Precedent H (Costs Budget) Assistance

Understanding Precedent H

In Multi-Track cases, the process of cost recovery commences with Cost Budgeting. The Cost Budget, commonly referred to as Precedent H, establishes the recoverable costs for the receiving party at the onset of litigation, aiding in the strategic allocation of resources throughout the proceedings.

Cost budget preparation is obligatory for all Multi-Track cases or as directed by the court. The front sheet of the budget is only required if costs fall below £50,000. However, for claims exceeding £50,000, the budget must be submitted 21 days prior to the first Case Management Conference (CMC).

Understanding the Process of Costs Budgeting

Costs Budgeting serves as a crucial aspect of managing expenses throughout the litigation process. It entails the preparation of a Precedent H, which must be accompanied by a statement of truth, encompassing all pertinent case considerations. When compiling the Costs Budget, parties are required to factor in various elements such as team members, their respective hourly rates, anticipated expert and witness expenses, as well as any potential contingencies. Pertinent details can often be gleaned from the Directions Questionnaire and proposed directions, and it's essential for the Costs Budget to align with these directives and the anticipated duration of the trial.

Failure to submit a budget or meet the deadline may result in court-imposed sanctions, potentially lim20iting cost recovery to court fees exclusively. In such instances, it's imperative to promptly seek relief from sanctions upon becoming aware of the default or if the issue is raised by another party.

Understanding Incurred and Budgeted Costs

With the revision to Practice Direction 3E, subsequently repealed in 2023, the guidance notes for Precedent H on costs budgeting were also revised. The updated PD 3E, effective from October 2019, provided clear definitions for incurred and budgeted costs:

"Incurred costs encompass all expenses accrued up to and including the date of the initial costs management order, unless stipulated otherwise."

"Budgeted costs refer to all expenses projected to be incurred after the date of the initial costs management order."

Another significant amendment in the guidance notes is the relocation of fees for a trial brief from the "Trial" phase to the "Trial Preparation" phase. This adjustment carries significance for costs professionals, as incorrectly placing the brief fee may result in court sanctions.

Although subsequent changes have been made to the Practice Directions, the aforementioned updates to Practice Direction 3E have been rescinded; nevertheless, the regulations remain applicable under CPR 3.17.

(1) In making any case management decision, the court will consider the available budgets of the parties and factor in the costs associated with each procedural step.

(2) This provision applies regardless of whether the court has issued a costs management order.

(3) Subject to rule 3.15A, the court—

“3.17

(a) may not endorse costs incurred up to and including the date of any costs management hearing;