Merrix v Heart Of England NHS Foundation Trust (2017) EWHC 346 (QB)

Posted on Friday, April 28th, 2017

Well this recent judgement has certainly had everyone talking! Mrs Justice Carr had allowed an appeal concerning the significance of costs budgeting and the final costs assessment by ruling that the answer to the preliminary issue is as follows: where a costs management order has been made, when assessing costs on the standard basis, the costs judge will not depart from the receiving party’s last approved or agreed budget unless satisfied that there is good reason to do so. This applies as much where the receiving party claims a sum equal to or less than the sums budgeted as where the receiving party seeks to recover more than the sums budgeted”.

This was an appeal dealing with the importance of a costs budget when the costs finally fall to be assessed. The district judge had held that the figures in the costs budget were not a definitive guide and could ultimately be challenged by the paying party on an assessment of those costs. The Claimant in this case appealed with the ultimate decision being that the agreed budget will be binding upon the parties at a standard basis Detailed Assessment regardless of whether the costs are for less, equal to or more than the sums approved by that budget, unless there is good reason to do otherwise. The Claimant submitted that if costs are claimed at or less than the budget then they should be assessed as claimed unless the Defendant was able to show that there was good reason to depart from the budgeted figures. The Defendant’s position was that the budget was only one factor to be considered in determining reasonable and proportionate costs on assessment, and was not, therefore, binding. Whilst accepting it was right to say that costs budgeting did not “replace” detailed assessment, it was concluded that where the costs management order had been made when assessing the costs on the standard basis the costs judge should not depart from the receiving party’s last approved or agreed budget unless satisfied that there is good reason to do so. This appeal was allowed.

It is clear from this decision then that the current intention and effect of cost budgeting is to result in a budget that the court should not depart from at any detailed assessment on a standard basis, unless there is good reason to do so.

Since writing, we now know there won’t be a further appeal

The full judgment can be read here.

If you have any questions about this piece of case law you can contact Melanie here.

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