5. Case Management and Costs

Question 1

Non-party costs

Answer 1

The court has jurisdiction to award costs against a non-party (ie to require a person who is not a party to the proceedings to pay something towards the costs).

The most likely circumstances in which the court will order non-party costs is where there is a ‘funder’, who is not a party, who is funding the litigation. The principles to be applied by the court when considering whether to make an award of costs against a non-party are as follows:

• Costs orders against non-parties are ‘exceptional’ but the ultimate question the court will ask is whether it is just to make the order;
• Where the non-party both funds but also substantially controls or at any rate is to benefit from proceedings, justice will ordinarily require that if the proceedings fail the non-party will pay the successful party’s costs.

The court has jurisdiction to award costs against a non-party (ie to require a person who is not a party to the proceedings to pay something towards the costs).

The most likely circumstances in which the court will order non-party costs is where there is a ‘funder’, who is not a party, who is funding the litigation. The principles to be applied by the court when considering whether to make an award of costs against a non-party are as follows:

Costs orders against non-parties are ‘exceptional’ but the ultimate question the court will ask is whether it is just to make the order;Where the non-party both funds but also substantially controls or at any rate is to benefit from proceedings, justice will ordinarily require that if the proceedings fail the non-party will pay the successful party’s costs.

Question 2

Whether costs are payable by one party to another – the general rule

Answer 2

The general rule governing whether costs are payable by one party to another is that ‘costs follow the event’. This means that the unsuccessful party (i.e. the loser) pays the costs of the successful party (ie the winner) (CPR 44.2(2)(a)).

However, while costs will normally follow the event, the court has complete discretion in this area. As such it can depart from the general rule and take a number of other factors into account (CPR 44.2(4) and (5)) to make a different costs order (such as an order that the successful party pays the unsuccessful party’s costs, or they each just bear their own costs, or one party pays the other party’s costs for a specified period of the litigation only) in respect of some or all of the issues under consideration. Matters it will take into account include:

• The parties’ conduct (including in relation to ADR / offers to settle)
• Whether a party has succeeded on only some issues / part of the claim

Question 3

Unreasonable refusal to agree to Alternative Dispute Resolution (ADR)

Answer 3

An example of party conduct that might have an impact on any costs award made by the court is that of an unreasonable refusal by one party to engage in ADR. Here case law has provided some helpful guidance.

Although a successful party would generally be awarded its costs, the court can refuse to award those costs if the successful party failed to engage in ADR.

However, the burden is on the unsuccessful party to show why there should be a departure from the general rule for this particular reason.

A finding of an unreasonable refusal does not automatically result in a costs penalty but is simply an aspect of the parties’ conduct which needs to be addressed in a wider balancing exercise.

Question 4

Amount of costs payable

Answer 4

Basis of assessment (CPR 44.3)

When the court makes a costs order it must specify the basis of assessment ie the general principles to apply in calculating the exact amount of costs. There are two bases of assessment, as follows:

Standard basis (CPR 44.3(2) and 44.4(1))

The court will allow costs which:

• have been proportionately and reasonably incurred; and
• are proportionate and reasonable in amount.

Any doubt is resolved in favour of the paying party.

Indemnity basis (CPR 44.3(3) and 44.4(1))

The court will allow costs which:

• have been reasonably incurred; and
• are reasonable in amount.

Any doubt is resolved in favour of the receiving party.

Either basis

The court will not in either case allow costs which have been unreasonably incurred or are unreasonable in amount.

Question 5

What does this mean in terms of recoverable costs?

Answer 5

Standard basis: It is not uncommon for only 60% of costs to be recovered from the paying party.

Indemnity basis: It is not uncommon that the receiving party will receive 70 – 80% of its legal costs from the paying party.

In neither scenario is a party likely to recover 100% of its costs

In general, indemnity costs would be awarded where there is some element of a party’s conduct of a case which deserves some mark of disapproval.

Question 6

What is meant by proportionate?

Answer 6

Where costs are awarded on the standard basis they need to be proportionate. This relates back to the overriding objective which states that litigation must be conducted ‘justly and at proportionate cost’. So what does proportionate actually mean?

