Costs budgeting for trustees post 1st April 2013

 In Practice Management, Trusts

Disclaimer: LawSkills provides training for the legal industry and does not provide legal advice to members of the public. For help or guidance please seek the services of a qualified practitioner.

Costs budgetingAfter the 1st April 2013 costs’ budgeting is now required knowledge for all trustees involved in, for example,  Beddoes applications, claims for reasonable financial provision under the Inheritance (Provision for Family and Dependants) Act 1975, challenges to Wills, applications concerning administration of estates, pursuant to Civil Procedure Rule (CPR) parts 7, 8, 57 and 64.  The penalty for non-compliance is extraordinarily draconian:

Unless the Court orders otherwise, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees” [CPR 3.14].

This means that if you do not file a costs budget you are at severe risk of not being paid your costs save for the reimbursement of court fee disbursements.

Free LawSkills Newsletter

If you like our articles, why not subscribe to our free monthly newsletter with regular Private Client news, views and advice from leading legal minds. It's quick, easy and you can unsubscribe at any time if you no longer want to receive it.

Sign Up Now

The purpose of costs management is that the court should manage both the steps to be taken and the costs to be incurred by the parties to any proceedings so as to further the overriding objective [CPR 3.12(2)].

The Rules

Pursuant to CPR 3.12 and 3.13, unless the Court orders otherwise, all represented parties, including trustees:

  • ‘commenced’ on or after 1st April 2013 in the County Court, Chancery Division or Queen’s Bench Division of the High Court or
  • in any other proceedings (including applications) if the court so orders following application of CPR 3.12 and Practice Directions (PD) 3E and 3F

must file and exchange costs budgets.

Budgeting does not apply in cases in the Admiralty and Commercial Courts; such cases in the Chancery Division as the Chancellor of the High Court may direct; such cases in the Technology and Construction Court and the Mercantile Court as the President of the Queen’s Bench Division may direct; if fixed costs or scale costs apply to the case or to litigants in person. On 18th February 2013 the Chancellor of the High Court and the President of the Queen’s Bench Divison directed respectively, that (a) in the Chancery Division and (b) in the Mercantile and Technology and Construction Courts budgeting shall not apply to cases where at the date of the first case management conference the sums in dispute in the proceedings exceed £2m excluding interest and costs, except where the court so orders.

How do you set out your Budget?

Precedent H is the form on which you should set out your budget of anticipated costs in accordance with CPR 3 and PDs 3E and 3F. See the guidance notes:

  • This table identifies where within the budget form the various items of work, in so far as they are required by the circumstances of your case, should be included.
  • Ensure that the form is completed in landscape format, with easily legible typeface.
  • If your overall costs budget is less than £25,000 then only the first page need be completed.
  • Make sure a partner signs the declaration of truth and dates the form.
  • Allowance must be made in each phase for advising the client (include counsel’s opinion), taking instructions and corresponding with the other party/parties, counsel and the court in respect of matters falling within that phase.
  • The ‘contingent cost’ sections of this form should be used for anticipated costs which do not fall within the main categories set out in this form (the above). Examples might be the trial of preliminary issues, a mediation, applications to amend, applications for disclosure against third parties or (in libel cases) applications re meaning. Costs which are not anticipated but which become necessary later are dealt with in paragraph 4.7 of the PD.
  • Any party may apply to the court if it considers that another party is behaving oppressively in seeking to cause the applicant to spend money disproportionately on costs and the court will grant such relief as may be appropriate.


The date for filing and exchanging the costs budget will either be prescribed by the Notice of Proposed Allocation served by the Court pursuant to CPR 26.3(1) or, in the absence of a specific date, 7 days before the first CMC [CPR 3.13]. For CPR part 8 claims that are automatically allocated to the multi-track a costs budget will need to be filed and exchanged 7 days before the first CMC unless the court orders otherwise. Thus if you are agreeing directions before the first CMC whether or not an extension of time for compliance with the need to file and exchange costs budget must now be included.

Failure to file the cost budget results in the penalty. As a matter of construction the penal provision in CPR 3.14 does not say “fails to file a budget in accordance with CPR 3.13” or expressly provide a 7 day limit. But this is being inferred. Is this the right construction? Yes [see Mitchell [2013] EWCA Civ 1537 at 30].

How do these rules affect trustees?

The answer really is the same as every other represented litigant. Do these rules affect the trustee’s right to indemnification pursuant to CPR 48.4 or CPR 46n.3? Yes. Most cases involve at least one party seeking costs from the trust fund. PD3F.5 sets out how a party may apply for, or the court may of its own motion impose, a costs capping order to limit the costs of such a party from the trust funds. If a trustee intends to apply for an order for the payment of their costs out of the trust fund they must file and serve on all other parties written notice of that intention together with a costs budget of the costs likely to be incurred by that party [3FPD.5.4]. These documents must be filed and served for CPR part 8 claims with the evidence in accordance with CPR 8.5 (or with the acknowledgement of service if no evidence is sought to be adduced [CPR 8.3]).

Neither CPR 48.4 nor the CPR 46n.3 have been amended or in any way linked to PD3F.5. PD46n.1 restates the general rule that a trustee is entitled to his costs out of the trust fund on an indemnity basis. But there is no reason why a trustee could not, if they fail to comply with the PD and/or the filing and exchanging of the costs budget, have a costs capping order or alternatively the penalty under CPR 3.14, imposed.

One reported case on this issue is Green (Administratrix of the Estate of Peter Maitland Deceased) v Astor and Others [2013] EWHC 1857 (Ch) where Buckton, Re, Buckton v Buckton [1907] 2 Ch 406 was considered and the division of trust litigation into three categories was again applied. The court considered the costs of an application by the administratrix of an estate pursuant to CPR 64.2(a). The court ordered that the administratrix should pay her own costs referable to the first head of relief, which had been refused by the court. However, the first defendant beneficiary was ordered to pay the costs referable to the second and third heads of relief. It follows that trustees will be required to file costs budgets in order to retain their indemnity out of the trust fund.


