By Lee Carter, Costs Draftsman 
 
IT’S not the most visually-compelling document, but the new Precedent R Budget Discussion Report is a powerful piece of weaponry. 
 
Unfortunately, and somewhat incorrectly, its importance is often overlooked. 
 
In our experience, the best way to unlock Precedent R’s full potential is to fully understand what it is – and how to use it. 
 
What is a Precedent R costs budget discussion report? 
 
The Precedent R Budget Discussion Report is a court form which sets out details of the costs in a party’s Costs Budget, as agreed by all other parties. 
 
Widely known as a Precedent R, it was first introduced on 6th April 2016 so that parties could comment on their opponent’s Precedent H costs budget. 
 
Since the new Precedent R 2019 came into force on 25th April 2019, all parties have been required to complete eight columns outlining: 
 
‘Budgeted costs claimed’ is made up of 3 separate areas, each with its own column: 
• Total budgeted costs for the phase 
• Total time costs 
• Total disbursements 
 
‘Budgeted costs offered’ is also made up of 3 separate areas, each with its own column: 
• Total budgeted costs for the phase 
• Total time costs 
• Total disbursements 
 
There are also columns for: 
• The amount allowed for time costs and disbursements 
• The Judge’s comments 
 
On 1 October 2020, changes were also made to section II of CPR 3 and CPR PD 3E dealing with costs budgeting. These came into force through the Civil Procedure (Amendment No 3) Rules 2020, SI 2020/747 and the 122nd update - practice direction amendments. 
 
When should Precedent R be filed? 
 
Under UK law, the Precedent R Budget Discussion Report must be filed not less than 7 days before the first case management conference. 
 
Precedent R basically sets out the case budget figures which are agreed and those which are not, on a phase-by-phase basis. A brief summary must be provided to explain any grounds of dispute. 
 
Whilst there is no legal requirement to use Precedent R, parties are encouraged to do so, as stated in paragraph 11 of CPR PD 3E. 
 
However, there are no official Precedent R guidance notes to assist with completing the form. 
 
Should you need help or advice to complete the document, get in touch – our Costs Draftsmen will be happy to help. 
 
Why is Precedent R so important? 
 
Costs budgeting is a delicate balancing act. 
 
In recent years, courts have criticised parties for using Precedent R as a budgeting ‘tactic’ – especially when submitting artificially low costs budgets to the other party. In essence, this is usually done (by the expected paying party) in a bid to persuade the court a case could be carried out for much less, in the hope the court will settle for an amount somewhere between the two vastly-different sets of figures. 
 
However, the courts are wise to this and come down hard on those who pursue such a move, a clear abuse of the budgeting process. 
 
In Findcharm Ltd v Churchill Group Ltd (2017 EWHC 1108 TCC), the Defendants placed an unrealistically low figure at each stage of their Precedent R without justification. 
 
This move was described as “an abuse of the cost budgeting process” by Coulson J who stated: “some parties seem to treat cost budgeting as a form of game, in which they can seek to exploit the cost budgeting rules in the hope of obtaining a tactical advantage over the other side”. 
 
Should an opponent act in this way, we recommend highlighting any unrealistic proposals when submitting your own Precedent R. 
 
Tips to compile a powerful Precedent R 
 
Never underestimate the importance of the costs budgeting process. 
 
Before drafting any Precedent R, it’s important to understand the client’s main objective and what they want to achieve from the Costs Budgeting process. 
 
Always consider proportionality – and weigh up whether the opposition’s budget is relevant to the amount at stake. 
 
Remember, courts will not approve costs which have been incurred before the date of a Costs Management Hearing. 
 
But it is essential to comment on these costs when drafting Precedent R as the court often records those costs and could take them into account when considering proportionality. 
 
Unless you want to be limited to the breakdown provided, be clear about your offer in the Time Costs and Disbursements. 
 
If any costs feel unnecessary or unreasonable, try to pinpoint them and check that their assumptions are consistent with the draft directions. 
 
The court will accept challenges to an opponent’s assumptions at the CMC stage, especially if there is a disagreement over the trial length or number of expert witnesses required. 
 
Raising these issues at the Precedent R stage could result in a direct impact on the final approved costs budget, although to what extent will depend on individual case factors. 
 
Should there be a significant development in the case that would warrant a revision of an approved Costs Budget at a later date, the fact that the Judge’s comments are recorded in the Precedent R can sometimes give you scope or evidence to do so. 
 
A finely-drafted Precedent R does not happen by coincidence. It takes years of knowledge and understanding to pitch it just right. 
 
At Carter Burnett, we specialise in securing Claimant costs on behalf of the receiving party, working hard to recover the maximum damages and costs to ensure their hardship and efforts are properly rewarded. 
 
It is our responsibility to ensure that the Claimant’s solicitor has the highest possible budget, so that they can provide the best possible service to the injured lay Claimant. 
 
By providing them with a suitable budget to vigorously investigate a claim, they are able to leave no stone unturned as they bid to probe the alleged negligence. 
 
Some costs firms work on behalf of defendants and specialise in seeking to reduce damages and costs. 
 
Typically, their first priority will be to win the case so that no damages are paid. But in the event of a loss, their aim is to reduce damages and costs as much as possible. 
 
This is why the judgment in Findcharm is so important. The Defendant put in an unrealistic budget in a bid to undermine the case in the hope the Court agreed and reduce the Claimant’s budget. 
 
But the court saw through this ‘tactic’ and reiterated that the Budget process must not be treated like a game. 
 
If you’re not confident about completing Precedent R budget discussion reports correctly, get in touch and speak to our experts. 
 
We boast unrivalled experience of drafting this important document and regularly work in partnership with the UK’s leading Claimant law firms. 
 
Whether you’re a fee earner or counsel, we’ll be happy to draft outline submissions to assist advocates at a CCMC hearing. 
 
LEGAL DISCLAIMER: The information outlined in this article should not be considered a definitive source of legal advice. If you need professional Precedent R guidance, please call 01482 534567 to discuss your case. 
 
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