Costs will be proportionate if they bear a reasonable relationship to the following specified criteria (CPR 44.3(5)):

• The sums in issue in the proceedings;
• The value of any non-monetary relief in issue in the proceedings;
• The complexity of the litigation;
• Any additional work generated by the conduct of the paying party; and
• Any wider factors involved in the proceedings, such as reputation or public importance.

Question 7

Factors to be taken into account in deciding the amount of costs

Answer 7

In assessing the actual amount of costs (after having determined the basis – standard or indemnity), the court will take into account all the circumstances of the case including the conduct of the parties (again – having also considered this when considering whether one party should pay the other party’s costs) , the complexity of the matter, the place where and circumstances in which the work was done and the receiving party’s last approved or agreed budget (CPR 44.4(3)). Budgets are part of the court’s costs management process (as referred to briefly at the end of this element).

Question 8

Time for complying with an order for costs

Answer 8

The final aspect of the court’s discretion relates to the time a party has to comply with an order for costs.

Unless the court orders otherwise, a party must comply with an order for the payment of costs within 14 days of:

• the date of the judgment or order if it states the amount of costs;
• if the amount of those costs (or part of them) is decided later, the date of the certificate which states the amount; or

(CPR 44.7)

(The process of deciding the amount of costs at a later time is called detailed assessment of costs. You will find more information on assessment of costs in the Costs Procedure element.)

Question 9

Qualified one way costs shifting (QOCS)

Answer 9

QOCS is the regime for the recovery of costs between parties in proceedings involving claims for damages in respect of death and personal injury (CPR 44.13). It restricts the defendant’s ability to enforce a costs order against the claimant.

Question 10

Fixed costs

Answer 10

As set out in the element ‘overview of costs’, having decided that one party should pay the other party’s costs, the court has to decide ‘how much’. However, sometimes that ‘how much’ question has a simple answer – the amount is fixed by the rules. These are called ‘fixed costs’ (CPR 45).

Fixed costs generally apply to the following type of situations: uncontested disputes,enforcement proceedings andsmall claims.

The CPR also provides for fixed costs in certain specialist areas (Sections II to VII of CPR 45) but these are beyond the scope of this module.

It should be remembered that the fixed costs regime only applies ‘unless the court orders otherwise’ (CPR 45.1).

Question 11

Assessed costs

Answer 11

Where costs do not fall under the fixed costs regime the court will need to be involved with the decision and calculation of the amount payable by way of costs from one party to another.

Assessment of costs generally only occurs when the parties are unable to agree the amount of costs one should pay to the other.

As explained in the Overview of Costs element there are two bases of assessment: the standard basis and the indemnity basis. These govern the criteria to be adopted by the court when calculating costs. That element also explains the considerations the court will take into account when deciding the amount of costs.

There are also two alternative procedures for assessment: summary and detailed assessment, and this element will now address those procedures.

Question 12

Summary assessment

Answer 12

This involves the court determining the amount payable by way of costs immediately at the end of a hearing. To enable the court to carry out a summary assessment, the parties must prepare statements of costs, preferably on the standard form N260 (44 PD 1.2)) and file and serve them on each party not less than 24 hours before the time fixed for the hearing (44 PD 9.5(4)(b)). A blank N260 is provided on the next page. The court will review these (in a relatively broad brush way) and hear the parties’ short submissions in relation to them, and then make a decision as to how much should be paid.

Unless there is good reason not to do so the court should use this summary assessment procedure:

• In fast track cases at the end of the trial. In this situation, the costs of the whole case will be assessed; and
• At the end of a hearing of an interim application or matter which has not lasted more than a day. In this case, usually only the costs of the interim application will be assessed.

