Keeping it Real (istic) – Costs Budgeting

Keeping it Real (istic)

The recent case of Reid v Wye Valley NHS Trust & Anor (2023) EWHC 2843 (KB) proves a very important read and provides some further important guidance for anyone faced with the task of both preparing and negotiating a Costs Budget.

Arising as a result of a Clinical Negligence claim with a value stated to be in excess of £1m, where Master Brown had already undertaken Costs Management and made substantial reductions to the Claimant’s Costs Budget, the Defendant contended that Master Brown should make no order for costs of the hearing. The standard direction at a CCMC is for costs in the case following costs management but on this occasion, it was the Defendant’s case that the Claimant had failed to engage in Budget negotiations and they argued for no order for costs.

In arriving at the decision to reduce the Claimant’s Budget substantially, Master Brown found that there had been “substantial sums claims particularly in relation to Statements of Case, Experts to some extent and Trial Preparation and Trial”. In the course of the hearing, Master Brown commented that he “would expect there to be a substantially greater degree of delegation that was allowed for”. He further surmised that “some of (these) claims in the budget were just not realistic”. It followed that the Court was minded to make considerable reductions to the Claimant’s Budget and also deemed it appropriate to “have regard to these matters, including the substantial nature of the deductions, in making (my) costs order, in particular some other order than ‘costs in the case’.”

Whilst the Costs Lawyer for the Claimant sought to argue that the Defendants did not make realistic offers during the process of budget negotiations, Master Brown did not agree with this contention. However, he also concluded that the Defendant’s arguments alleging that the Claimant failed to make realistic offers and engage fully in Budget negotiations did not add anything to his concerns.

The decision reached then was for Costs in the Case but Master Brown made a provision for a deduction from the Claimant’s costs of 25%: “I think overall the right deduction from costs is a 25%, so that the costs are costs in the case, save that should the Claimant recover their costs there is a 25% reduction of those costs. That seemed to me to meet the broad justice of the matter bearing in mind also that these claims were really pursued to the end.”

In reaching his conclusion, Master Brown set down his hopes for the future of Costs Budgeting and it is these words that really tend to stick and probably prove of most importance for those drafting and negotiating Budgets. It may be that sort of percentage deduction encourages to take reasonable steps to negotiate their costs budget and to achieve settlement- or at least I might hope so.”

This is an important reminder of the need to submit realistic Budgets and take reasonable steps to negotiate those Budgets and to achieve agreement as far as possible. Any Budget deemed “unrealistic” will, it seems attract sanctions as to costs going forwards and so it remains crucial that careful thought continues to be applied by both costs professionals and instructing solicitors when dealing with Costs Budgeting.

For further information, contact Melanie Pearson, here

The full case can be found here.

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