PD 3E para.6(c) provides:
“In cases where a party’s budgeted costs do not exceed £25,000 or the value of the claim as stated on the claim form is less than £50,000, the parties must only use the first page of Precedent H.”
This is a mandatory provision and a strange one at that.
If either of these two conditions are met, then the first page only is to be completed.
The logic behind the first part of the provisions, that only the first page of a costs budget needs to be completed where the budgeted costs do not exceed £25,000, is presumably fairly straightforward. Where the costs being sought in the budget are relatively modest, it would be an unnecessary additional expense to prepare a full budget. It should be possible for a court to either approve the budget as drafted, or make minor amendments to it, based on the summary page alone.
The logic behind the second part of the provision, that only the first page of a costs budget needs to be completed where the value of the claim is stated to be less than £50,000 is harder to discern. At first blush, it might be viewed that where the value of the claim is less than £50,000 this would indicate that the matter is likely to relatively straightforward in terms of complexity and a full costs budget, showing a detailed breakdown of the estimated work and the assumptions behind the figures, is likely to be unnecessary to control costs through the costs management process.
However, the primary purpose of costs management is to control the overall level of costs that may be incurred. Outside of fixed costs matters (that are not subject to costs management in any event), there is not necessarily any direct link between the level of costs that may be incurred and the value of the claim. If the purpose of costs budgeting is to control excessive costs, why would the value of the claim be relevant as to the amount of detail that is required within the costs budget? The trigger point is surely the level of costs being sought, not the value of the claim.
Further, in addition to controlling the overall level of costs being incurred in litigation in general, a central part of costs management is to ensure that the recoverable costs are proportionate to the amounts and issues in dispute. Costs management therefore becomes much more important where the risk of disproportionate costs being incurred is greatest. Which of these two examples shows the greatest risk of disproportionate costs:
- a commercial claim valued at £1,000,000 where the Claimant’s costs budget is claimed at £100,000, or
- a clinical negligence claim valued at £30,000 where the Claimant’s costs budget is claimed at £100,000?
Surely it is the latter.
If that is so, where is the logic in requiring a full costs budget in the first example but only the first page in the second? The same amount of costs are claimed within each budget but the danger of disproportionality is greater in the second example. The task of the judge at the CCMC to set a proportionate budget in the second example is made much harder if the first page of the budget alone has been completed, meaning no assumptions are set out. Trying to tailor the directions so as to control the costs, and thereby reduce the proposed budget, becomes a much more difficult task with the first page only completed.
I would suggest that the value of the claim form should be irrelevant on the question of how detailed a costs budget should be. The requirement to complete the first page only should be limited to cases where the total of the costs budget does not exceed £25,000.