The updated Guidance Notes on Precedent H retains the requirement to include, under the CMC phase:
“Correspondence with opponent to agree … budgets, where possible”
This is odd.
The Guidance also states:
“Budget preparation: the time spent in preparing the budget and associated material must not be claimed in the draft budget under any phase. The permitted figure will be inserted once the final budget figure has been approved by the court.”
In fact, Precedent H includes two boxes relating to the costs of costs management.
The first box relates to the costs of “budget drafting” and states “1% of approved budget or £1,000”. This is clearly intended to reflect PD 3E para.7.2(a) which states that, save in exceptional circumstances:
“the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% of the total of the incurred costs (as agreed or allowed on assessment) and the budgeted costs (agreed or approved)”
The second box is titled “budget process” and refers to 2%. This is clearly intended to reflect PD 3E para.7.2(b) which states that, save in exceptional circumstances:
“all other recoverable costs of the budgeting and costs management process shall not exceed 2% of the total of the incurred costs (as agreed or allowed on assessment) and the budgeted (agreed or approved) costs.”
Time engaged in correspondence attempting to agree budgets clearly falls into “other recoverable costs of the budgeting and case management process”.
There is plainly a danger of the intended 2% cap being breached. The 2% figure is intended to cover work relating to the budgeting/costs management process that falls outside any of the phases within Precedent H. This work is usually placed in a separate part of any Bill of Costs. However, if correspondence attempting to agree budgets is included within the CMC phase of a budget, this work will also probably be included in this section of any subsequent Bill of Costs and thus be liable to slip under the radar when the 2% cap is being applied.