In the recent case of Utting v City College Norwich [2020] EQHC B20 (Costs) Master Brown has rejected the Defendant’s submissions that an underspend should amount to a good reason to go behind the budgeted sums to allow a line by line assessment of costs incurred.
Master Brown examined the contrasting authorities on the point in the cases of Salmon v Bart Health NHS Trust [2019] & Chapman v Norfolk and Norwich University Hospital NHS Foundation Trust, March 2020 finding in favour of the latter. Master Brown commented that to find an underspend as a de facto basis for departure would not only punish Solicitors who have sought to engage in effective costs management but also seek to contradict the effectiveness of costs budgeting in limiting the amount of cases that ran to Detailed Assessment.
Comment was further provided that should an underspend amount to a good reason for the purpose of CPR 3.18, it does not automatically follow that a reduction should be made. Evaluation would be required into the additional factual circumstances of those phases where an underspend had occurred and only upon assessment of these factors would an assessment on a line by line basis be warranted.
Master Brown conducted this assessment on several phases finding in favour of the Claimant even when areas of work were not undertaken as the level of the underspend reflected the work not completed.
This decision highlights the level of justification which must be made by a paying party in seeking to adduce a good reason to depart. This decision should re-enforce the position that once a CMO is made and adhered to Solicitors should be confident in their recovery of their costs as was always the intention of the budgeting process when initially introduced.