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Not avoiding a detailed assessment; the correct approach at the detailed assessment

Merrix v Heart of England NHS Foundation Trust [2017] 1 Costs LR 91. Carr J .When carrying out a detailed assessment of standard costs, the costs judge is bound by the budget unless ”good reason” can be shown under CPR 3.18(b) to depart from it. The words of CPR 3.18 do not permit the court to carry out a line by line assessment, merely using the budget as a guide or factor to be taken into account. The budgeted costs must be allowed unless a good reason can be shown for not doing so.

“Where a costs management order has been made, when assessing costs on the standard basis, the costs judge will not depart from the receiving party’s last approved or agreed budget unless satisfied that there is good reason to do so. This applies as much where the receiving party claims a  sum equal or less than the sums budgeted as where the receiving party seeks to recover more than the sums budgeted” [92].

Harrison v University Hospitals Coventry and Warwickshire NHS Trust [2017] 3 Costs LR 425. Etherton MR, Black, Davis LJJ.

The decision in Merrix was correct. As regards procedure and proportionality:-

“I add that where, as here, a costs judge on detailed assessment will be assessing incurred costs in the usual way and will also be considering budgeted costs (and not departing from such budgeted costs in the absence of “good reason’), the costs Judge ordinarily will, still, as I see it, ultimately have to look at matters in the round and consider whether the resulting aggregate figure is proportionate, having regard to CPR 44.3(2)(a) and (5) : a further potential safeguard, therefore, for the paying party Davis LJ

How is that to be applied when the hourly rate allowed for the incurred costs is less than the figure shown in the receiving party’s precedent H?

RNB v London Borough of Newham [2017] EWHC B15 (Costs) *** – hourly rate allowed at detailed assessment for pre-budget incurred costs applied to the costs allowed in the last approved costs budget….

Contrast judgment of DJ Lumb sitting at Birmingham DR 18 August 2017 (unreported)*** – to reduce hourly charging rates for  budgeted costs to the same levels as those allowed for the incurred costs, thereby causing a potential departure from the budgeted phase totals, would be to second-guess the thought process of the costs managing Judge and would impute a risk of double jeopardy into the detailed assessment.

AND The Capital Markets Co (UK) Ltd v Traver [2017] EWHC 2885 (Ch). Claimants’ incurred costs amounted to £6.3m. Further costs estimated at £8.9m. In refusing to approve the budget, the judge said at [15]

My second general observation is that the hourly rates which the claimants’ solicitors propose to charge in their budget are well in excess of the current guidelines for London solicitors.  They are proposing to charge £705 per hour for partners and an average of £540 per hour for other Band A earners…… the guidelines are of course, just for guidance and in appropriate high-value or high difficulty cases, the court will allow a higher rate….. While it is not for the court to set hourly rates when approving a costs budget, I can take account, when deciding whether to approve the budget, of the fact, as I consider to be the case, that the claimants are proposing to remunerate their solicitors at a rate which is higher than the lowest amount they might be expected to pay in order to conduct the case proficiently… [16], in my view, looked at in the round, all other things being equal, a reduction of 20% would be justified from the solicitors’ costs element of the claimants’  budget for that element alone”

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