Precedent T – Q&A

What is Precedent T?

Precedent T has been introduced through the 122nd amendment to the CPR as the format to be used when varying Costs Budgets. From 1 October 2020 this format became mandatory.

What detail is included within Precedent T?

The Precedent T is comprised of two sheets contained within an Excel document. The front page includes the details of the previous Costs Management Order (CMO) and a summary of the variance sought. The second page is where you are able to set out the details of what phases are to be varied, the new figures to be included in the varied CMO, the reasons for the variance setting out the ‘significant development’ that has occurred, and finally, space for your opponent to record their comments setting out their agreements/disagreements.

Precedent T also allows for particular detail to be included in respect of the expert phase, chiefly, the amount of expert fees if they are changing.

Why do I need to vary a Cost Budget?

There is now a clear mandatory obligation on all parties because they now must revise their budgeted costs upwards or downwards if there is a significant development in the case.

But this is not simply an extra unnecessary step in the costs management procedure. The importance of an up to date CMO cannot be underestimated. A CMO is the first chance that you are able to ‘ring fence’ a portion of costs from any future assessment thanks to the decision in Harrison. If all of the assumptions are met and the phase can be said to be ‘completed’, and the costs claimed are under the budgeted amount set out in the CMO, then these costs will be awarded as claimed at assessment subject to any ‘good reason to depart’ from the Budgeted amount. This therefore means that a significant sum of costs can now be awarded without being subject to the rigours of the assessment process.

How do I vary a Cost Budget?

The procedure to vary a CMO is now set out in CPR 3.15A. The procedure is as follows:

  1. Serve the proposed variations to the Budget in the form of Precedent T on the Defendant,
  2. Ensure that the Precedent T only includes the additional costs occasioned by the ‘significant development’,
  3. The Precedent T must be certified that any costs include within Precedent T have NOT been include in any previous Budget or Precedent T,
  4. The Precedent T must then be served at the Court promptly, with a copy of the previous Budget, and an explanation of the areas of agreement/difference between the parties,
  5. The Court will then either approve, vary or disallow the proposed variations with reference to the significant developments but can also set the matter down for a further costs management hearing.

It should be noted that there is no requirement to prepare an ‘updated Costs Budget’ in respect of the costs that have been incurred since the making of the original CMO.

When should I vary a Cost Budget?

CPR 3.15A (2) states that any Precedent T should be submitted promptly to the other party and the Court. It is therefore recommended that a Precedent T should be completed before the costs have been incurred or as soon as the significant development comes to light to stand the best chance of the Court allowing the variation that is being applied for.

However, the CPR does provide for the Court to vary a CMO relating to costs which have been incurred prior to the order of variation but after the making of the original CMO CPR 3.15A(6). However, it is recommended that this should only be used as a last resort and when the significant development in a case are particularly time sensitive.

What is a significant development?

The CPR does not provide a definition of what can amount to a ‘significant development’ in a case. However, I would recommend that the first port of call will be to consider the assumptions that the CMO was based upon. If the assumptions are detailed then this will help significantly. If the case requires you to do something outside of the scope of the original assumptions set out then this is likely to be considered a ‘significant development’. Given the ability to provide additional detail in respect of expert fees within the Precedent T it can be safely assumed that the need to obtain further additional expert evidence which was not included within the CMO is likely to be considered a significant development. Further examples could include: the need to obtain additional witness statements, the receipt of surveillance evidence, or significant change in the quantum of the claim.

Why should I vary a Cost Budget upwards?

If a significant development occurs which requires additional costs to be incurred in a phase then this is when a Cost Budget should be varied upwards. This will ensure that at the conclusion of the claim you are not limited by the original budgeted amount set in the CMO even though you have incurred far more in that phase.

Why should I vary a Cost Budget downwards?

Whilst on the face of it varying a Cost Budget downwards may seem counter intuitive, it is actually an important mechanism to ensure that the ‘Budgeted Costs’ remain ‘ring fenced’ and are not subject to assessment at the conclusion of the case. This is because if not all of the assumptions for a phase are completed because a significant development meant that they were unnecessary, for example an expert is no longer required to be instructed due to a Claimant’s change in condition,  then a paying party may be able to strongly argue that there is a ‘good reason to depart’ from the CMO. If this argument is successful then all of the originally ‘ring-fenced’ budgeted costs for that phase are then subject to assessment and the tests of reasonableness and proportionality.

It may, therefore, provide a better outcome to vary a Cost Budget downwards to the costs that are being incurred than to open up that phase to assessment.

What happens if I fail to vary a Cost Budget?

There are no sanctions explicitly set out in the CPR for failing to comply with the mandatory obligation set out in CPR 3.15A(1).

However, it is likely that any sanction is likely to be addressed at the assessment of the Bill of Costs in one of two way. It is either

  1. likely to lead to any paying party having a much greater chance of establishing a ‘good reason to depart’ from the CMO and ultimately opening up that particular phase to be assessed on the relevant basis; or,
  2. it will mean that it will be difficult for any receiving party to be able to argue that there is ‘good reason to depart’ upwards.

How can Paramount Legal Costs help me with Precedent T?

At Paramount we have a team of highly skilled Costs Lawyers and Draftsmen with significant experience of the Costs Management process. We can deal with the preparation of Precedent T on any case, even if we didn’t draft the original Cost Budget.

For further information on this subject, please contact Kris Kilsby, Costs Lawyer, here.


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