The new Precedent T
On 21 July 2020 it was announced that there will be an amendment to Part 3 of the CPR (Civil Procedure (Amendment No. 3) Rules 2020) which will significantly change the way in which parties deal with budget variations. This change comes into effect on 1 October 2020 and with it comes the new Precedent T.
Why was it needed?
The requirement (PD 3E, paragraph 7.6), as it stands, allows each party to revise its budget upwards or downwards where there is a significant development in the litigation and the opportunity to agree the variation between the parties. Only where agreement is not reached does the Court have to approve, vary or disallow the changes.
In terms of documentation, parties have tended to use a mark-up of the original budgets, with varying degrees of success, to set out the variations sought and the contentious issues between the parties.
Problems have tended to arise from the non-standardised approaches taken and often lead to lengthy arguments on presentational differences before any discussion on the substantive changes can take place.
Parties end up unclear on what costs appear where, how costs are apportioned and whether they fall into incurred or estimated costs. These issues lead to wasteful arguments at the budget revision stage and add confusion and further argument at detailed assessment, with disagreements on whether parties have breached their budgets and whether costs need to be assessed or whether they should be allowed as part of the estimated costs.
These problems have been further exacerbated by the opportunity provided by the rules to complete this task without Court involvement.
The new Precedent T
So, what does the new document look like and will it make life better?
For starters, it provides a very clear distinction between the previous budget and the variation sought. The summary sheet allows for the previous budget information to be included and a separate column for the variation by phase with a further column for the future total estimated costs sought (including those from the original budget).
It is also apparent from the document that the focus will be on global figures. The summary page has one column for the variation sought (covering time costs and disbursements) and the particulars page only breaks down that figure into time costs and disbursements (although there is a box allowing for a more detailed breakdown of expert’s fees, as in the Precedent H). This supports the approach taken to budgeting by the Courts by dealing with costs on a global phase basis rather than the more detailed breakdown approach required in the Precedent H presentation.
The particulars page allows for arguments both in support of (for the party seeking the variation) and against (for the opposing party), similar to the Precedent R. This ensures that there is one document for the Court to consider. There is an opportunity for parties to provide a general explanation and objection to the variation and further boxes for each phase. However, in what appears to be an attempt to minimise and streamline information, explanation per phase is only required where the variation is above £10,000.
The new document seems to be clear, concise and a helpful addition to the budgeting process which should make the process better, but what about the new rule (3.15(A))?
The rule is fairly streamlined too – setting out clearly what the revising party must serve. However, a couple of key points to note:
- The Precedent T must be served “promptly” although there is no guidance yet on what promptly might mean.
- The particulars of variation must be provided to the Court, whether agreed or not, and the Court may vary, allow or disallow the variations sought – presumably regardless of what is agreed between the parties.
- The Court does have the power to vary budgeted costs incurred after the costs management order and prior to the variation order.
The Precedent T, together with the new rules, should assist in streamlining the process of budget variations, remove the uncertainty created in multiple approaches and enable the Court to have greater clarity and input into costs budget variations and therefore the overall costs. The Precedent T should also assist in reducing arguments on estimated costs at the detailed assessment stage, making it clearer as to what costs are allowed and where good reason to depart will be required.