Cost Budgets – Rule Changes

Changes to the CPR coming into force today alter the rules relating to cost budgets. In cases with a stated value of over £50,000 all parties except litigants in person will now exchange budgets 21 days before the first case management conference. Parties must then file an agreed  “budget discussion report” at least 7 days before the first CMC setting out what is agreed, what not agreed, and brief grounds for the latter. The parties are encouraged, but not required, to use a new precedent (“Precedent R”) for the purposes of the budget discussion report.

New Rule 3.13 reads:

 (1) Unless the court otherwise orders, all parties except litigants in person must file and exchange budgets—

(a) where the stated value of the claim on the claim form is less than £50,000, with their directions questionnaires; or

(b) in any other case, not later than 21 days before the first case management conference.

(2) In the event that a party files and exchanges a budget under paragraph (1), all other parties, not being litigants in person, must file an agreed budget discussion report no later than 7 days before the first case management conference.

Paragraph 6A of Practice Direction 3E now reads:

The budget discussion report required by rule 3.13(2) must set out—

(a) those figures which are agreed for each phase;

(b) those figures which are not agreed for each phase; and

(c) a brief summary of the grounds of dispute.

The parties are encouraged to use the Precedent R Budget Discussion Report annexed to this Practice Direction.

These changes are to be welcomed. Earlier exchange of budgets before a CMC should ensure that points of dispute are identified earlier and with greater clarity. Having the extent of agreement and disagreement in a single document also makes sense. Previously one often had to refer to points spread across a stream of correspondence. There remain more fundamental problems with cost budgets which are not addressed by these changes. It remains to be seen whether further reform can make the system as a whole operate smoothly and efficiently.