Merrix v Heart of England NHS Foundation Trust [2017] EWHC 346 (QB) – To what extent, if at all, does the costs budgeting regime under CPR Part 3 bind the court on assessment? The importance of getting your budget right is set out clearly in the latest decision centred on costs management.

Martin Harris is the Manager of the Manchester office of Neat Legal Services. To contact Martin directly, email him at or call on 0161 200 2492.

Mrs Justice Carr confirms on appeal that without good reason, a budget should not be departed from be that upwards or downwards where a costs management order has been made:

“In my judgment, 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”.

The full decision confirms that, “This appeal was not about the budget in this particular case, nor whether there are good reasons for departing from it.  The Costs Judge has not yet considered the budget or the bill. Rather, the appeal relates to the determination of a preliminary issue, formulated by the Costs Judge as follows:

“To what extent, if at all, does the costs budgeting regime under CPR Part 3 fetter the powers and discretion of the costs judge at a detailed assessment of costs under CPR Part 47?”

The receiving party sought their costs in full on the basis that the costs claimed in their bill were less than the amounts allowed in their budget. The receiving party argued that unless the paying party could demonstrate good reason to depart from the budget, the costs claimed ought not to be subject to a fresh assessment having already been budgeted and approved as a reasonable and proportionate sum to spend.

In confirming that CPR 3.18 has the teeth to bite, the decision in Merrix highlights perhaps more clearly than ever before the importance of ensuring that your cost budget is well drafted, sufficiently well thought out and most importantly, accurate to the extent that you are happy to have the same bind you until the end. You may very well not get another chance to ensure that you recover a fair and proportionate amount for the work that you carry out.

Unsurprisingly, the decision is the subject of a further appeal which we understood will take place in May 2017 before the Court of Appeal. Whilst not wishing to predict the outcome of the next battle to commence on the point, what is clear is that cost budgeting is a fundamental part of the process when it comes to costs recovery; don’t get caught out by overlooking the importance of getting the right people on board to work with you.

Our highly experienced team at Neat Legal Services will work with you hand in hand in preparing and finalising a comprehensive budget and will work in house with you if you prefer. We are ready and waiting to assist so why not give us a call on 0161 200 2492 or alternatively, get in touch with any of our offices across the country using the following details: – Manchester – Carlisle – London – Liverpool – Midlands

To access the decision in full; simply follow the link;