Cost News

By Lindsay Woolford

News in: Guidance on the new Precedent T is now here!

As mooted in February 2020, it has now been announced on 21st July 2020 that Civil Procedure (Amendment No. 3) Rules 2020 contain Rules changes in respect to the CPR and also the 122nd Practice Direction Update that will significantly update PD 3E.

When the CPRC initially considered the issue of revising Budgets, recognition was given to the fact that there were a number of ways in which this could be undertaken. It is hoped that the introduction of the new Precedent T will codify the procedure for revising Budgets with the Precedent T for setting out proposed variations, and a new Budget Variation Notice. This will come into force on 1st October 2020.

What is the current process for Revising Budgets?

PD 3E, para 7.6 states that ‘Each party shall revise its budget in respect of future costs upwards or downwards, if significant developments in the litigation warrant such revisions. Such amended budgets shall be submitted to the other parties for agreement. In default of agreement, the amended budgets shall be submitted to the court, together with a note of (a) the changes made and the reasons for those changes and (b) the objections of any other party. The court may approve, vary or disapprove the revisions, having regard to any significant developments which have occurred since the date when the previous budget was approved or agreed’.

Why have the changes come about and what is the intention behind them?

The intention behind the new Precedent T is to rationalise the current structure of the Rules on the variation of budgets. The changes have reduced the existing structure which involved three sources of rules (CPR Rules, a Practice Direction and a lengthy Guidance Note) into two documents; a set of Rules and a Practice Direction which is intended only to include practice guidance.

What are the new changes?

The amendments are made by the Civil Procedure (Amendment No. 3) Rules 2020 and the 122nd Practice Direction Update, with the key amendments being:

  • The introduction of Rule 3.15A in relation to the revision and variation of cost budgets on account of significant developments, which are referred to as ‘variation costs.’ This sets out the new Rules in relation to the documents to be lodged for cost budgeting purposes, and the procedure to be followed. Thereby consolidating the process.
  • There is also the introduction of the new Precedent T which is to be used in the event of the variation of a budget pursuant to Rule 3.15A, and is therefore being introduced as part of the changes to PD3E from 1st October 2020.
What is the impact of the new changes?

Previously, the Parties could agree revisions to their budgets without the Court even being involved, however, the introduction of Rule 3.15A changes this.

One of the main changes is that the Guidance Note to Precedent H now no longer exists, and whilst the new Rules mainly move the Practice Direction into CPR and the Guidance Note to the Practice Direction, there are some new provisions.

It is interesting to note that there is a new provision of PD3E paragraph 13.2 in relation to what is termed “oppressive behaviour” whereby “any Party may apply to the Court if it considers that another party is behaving oppressively in seeking to cause the Application to spend money disproportionately on costs and the Court will grant such relief as may be appropriate.” It will take time to see how the Courts will deal with this, and of course there will need to be case law on the point at a practical level.

These are welcome changes, and will hopefully streamline the process of revising budgets; at present, we see it all too often that protracted correspondence takes place as to the format of the revised budget, rather than focusing upon the contents of the additional amounts being sought. It is hoped that this will also help to overcome the issue of ‘retrospective costs budgeting.’

Unfortunately, there is no copy of the Precedent T available at present, however, as soon as this is available for consideration MRN will provide further commentary.