How to use the Precedent H checker
- Describe the claim. Part 7 or Part 8, the track, the value stated on the claim form, and any exception such as a child claimant or fixed costs.
- Add the first CMC date. If it is listed, the checker counts back the dates for the budget and the budget discussion report.
- Enter the figures. Optionally, the incurred and estimated costs for each phase of your draft Precedent H.
- Read the answers. Whether costs management applies, the dates, the first page or the full form, the totals and the CPR 3.15(5) caps, each with its rule.
What Precedent H is
Precedent H is the costs budget form annexed to Practice Direction 3D. Unless the court orders otherwise, a budget must be in that form, in landscape format with an easily legible typeface (PD 3D para 4(a)). Apart from Precedent H and the budget discussion report, the parties are not expected to lodge other documents for costs budgeting, save in exceptional circumstances or where the court orders otherwise; in the Excel version published with the practice direction, the first page totals itself from the phases (PD 3D para 3(a)). The purpose of costs management is that the court manages both the steps to be taken and the costs to be incurred, to further the overriding objective (CPR 3.12(2)).
When a costs budget is needed
Costs management under Section II of Part 3 applies to all Part 7 multi-track cases, with the exceptions in CPR 3.12(1)(a) to (e): a claim commenced on or after 22 April 2014 that is stated on the claim form at £10 million or more, or, if unquantified or not a money claim, that the claim form states is valued at £10 million or more; a claim made by or on behalf of a child in proceedings commenced on or after 6 April 2016; proceedings subject to fixed costs or scale costs; and where the court orders otherwise. It applies to any other proceedings, including applications, where the court so orders (CPR 3.12(1A)).
Where the claimant has a limited or severely impaired life expectation, of 5 years or less, the court will ordinarily disapply costs management (PD 3D para 1). Budgets may be particularly appropriate in some cases outside the automatic rule, such as unfair prejudice petitions, claims under the Inheritance (Provision for Family and Dependants) Act 1975, Part 8 claims with a substantial dispute of fact, and personal injury and clinical negligence cases valued at £10 million or more (PD 3D para 2).
When the budget is due
Unless the court otherwise orders, every party except a litigant in person must file and exchange a budget with its directions questionnaire where the stated value of the claim on the claim form is less than £50,000, and in any other case not later than 21 days before the first case management conference (CPR 3.13(1)). A litigant in person does not prepare a budget, but each other party must give the litigant in person a copy of its own (CPR 3.13(6)). A party that fails to file a budget when required is treated, unless the court otherwise orders, as having filed one comprising only the applicable court fees (CPR 3.14). The checker counts the 21 days as clear days, as the free CPR deadline calculator does.
The first page or the full form
Where a party’s total costs, incurred and estimated, do not exceed £25,000, or the value of the claim stated on the claim form is less than £50,000, only the first page of Precedent H is used (PD 3D para 4(b)), and written assumptions are not normally required (PD 3D para 10(b)). Otherwise the whole form is completed, phase by phase.
What goes in each phase
Precedent H divides the costs into pre-action, issue and statements of case, the CMC, disclosure, witness statements, expert reports, the PTR, trial preparation, the trial, and ADR and settlement, with two sections for contingent costs. The table in PD 3D para 6 says what each phase includes and excludes, and the time estimated may have to be justified at the budget hearing with the grade of fee earner doing the work. A few of its distinctions catch budgets out:
- preparing the costs budget for the first CMC is not part of the CMC phase, and the time spent preparing the budget is not claimed in any phase (PD 3D paras 6 and 8);
- counsel’s brief fee for trial goes in trial preparation, and counsel’s refreshers in the trial phase;
- assembling or copying bundles is not fee earners’ work;
- each phase must allow for advising the client, taking instructions and corresponding with the other parties and the court about it (PD 3D para 7).
The J-code and Precedent S lookup shows the Precedent H phase each task budgets under, which matters later, when the bill is drawn to read against the budget.