What happens if you make a mistake?

Post 1st April 2013 human error can no longer be preyed in aid; “but it was an oversight” is not good enough. Shortly before implementation of the Jackson reforms, Lord Dyson warned parties that they can “no longer expect indulgence if they fail to comply with their procedural obligations”.

Mr Justice Coulson declined to allow retrospective budget variation in Elvanite Full Circle Ltd v AMEC Earth and Environmental (UK) Ltd [2013] EWHC 1643 and future departure was heavily restricted. In Kim Murray and Another v Neil Dowlman Architecture Ltd [2013] EWHC 872 (TCC), Mr Justice Coulson said: ‘The courts will expect parties to undertake the costs budgeting exercise properly first time around, and will be slow to revise approved budgets merely because, after the event, it is said that particular items had been omitted or undervalued. I also agree that any other approach could make a nonsense of the whole costs management regime.’

Following hearings on 18 June 2013, 25 July 2013 and 1 August 2013 in Andrew Mitchell MP v News Group Newspapers Ltd [2013] EWHC 2179 (QB) and 2355 (QB) (colloquially known as “Plebgate”) the costs budget of the former cabinet minister Andrew Mitchell MP for suing The Sun for libel was restricted to just the court fees as a result of failures to comply with the new CPR. Master Victoria McCloud applied CPR 3.14 by analogy and refused relief from sanctions after hearing full argument from experienced costs counsel and having the benefit of witness evidence. Mitchell appealed; the appeal was leap frogged to the Court of Appeal pursuant to CPR 52.14(1) and heard on 7 November 2013. Judgment was delivered on the 27 November [[2013] EWCA Civ 1537]. The appeals were dismissed. The whole judgment is essential reading and a salutary lesson for all over worked lawyers.

Does ‘commenced’ after 1st April 2013 mean issued after that date?

Cases issued prior to the 1st April 2013 are being subjected to this extraordinarily draconian penalty when the court so orders, often after a costs management order has been made to allow the court to control the parties’ budgets in respect of recoverable costs pursuant to CPR 3.15[1], and/or for any applications issued after the 1st April 2013 irrespective of when the claim was issued.

Given that CPR 3.14 is so draconian it is arguable that it should be construed narrowly and literally. Post Jackson the CPR is not about “no tolerance” but “lower tolerance”. For cases pre-1st April 2013 clear and unequivocal notice that the costs budgeting is to be applied ought to be received. Simply finding the word “directions” as opposed “listing”[2] in an order of the court cannot constitute sufficient “notice” of the courts’ intention to seek a costs budget, can it? If no express reference is made to a costs budget in any order and CPR 3.14 is sought to be applied by analogy with its draconian penalties it must be expressly so stated (e.g. unless orders or right to apply to vary order within 7 days). To find otherwise would be too draconian and wholly unfair. Mitchell did not address this issue.

However, on the upside for cases issued after 1st April 2013 the costs of any interim applications will be treated as additional to approved cost budgets, provided the applications were not reasonably foreseeable when the cost budget was approved [PD3E.2.9]. This begs the question: what applications are reasonably foreseeable at the first CMC? Satelite litigation is likely to be rife.


  • Ensure compliance with costs budgets or be prepared to notice when another party has not complied. Do not assume that as the claim was issued pre-1st April 2013 that these rules do not apply. With legal aid down and CFAs up reducing opponents’ costs to court fees could have many significant advantages
  • Be prepared to make an application or a cross application for relief from sanctions pursuant to CPR 3.9 [see Wyche v Careforce Group Plc (unreported, QBD, 25 July 2013) where the defendant succeeded in its application for relief from the sanction of strike-out the defence. The case concerned non-compliance with an ‘unless order’ regarding e-disclosure; specifically the adequacy of search terms used and the inaccurate categorisation of certain documents as privileged. The triggers to relief in Wyche appear to have been inadvertence, the speed with which the errors had been remedied and the fact that the trial date had not been affected. But the case is heavily criticised in Mitchell [2013] EWCA Civ 1537 at 47 -51].
  • Be prepared to at the first CMC if you have failed to file your costs budget to persuade the court to invoke the saving provision in CPR 3.14 (“unless the court otherwise orders”). Evidence would need to be filed and served in support. This evidence would need to be address the same factors as a relief from sanctions application would [Mitchell [2013] EWCA Civ 1537 at 32]. Early communications with the court and your opponent explaining reasons for delay
  • If an application was made without notice be prepared to seek a rehearing pursuant to CPR 39.3.
  • Or consider making an application pursuant to CPR 3.1(7) where there has been a material change in circumstances, misstated facts or manifest mistake [Mitchell [2013] EWCA Civ 1537 at 44 – 45 where Tibbles v SIG Plc [2012] EWCA Civ 518 is applied].
  • If all else fails consider an appeal.

Practitioners are alerted: It appears that  latitude for human error will no longer be permitted unless it is trivial.

[1] By such order the court will (a) record the extent to which the budgets are agreed between the parties; (b) in respect of budgets or parts of budgets which are not agreed, record the court’s approval after making appropriate revisions.

[2] Directions questionnaires are for cases post 1st April 2013 whereas allocation questionnaires are for pre 1st April 2013 cases.

Free LawSkills Newsletter

If you like our articles, why not subscribe to our free monthly newsletter with regular Private Client news, views and advice from leading legal minds. It's quick, easy and you can unsubscribe at any time if you no longer want to receive it.

Sign Up Now
Recommended Posts
Business confidenceProfessional negligence