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Want a payment on account: does the budget help?


MachInnes v Gross [2017] 2 Costs LO 235 Coulson J

The approved budget is the appropriate starting point for the calculation of any interim payment on account of costs. Where there is an approved or agreed costs budget, when costs are assessed on a standard basis at the end of the case, the court will not depart from it, unless satisfied that there is a good reason to do so.

“The significance of this rule cannot be [over] stated. It means that when costs are assessed, the costs judge will start with the figure in the approved costs budget.…… One of the main benefits to be gained from the increased work for the parties (and for the court) in undertaking the detailed costs management exercise at the outset of the case is the fact that, at its conclusion, there will be a large amount of certainty as to what the likely costs recovery will be. One consequence is that, for the purposes of calculating the interim payment on account of costs, the starting point will almost always be the payee’s approved costs budget. Another consequence is that the court assessing the interim figure cannot ignore the fact that, as here, there may have been significant expenditure on costs by the payee above the budget figure ….. Any increase is a matter for the cost judge and the relatively onerous burden of recovering more than the budget is on the payee [emphasis added]”.[see paras 25-26].

See too Car Giant. Paragraph 41. Approved budget for defendant was £110,000 who had a costs order in its favour under Part 36, but be set off against that were adverse costs of the claimant….

”I cannot imagine that Car Giant will recover more than £25,000 in respect of its recovery of 50% to 7 May 2014. There will of course be interest payable which will affect these figures. Nevertheless, it would seem to me that a reasonable sum on account of costs would be 80% of £85,000, i.e. £68,000 and I will direct that Car Giant pays that sum…. within 14 days…”

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