Incurred and estimated costs
A costs management order records the extent to which the budgeted costs are agreed and the court’s approval of the rest after appropriate revisions, and the extent, if any, to which incurred costs are agreed (CPR 3.15(2)). The court may not approve costs incurred up to and including the date of the costs management hearing, but it may record comments on them and take them into account when considering the reasonableness and proportionality of the budgeted costs (CPR 3.15(4), 3.17(3)). When reviewing budgeted costs, the court does not undertake a detailed assessment in advance: it considers whether they fall within the range of reasonable and proportionate costs (PD 3D para 12), and it does not fix or approve the hourly rates (CPR 3.15(8)).
Assumptions and contingencies
Include only the assumptions that significantly affect the costs, such as the duration of the proceedings, the number of experts and witnesses or the number of interim applications envisaged, in brief in the box beneath each phase; the assumptions already reflected in the PD 3D table are not repeated (PD 3D para 10(a)). Contingent costs are for anticipated costs outside the main phases, such as the trial of a preliminary issue or an application to amend; disputed costs go in their phase, marked as disputed if need be, and only costs more likely than not to be incurred are included (PD 3D para 9).
The statement of truth
Every budget must be dated and verified by a statement of truth signed by a senior legal representative of the party (CPR 3.13(5)). The form is: “This budget is a fair and accurate statement of incurred and estimated costs which it would be reasonable and proportionate for my client to incur in this litigation.” (PD 22 para 2.3).
The budget discussion report (Precedent R)
Where a party files and exchanges a budget, all other parties, other than litigants in person, must file an agreed budget discussion report no later than 7 days before the first case management conference (CPR 3.13(2)). It sets out the figures agreed for each phase, those not agreed, and a brief summary of the grounds of dispute, and the parties are encouraged to use Precedent R (PD 3D para 11).
The caps on the costs of budgeting
Save in exceptional circumstances, the recoverable costs of initially completing Precedent H cannot exceed the higher of £1,000 and 1% of the total of the incurred costs (as agreed or allowed on assessment) and the budgeted costs (agreed or approved), and all other recoverable costs of the budgeting and costs management process cannot exceed 2% of that total (CPR 3.15(5)). The maximum figures are inserted once the budget has been approved (PD 3D para 8). The checker works the caps on the budget as drafted, so they show the order of magnitude; the court applies them to the agreed or approved figures.
Varying the budget (Precedent T)
A party must revise its budgeted costs upwards or downwards if significant developments in the litigation warrant it. It serves particulars of the variation in the form prescribed by PD 3D, confined to the additional costs of the development and certified as not included in any previous budget, and submits them promptly to the other parties for agreement and then to the court, with the last approved or agreed budget and, if not agreed, an explanation of the points of difference (CPR 3.15A(1) to (4)). Precedent T is that form (PD 3D para 3(b)). For a case on how timing affects a variation, see our note on Car Wizard v Vixen.
What the budget means at the end of the case
Where a costs management order has been made, on a standard basis assessment the court has regard to the receiving party’s last approved or agreed budgeted costs for each phase, will not depart from them unless satisfied that there is good reason to do so, and takes into account any comments recorded on incurred costs (CPR 3.18). So the budget is the first draft of the argument about recoverable costs, made before the shape of the claim is clear. Our practitioner guide to clinical negligence costs budgets and the CCMC works through the assumptions phase by phase.
Help with a budget
DMD Costs prepares Precedent H budgets, the assumptions behind each phase, Precedent R reports and Precedent T variations for claimant solicitor firms: see our costs budgeting service. The fee is fixed and agreed before any work begins.
Sources
- CPR Part 3 (rules 3.12 to 3.18)
- Practice Direction 3D: Costs Management (paras 1 to 13)
- Precedent H, Precedent R and Precedent T, annexed to Practice Direction 3D
- Practice Direction 22 (para 2.3)