Question 13

Detailed assessment

Answer 13

Detailed assessment of costs is a more complex procedure for determining the amount of a party’s costs to be paid. In outline, the procedure is as follows:

• The court, on deciding that one party should pay the other party’s costs, orders that they be subject to detailed assessment (if not agreed). At that point, the court makes no attempt to set a figure on them.
• To commence the detailed assessment proceedings, the receiving party serves a notice of commencement and a copy of its bill of costs (a more detailed statement of costs than used in summary assessment) on the paying party.
• Points of dispute in relation to any item in the bill of costs should then be served on the receiving party by the paying party within 21 days of service of the notice of commencement.
• If the parties cannot reach agreement, the receiving party should then file a request for a detailed assessment hearing at which a costs officer will determine the sum to be paid.

Question 14

Interaction between the parties’ budgets and amount of costs payable

Answer 14

Any consideration of costs orders made by the court must include, where relevant, the role played by the parties’ respective budgets and the costs management procedure. The budgets can have an impact on the assessment of costs, even if a costs management order was not made.

Question 15

Types of interim costs order

Answer 15

Costs in any event (and summary assessment of costs)

The party in whose favour this order is made is awarded its costs of the interim hearing from the other party regardless of who eventually wins at trial.

Costs in the case

The party who eventually gets its costs at trial (usually the winner) will recover its costs of the interim hearing from the other party ie usually the party that wins at trial will recover the costs of this application.

Costs reserved

The decision about who pays the costs of the interim hearing is put off to a later occasion. If no decision is later made then the costs will be in the case (see above).

Claimant or defendant’s costs in the case

In the case of the claimant’s costs in the case, if the claimant is successful and receives an order that it should be entitled to its costs at the end of trial, it can include the costs of the interim application. If the defendant is awarded costs at trial, the claimant does not have to pay the defendant’s costs of the interim application.

In the case of the defendant’s costs in the case, the same principles apply but in reverse.

Costs thrown away

If a judgment or order is set aside, the party in whose favour this costs order is made is entitled to the costs incurred as a result of the judgment or order being set aside. This potentially includes the hearing (including preparation and attendance) at which the original order is made, as well as the hearing at which the order is set aside. The rationale is that the judgment or order should never have been made so the party at fault should be punished by having to pay the costs of it being made and set aside.

Costs of and caused by

A party must pay the costs resulting from something that party has done; for example costs incurred by the defendant resulting from a claimant amending its particulars of claim.

Costs here and below

The party in whose favour the costs order is made is entitled not only to that party’s costs in respect of the proceedings in which the court makes the order but also to that party’s costs of the proceedings in any lower court. In the case of an appeal from a Divisional Court the party is not entitled to any costs incurred in any court below the Divisional Court.

No order for costs (or if no order is made)

Each party will bear its own costs of this hearing.

Question 16

Case management

Answer 16

Once the parties have filed and served their statements of case (claim form, particulars of claim, defence and possibly other statements of case) it should be possible to identify the issues in dispute. These are the issues that need to be resolved at trial. They will be resolved by a judge (and very occasionally a jury) considering the evidence.

What happens between completion of the statements of case and trial? The main task is for the parties to prepare and exchange evidence – relevant documents, statements indicating what the witness will say at trial (witness statements), and possibly reports from experts who can give useful opinions on relevant matters (such as when someone might expect to recover from an injury, or why a particular building is suffering from a defect).

This evidence is exchanged in stages in the months or years before trial. Exchanging evidence before trial allows the parties to prepare better for trial and for the trial to be more effective and efficient: if all the evidence was seen for the first time at trial, trial would be time consuming and chaotic. Secondly, exchanging evidence before trial gives the opportunity for the parties to explore settlement in the knowledge of the evidence which has been exchanged.

Exchanging evidence not only before trial, but in stages, allows the costs of preparing and exchanging it to be spread out and interspersed with settlement attempts, if the parties so choose. It also helps in the preparation of each type of evidence: it makes sense to exchange documentary evidence, then witness statements and finally any experts’ reports. This allows the witnesses to comment on the documents in their witness statements, and the experts to form their opinions in light of both the documents and the witness statements.

The court directs when these various stages should take place – the court gives ‘directions’. The directions aim to achieve a just result at a proportionate cost, in accordance with the overriding objective. The aims of justice and proportionate cost mean that different cases will require different directions.

The court also needs to actively manage a case – generally, and specifically to ensure it progresses in accordance with the court’s directions.

