What is a Budget Discussion Report?

A “Precedent R” or Budget Discussion Report is a tool encouraged in civil litigation after a Precedent H or Costs Budget has been filed and exchanged.

The budget discussion report is an important part of the costs management and budgeting process. It allows a party to agree or object formally to the other side’s Costs budget, setting out which phases of the budget can be agreed upon and which can be deemed unreasonable and disproportionate.  

Parties are encouraged to attempt resolution to any disagreement which arises as a result of the budget discussion report. Often, parties will come to an intermediary conclusion on a costs budget; however, some cases face disputes leading to a costs management order in Court.

When should a Budget Discussion Report be filed/exchanged?

Under 3.13 (ii) of the Civil Procedure Rules, both parties are required to engage in discussions on costs and thereafter, to file and exchange the budget discussion report, usually 7 days prior to any Costs and Case Management Conference (CCMC). This allows for a period of time in which negotiations can take place.

Greener Costs recommends that you instruct an experienced legal costs expert to complete this document in order to put your best submissions forward before the first CCMC can take place.

Although there is no formal sanction for a late submission or failure to provide a costs budget discussion report, issues may arise later in Court with a lack there of. This may suggest no objection if the opposing parties costs budget remains unchallenged, and the Costs Judge may exercise its’ discretion to impose sanction or allow budgeted costs in full.

What should and shouldn’t be included in a Budget Discussion Report?

The typical inclusions of a budget discussion report were updated in the 2019 revision of the Precedent R. When submitting a report, a phase-by-phase breakdown including columns splits time spent and disbursement for incurred and budgeted costs claimed, and budgeted costs offered.

The subsequent changes made in 2019 allows all parties and the Court to have a clear overview of costs for each phase and allows for more scrutiny when comparing opposing parties’ budgets. The reduction in complexity when reviewing a budget discussion report is beneficial for parties wishing to contest claims for costs or provide justification for how a total phase figure was submitted.

What cannot be contested within the report?

Costs incurred are reserved to be considered on assessment of costs and, therefore, cannot be contested within the budget discussion report. These costs do not receive the same special protection as approved budgeted costs.

The Court can review the level of incurred costs and will record on the Court Order whether they believe the costs to be disproportionate. If considered to be disproportionate at this stage, then the Court will consider the comments when undertaking Detailed Assessment of the Bill of Costs, potentially resulting in further reductions for the Receiving Party.

It is important to note, as seen in the recent case of GS Woodland Court GP 1 Limited V RGCM Limited, that parties should maintain proportionate costs. It is crucial that costs are not only reasonable but are proportionate to the value and complexity of the case. Otherwise parties can face cost consequences and criticism from the Court.

What happens following the exchange of a Budget Discussion Report?

After budget discussion reports have been filed and exchanged, the parties can attempt to agree on budgets through negotiations without the need for input from the Court.

Budget discussion reports should not be agreed upon convenience or to vacate a CCMC. If you believe the other parties’ cost offers to be unreasonable, it is recommended that you proceed to a CCMC. It is even possible that a Court approved budget can provide substantially better recovery than any budget agreed during negotiations between parties.

What happens if parties cannot agree?

If the parties involved are unable to agree on a budget, the Court will need to mediate the sums at the subsequent CCMC.

The Court will carefully consider the arguments from both sides regarding the disputed costs, focusing on whether these expenses are reasonable and proportionate to the issues at hand. In some cases, the Court may request further clarification or justification for specific budget items before awarding sums for each phase

It is however, worth noting that the “final say” on the costs sought, will be up to the discretion of the Court. Should the parties agree budgets between themselves, the Court may not have the same view that those are reasonable and proportionate costs.

How can Greener Costs Assist?

Greener Costs are a team of expert law Costs Draftsmen with many years of experience in the field. We can assist by drafting your budget discussion report as well as your initial costs budget. We can also engage in negotiations with the other party to reach an agreement as to costs before or during a CCMC. We can assist from the outset of a case by assisting in the drafting of retainers, right through to the settlement of a case by drafting bills of costs, points of dispute and points of reply, whether you are the paying party or the receiving party.

In addition to our drafting services, at Greener Costs, we are actively doing everything we can to ensure our business benefits the environment.

We are doing this through carbon offsetting of our staff, becoming completely paperless and carbon offsetting through each instruction.

For a free, no obligation discussion, get in touch using the form at the bottom of the page or contact info@greenercosts.co.uk.