This week, the costs management rules in court proceedings have been extended. Parties now have to submit a costs budget at court, except where the claim is for £10 million or more.
The budget is put together by each party and costs out each step of the proceedings. The court can reduce a budget if it decides that the costs of a step are not proportionate. This will impact on the costs you can recover if you win.
Are the changes new?
Not entirely. They were introduced last April for cases up to £2 million but some specialist courts were originally excluded. The changes were part of an overhaul of court procedures, known as the Jackson reforms. The process is now being extended to include all courts and higher value disputes.
Can you see the other party’s budget?
Yes – provided they have instructed solicitors. Costs budgeting means more costs transparency early on in the process.
So, what do you need to know about the process?
Have a plan
Work closely with your legal advisers to plan the approach. The court will appreciate that you can not always plan for the unexpected. But you will only be able to claim costs over and above your budget if there are good reasons. This is a difficult hurdle to overcome and best avoided.
Proportionality is key
You may think that a particular step in the litigation is necessary but if the court decides that the costs of that step are not proportionate, you will not be able to recover that cost. The courts are now much more likely to question the steps a party intends to take.
The court will want to see that all deadlines are being met. This applies not just to costs budgets but to all court orders and time limits set by the court rules. Ensure that you reply to your legal team promptly and provide the necessary information on time. If you miss a court deadline, there can be severe consequences. For example, you may not be able to recover all your costs. In some cases your claim or defence may be struck out, even though it has good prospects of success.
Getting back on track is more difficult
You can apply to the court for more time. But the courts are much stricter in allowing these types of applications and again, there has to be a good reason.
It is clear that costs budgets are part of the new approach to court proceedings. Keeping to a budget has always been important, but even more so now.
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