Costs Budgeting process appeal upheld

Tue, 27 Nov 2018

An appeal over the process of Costs Budgeting has been upheld bringing into question the practice of ‘parking off’ hourly rates to detailed assessment.

Paul Joseph, counsel at No5 Barristers’ Chambers, has highlighted the case of Derrick Offei Agyemang Yirenkyi v Ministry of Defence (2018). The claimant appealed against a master’s decision on cost budgeting.

After a cost budgets hearing, the master had made an order approving the claimant’s costs budget as well as the defendant’s “save that the parties reserved their positions as to incurred costs and as to hourly rates (and) it remains open to them to dispute those matters (and to that extent the figure for each phase) as a detailed assessment”. The master approved a number of hours and individual disbursements to be incurred in each phase of the proceedings.

The appeal was upheld that the master has erred in principle in approving specific hours and disbursements rather than total figures for each phase of the proceedings and in expressly reserving matters, such as hourly rates, to be disputed at a detailed assessment.

Paul Joseph added: “Parties have sometimes felt that the right course at the Costs Budgeting stage is to “park off” to detailed assessment, which takes place at the conclusion of the case, the issue of what hourly rates should be allowed for the work done by the various solicitors who worked on the case. 

“Some judges have been prepared to go along with this and this is what happened in this case.  They then ‘fix’ a budget but subject to the express reservation that at the detailed assessment, the parties can argue about the hourly rates which will apply to the budgeted costs.

“However, the court has confirmed that this approach is wrong. The function of the court at the Costs Budgeting stage is to set a reasonable and proportionate Costs Budget. That means that it cannot purport to approve a party’s budget and at the same time put off to detailed assessment the hourly rates to be allowed for the work which the budgeted phases encompass. That is to fudge the issue and to fail to comply with the court’s function.

“This only applies to budgeted costs because the court is unable to alter incurred costs. The result is that it remains possible to challenge hourly rates in relation to incurred costs, but once the court has fixed the phases for the budgeted costs, those phases can only be departed from at the detailed assessment if there is good reason to do so.”

Paul Joseph is part of the Costs and Litigation Funding group at No5 Barristers’ Chambers. To see his profile, visit https://www.no5.com/barristers/barrister-details/227-paul-joseph/

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