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Editorial: Budget Discussion Reports - Aidan Ellis, Temple Garden Chambers

28/02/18. I have recently had a number of costs and case management hearings in which the late filing of a budget discussion report by one party or the other, or a failure to engage in negotiations, has been largely excused by the Courts. It is suggested that that approach may be too lenient and that, to enforce compliance with orders and rules, some sanction should be imposed as a matter of course where a budget discussion report is filed late.

It is right that the Rules do not prescribe a sanction for failure to file a budget discussion report. CPR 3.13 provides at subsection (1) that, in relevant cases, the parties must file and exchange costs budgets and at subsection (2) that, where one party serves a budget, the other party must file an agreed budget discussion report. Both provisions are mandatory. It is well known that CPR 3.14 provides a harsh sanction for failing to file a budget; the party in default is restricted to a budget comprising Court fees only. There is no equivalent sanction stated for failing to file a budget discussion report.

I would also concede that the failure to file a budget discussion report, or the late filing of a budget discussion report, will not necessarily cause a costs management hearing to be adjourned. Provided sufficient time has been allocated by the Court, in many cases the parties can present their submissions efficiently within the time allowed with or without a discussion report.

Nevertheless, it is worth considering whether some sanction should still be imposed. In the first place, one purpose of the Jackson reforms and the re-drafting of CPR 3.9 was to end the previous lax culture of non-compliance with Rules and Court Orders. The Rules in relation to budget discussion reports are clear. The absence of a sanction can only encourage a return to the previous lax culture. Second, the costs budgeting process is supposed to begin with negotiation and attempts to reach agreement on the budget as a whole or individual phases. The Court’s approval is only required for those phases or budgets which cannot be agreed. Delay in relation to the budget discussion report does interfere with that process because it lessens the time available for negotiations to take place, with the result that the Court’s approval is more likely to be required.

A well-crafted budget discussion report is a helpful document because it helps to narrow the issues and can act as written submissions or a skeleton argument. Now that the budgeting rules have had time to bed down and the Courts are more familiar with the process, it is suggested that it would not be disproportionate to impose a sanction for a failure to provide a discussion report – provided, of course, that the defaulting party can apply for relief in the usual way.

Aidan Ellis
Temple Garden Chambers

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