CMC phase assumptions of the approved Precedent H should be treated as if they had been pleaded in the CMC phase of the bill. She directed that all other costs of costs budgeting and costs management should remain in the non-phase part of the Bill and be subject to the relevant 2% or 1% cap.

She added: ‘The above approach is not ideal. Whilst it ensures that the CMC budget phase matches exactly the bill CMC phase, it has the undesirable effect of dividing the costs budgeting costs into two parts (those subsumed into the CMC budgeted phase and those in the ‘non phase’, non-budgeted part of the bill).

‘Separating those in that way then arguably causes difficulties in application of the 2% cap on budgeting costs, and in this judgment I was not asked to rule on the question as to whether the costs budgeting costs in the CMC phase were subject to the budget for that phase only, or whether they were subject to both the phase budget and the 2% cap.

‘It may be helpful for the Rule Committee to consider whether the guidance for Precedent H should stipulate a simple solution, namely that any costs referable to costs budgeting and costs management are not to be included in the Precedent H other than for the purposes of the 1% and 2% caps on budgeting costs.

‘Taking that approach would mean that CMC budgets would be as their name suggests, budgets for case management conferences and case management, and not the costs management aspects of the case, which (consistently with the senior costs judge’s guidance in BP v Cardiff & Vale University Local Health Board) could helpfully be spelled out in one clear part of the Bill to which the relevant percentage cap can easily be applied.’