Precedent R: the budget discussion report explained

The budget discussion report is the document in which the parties record the outcome of their discussions about each other’s costs budgets. Under CPR 3.13(2), once a party has filed and exchanged a budget, all other represented parties must file the report no later than seven days before the first case management conference. The prescribed form is Precedent R, published alongside Precedent H on GOV.UK.

The report is per party, not per pair: each represented party files its own report dealing with the other parties’ budgets. Litigants in person are not required to file one. The deadline runs from the first CMC date, so as soon as that hearing is listed, the seven-day date should be diarised alongside the 21-day budget deadline.

Practice Direction 3D requires the report to set out which figures are agreed for each phase of each party’s budget, which figures are not agreed, and a brief summary of the grounds of dispute. It is a record of the discussion, not a skeleton argument: concise, specific reasons carry more weight than pages of generalised criticism.

A useful entry identifies the phase, the figure proposed, the figure contended for and the reason — for example, that the disclosure estimate assumes a review exercise the proposed directions do not require, or that the expert phase includes a discipline the party has not justified. ‘Too high’ is not a ground of dispute; it is a conclusion without reasoning.

The discussion works best when it starts from the assumptions rather than the totals. If an opponent’s witness phase assumes six statements and the directions will only need three, the disagreement is about scope, and it can often be resolved by reference to the proposed directions. If the disagreement is about hourly rates or the grade of fee earner, that is a different conversation and may be one the court prefers to leave to assessment.

Offers should be realistic. A blanket proposal to halve every phase invites rejection and tells the court little. A reasoned counter-figure, tied to the assumption that drives the phase, gives the opponent something they can actually accept and gives the judge a clear choice at the hearing. Keep a note of what was proposed and when; it can matter later if costs of the budgeting process are argued.

At the case management conference, the court records the extent to which budgeted costs are agreed and approves the phases that remain in dispute, after making any appropriate revisions. The costs management order then controls the parties’ recoverable budgets going forward. Agreed figures recorded in Precedent R are recorded as agreed; they are not re-argued at the hearing.

The court does not approve incurred costs through this process, although it may record comments about them to be taken into account at any later assessment. Once budgeted costs are approved or agreed, the party must re-file and re-serve the budget in the approved form, with the figures re-cast as the order requires.

The first is treating the report as optional. It is a rules-based requirement with a fixed deadline, and a party that ignores it starts the CMC on the back foot. The second is filing a report that disputes everything without explaining anything, which squanders the chance to narrow the hearing to the phases that genuinely matter.

The third is negotiating in the dark. Effective discussion needs the opponent’s assumptions, the proposed directions and a view on which phases drive the total. Our Costs Lawyers review opponents’ budgets, prepare Precedent R reports and represent parties at costs and case management conferences, so the discussion, the report and the advocacy all point the same way.