How to budget work which doesn't fit within existing phases
Posted on 22nd June 2023 at 17:42
By Sean Linley, Costs Draftsman
A long standing issues with Costs Budgeting is that certain elements of work don’t really seem to fit the existing phases.
One example of this is time spent by the solicitor arising from case management meetings of medicals and other professionals (like MDT), work pertaining to Case Managers and work arising where there is a Deputy in place. The case of Hadley v Przybylo  EWHC 1392 (KB) (22 June 2023) finally gives some helpful guidance.
For a speed read, scroll down to our analysis of the bottom!
The claim was a very complex and serious personal injury case with the Claimant’s budget exceeding £1million. The court had ordered the parties to engage in ADR in order to address costs management issues or at the very least to narrow them.
An issue, however, remained, with respect to whether time relating to fee earners attending at case management meetings of medical and other professionals and meetings with or attendances on Court of Protection Deputies should be included in the Costs Budget.
The Claimant’s position was as follows:
“The Claimant argues that it is frequently, in its representatives' experience, the case that such charges are allowed to be included in budgets in that section and that such is the practice of other Masters. They contend that attendance by a fee earner at these case management meetings etc are reasonably necessary to progress the litigation because they assist in maintaining the Schedule of Loss as the claim goes along. It is (in my words) something of a 'live feed' from the Claimant's care and treatment at medical-professional level and the deputies, to the lawyers. What is claimed in the budget is about 1 hour each week with the Case Manager and 1 hour each week with each of the two Deputies, totalling 3 hours a week in the Issues and Statements of Case phase, as part of work on drafting and updating the Schedule of Loss on an ongoing basis.”
The Defendant’s position was set out thus:
“The Defendant argues quite the contrary. His representatives argue that as a matter of principle such attendance charges ought to be ruled as inadmissible in a budget. They are not progressive of litigation any more than, say, having lawyers attend every medical treatment appointment would be. They are not properly included. In addition, whether or not in principle ever allowable in a budget, they do not fall within the guidance as to the categories of matter to be included in the Issues and Statements of Case phase in any event. Furthermore, their experience in contrast with that of the Claimants is that such charges are often rejected for inclusion in budgets.”
The court noted that there was no relevant authority on the issue and Master McCloud tellingly stated that “it falls to me to make a decision so that any aggrieved party can seek a ruling, if they wish, on appeal, as to the correct approach.”
Master McCloud considered the concept of costs in litigation and commented that:
“10. I accept the Defendant's argument at hearing that it is a general principle that 'costs' are legal costs which are incurred in the progression of litigation. They may be pre-action, for example, or they may be reasonably incurred but found in hindsight not to be useful, yet such costs can still be 'progressive' even if they rule out some things which are then not pursued. But costs which are inherently non-progressive are not in my judgment 'costs' properly claimable in a budget between the parties. It is not unusual in assessing a bill of costs to disallow items with the brief statement 'non-progressive', for example and it seems to me that if costs fall into that category then they are not suitable for inclusion in a budget.
11. If costs are progressive, then for the purposes of budgeting one has to proceed to fix the reasonable budget sum as a best judicial estimate of future costs, doing the best one can without the assistance of actual material showing work done, such as a Costs Judge would have at a detailed assessment. But the question "are these in principle claimable at all as costs?" is a latent but usually uncontentious one lurking in any costs decision as to quantum whether in budgeting or assessment of costs. It has raised its head in this case.”
Master McCloud stated that where a whole category of expense is sought but also challenged then the question to be considered is:
“Does an item of a specific type in a budget materially progress the case?”
The court stated that if it did not then it is not budgetable or a recoverable head of costs in principle.
Carrying on considerations in the case at hand Master McCloud stated that:
"13. In my judgment having a fee earner attending rehabilitation case management meetings is not progressive in the above sense and does not fall within the notion of 'costs'. Likewise a fee earner attending on deputies so as to seek input into the ongoing drafting of the case in the form of the Schedule, when deputies do not properly play a part in such work, is not progressive. It is for the Claimant to consider whether at trial they may be claimable as damages.
14. The argument that simply attending on these individuals is an 'integral part' of producing the Schedule of Loss, and hence allowable for inclusion as a budget item under that head is weak, in my judgment. Information about case management, or incurred expenses of such things as money management can be achieved by the occasional letter to the case manager or relevant deputy or from obtaining documents for later disclosure, in the disclosure phase, and ultimately also in the Case Manager's or Deputies' witness statements which may or may not be needed for the purposes of a formal deputyship expert. Those are qualitatively different things from attending meetings for input into a Schedule of Loss, as is claimed here on a very significant scale. Thus, nothing in this decision says that in principle some phases in a budget cannot include engagement with case managers or deputies, such as for disclosure or witness statements and occasional letters. Past deputyship costs one notes are a matter of fact based on invoices possibly assessed by the SCCO, and the future cost of deputyship is a matter for a deputyship expert.
