By now, parties engaging in Civil Litigation should be familiar with Precedent H Costs Budgets and, more recently, preparation of Precedent R discussion reports. If utilised correctly, Precedent H together with Precedent R can be a somewhat ‘golden ticket’ when it comes to justification of costs, and whether those costs are both reasonable and proportionate during negotiations upon conclusion of the substantive claim.
Mr Justice Coulson shot a warning to litigants in Findcharm Ltd v Churchill Group Ltd  EWHC 1108 (TCC) last week.
Commenting at the Costs and Case Management Conference, Coulson J commented that “some parties seem to treat cost budgeting as a form of game, in which they can seek to exploit the cost budgeting rules in the hope of obtaining a tactical advantage over the other side.” Coulson J continued “In extreme cases, this can lead one side to offer very low figures in their Precedent R, in the hope that the court may be tempted to calculate its own amount, somewhere between the wildly different sets of figures put forward by the parties. Unhappily, this case is, in my view, an example of that approach.”
Given the Defendant’s unrealistic Precedent R of “no utility”, Mr Justice Coulson concluded that the Claimant’s Precedent H was both proportionate and reasonable as downwardly revised ahead of the Costs and Case Management Conference. The Claimant’s Precedent H was therefore allowed in the sum claimed of £244,676.30.
Given the recent ruling handed down in Merrix v Heart of England NHS Foundation Trust  EWHC 346 (QB), the parties now place a large value on the contents of the respective parties’ Precedent H Costs Budgets.
It is of utmost importance that the parties therefore get the process right and think beyond preparation of the Precedent R discussion report as a simply a procedural hoop that one has to jump through.
The introduction of Precedent R, which requires each party to comment on the cost budget of the other, has led to a “great saving” of judicial time, “because it has obliged the parties to adopt a realistic attitude to the budget of the other side, and has assisted in the identification of the real disputes between the parties on costs”.