15. It is true that the Rehabilitation Code requires consideration by both sides of whether rehabilitation would assist and that it is intended that both sides will collaborate in relation to consideration of rehabilitation needs. However, that does not in my judgment bear an interpretation that having lawyers attend rehabilitation meetings amounts to litigation costs. It may arguably form part of damages but that is not a matter for me.
16. Thus, the (numerous) attendances of the sorts proposed here do not in my judgment progress litigation in this case. Note that I am not here saying that these costs are 'unreasonable' or 'disproportionate': those would be the tests I would apply if I were accepting that in principle they were 'costs' for the purposes of a budget in the first place.
17. If (per contra) I had decided that these sums of proposed expenditure in principle would progress the litigation then I would indeed have next to consider whether the proposed extent of attendance was reasonable and proportionate. Were I to have to decided that I would say that the sum and the extent of proposed attendance is unreasonable and would have striven to budget a lesser sum. However, that question strictly does not arise given my decision above.
18. It was pointed out after the hearing in this case that, apparently, the Defendant sent a representative to attend one Case Management meeting. The Defendant clarified that no costs had been included for attendance at that meeting in the Issues and Statements of Case phase but a sum of £368.90 had been included in the disclosure phase for a remote attendance at one Multi-Disciplinary Team meeting. In my judgment that does not alter the principle above and it is entirely possible that, if objection had been taken, I would have excluded it from the Defendant's budget to the extent that it was time cost of attendance. In this instance the item is included by the Defendant as past costs so I am not empowered to disallow it any more than I can in relation to any MDT meeting attendances which may be included in the Claimant's 'Incurred Costs' totals. That is a matter for a Costs Judge in due course. The Claimant's side at the stage of draft judgment also pointed out that the Defendants had expended legal costs on other forms of interaction with the case manager and over rehabilitation. I make no comment on recoverability of such costs given that this judgment is focussed on the narrow issue of principle already identified.
Some further interesting comments arose from Master McCloud as to how matters like this should be addressed within the Costs Budget itself:
“20. I shall express a view as to the correct phase for such sums if they were in principle allowable in a budget. My view is that no current phase is appropriate for such sums. If they were to be allowable in principle I lean to the view that a separate phase or phases should be added ad hoc by the Judge to incorporate them as a specific identified category in any particular case, assuming the sum can be budgeted judicially and is not too unclear to be determined in advance (in which case one might expressly decline to budget the item and leave it for detailed assessment). It may be hoped that some guidance can be given either by any appellate court or the Rules Committee if ultimately I am wrong and time cost of this sort is recoverable, as costs, at all in principle.
21. Because of the importance of this decision I give leave to the Claimant to appeal, and will hear argument as to any 'leapfrog' in view of the impact it might have more widely. As to form of order if not agreed I will hear argument at a handing down hearing, and will hand down in absence of parties if agreed.”
Implications and Analysis
The judgment raises a number of interesting questions and it should not be understated that Master McCloud was very clear that she was making a decision where there was no guidance and consequently the views given could well be altered in the near future.
There are some key takeaways:
- The question of whether an element of costs should or should not be budgeted is whether or not it materially progresses the case?
- Even if the answer to this question is no, then such time could be claimable as part of the damages, though there are clear practical issues with this approach. Crucially if the answer is no, it would not be budgetable.
- Declining to budget a specific work type does not mean it is irrecoverable, it could be left for detailed assessment. Practically speaking it would remove certainty around what can be recovered for this specific element but crucially would allow receiving parties the opportunity to claim the applicable costs down the line.
- For work which falls outside the budget it is preferred that these are identified separately (i.e. as a contingency) whereupon the Judge can incorporate them as appropriate.
- Time for dealing with the Case Manager, Rehabilitation, Deputies etc are permissible to some extent, the court here made the explicit point they would expect some time but the time to be far more limited, i.e. considering records of MDT meetings, getting witness evidence from the Deputy etc.
It highlights the complexity with costs management. My view (and it is only that) is that where there are work types which do not sit comfortably within the budget then it is sensible to claim such work under separate phases (such as within a contingency) so it is clear for the court when determining how to approach matters. It is much easier to move a contingency then it is to move time out of existing phases.
Whilst Master McCloud says that work which is not budgetable could, in principle, either be left for detailed assessment or claimable within damages. Neither of these options are practical. Leaving the time for detailed assessment, removes the certainty of budgeting for all sides. If damages then there are practical issues as to how this is presented and also how it is billed to the client. This could give rise to some solicitor-own-client issues, particularly where is a global settlement. It certainly is not consistent with the aims of the Jackson reforms to give parties more certainty on costs and to seek to reduce the need for assessment.
The decision also highlights some deficiencies with budgeting. We know that the Civil Justice Council are looking at ways to streamline and improve the budgeting process and this will present another challenge for them to address.
It is extremely likely that there will be more to come on this but making sure you have a clear costs budget from the start will assist.
Should you have any queries arising from this article or upon costs generally then please do not hesitate to get in touch with our friendly team either via phone 01482 534567 or e-mail firstname.lastname@example.org.
Tagged as: Costs Budgeting
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