The giving of directions and the management of a case is called ‘case management’. Case management is the subject of this topic. Managing the case goes hand in hand with managing the costs of the litigation, and so ‘costs management’ can be considered the sister of this topic, and you may also be asked to study elements relating to costs management.

Question 17

The court’s general case management powers

Answer 17

The court has a number of powers to manage cases and costs (CPR 3.1(2)).

Examples are:

• Extend/shorten the time for compliance with any rule, practice direction or court order.
• Adjourn hearings or bring them forward.
• Require a party or their legal representative to attend court.
• Stay the whole or part of the proceedings or judgment either generally or until a specified event.
• Order any party to file and serve a costs budget.

There is also a general provision allowing the court to take any other step or make any order for the purpose of managing the case and furthering the overriding objective (CPR 3.1(2)(m)).

Question 18

The court’s power to make orders of its own initiative

Answer 18

The court’s power to make an order of its own initiative (CPR 3.3) means that, without either party taking a step, the court could provide new directions or terminate a case.

If the court makes an order of its own initiative without a hearing and without giving the parties the opportunity to make representations, the court will include a statement in the order that the parties have a right to apply to set aside, stay or vary the order within a given period. If the court does not specify a period, any application should be made within seven days of the date on which the order was served on the party making the application.

Question 19

The court’s power to strike out

Answer 19

Key word or definition: Strike out is the deletion of written material from a statement of case so that it cannot be relied on in the proceedings by any party. It can include deletion of the entire statement of case so that the case is effectively over. Strike out is designed to target cases that are inadequately drafted or are otherwise an abuse of the court process.

The court may exercise its power to strike out the whole or part of a statement of case (CPR 3.4) of its own initiative or on the application of a party. Applications should be made as soon as possible and preferably before allocation. If the court is going to exercise its power to strike out of its own initiative, this is likely to happen around the allocation / case management stage, when the court first engages with the substance of the dispute.

Strike out is used quite sparingly by the courts as there are often more suitable ways to deal with defective cases such as requiring the party at fault to amend its statement of case or, if the ground for striking out is failure to comply with previous orders made by the court, imposing a sanction such as an adverse costs order.

Question 20

What is the difference between strike out and summary judgment?

Answer 20

There is considerable overlap between the two provisions and applications are often made for summary judgment and strike out in the alternative. Strike out focuses on the statement of case and so covers cases which do not amount to a legally recognisable claim or defence. The case or issues are weak as pleaded. Summary judgment (CPR 24) covers cases which are weak on the facts.

Question 21

What is the difference between strike out and default judgment?

Answer 21

Default judgment (CPR 12) is the consequence of the defendant failing to respond to a claim. Default judgment is therefore procedural: if a defendant fails to file an acknowledgment of service and/or a defence in accordance with the CPR time limits, the claimant can apply for default judgment. The court does not consider the merits of the case when ordering judgment in default. Strike out is not purely procedural.

Question 22

Grounds for strike out

Answer 22

(a) The statement of case discloses no reasonable ground for bringing or defending the claim

A statement of case may be struck out if it discloses no claim or defence as a matter of law. It is therefore important that the party’s statement of case is properly set out.

Example: A claim which stated ‘money owed £5,000’ without explaining how and why the debt arose: duty, breach and causation. The statement does not include the required facts.

Example: A defence denies a claim without giving any reasons for the denial. This is incoherent and in breach of the rules.

(b) The statement of case is an abuse of the court’s process or otherwise likely to obstruct the just disposal of proceedings.

Abuse of process is a misuse of procedure. It is not defined in the CPR, but Lord Bingham said it is “using that process for a purpose or in a way significantly different from it ordinary and proper use” (Attorney General v Barker [2000] 1 FLR 759).

Example: An example of abuse of process is a vexatious litigant; it is obviously a misuse of court procedure to commence a claim with no intention of taking the case further as it is not using the court procedure for the purpose for which it is designed.

Obstructing just disposal includes claims that are vexatious or obviously ill-founded (3A PD 1.5) and the court will look at all the circumstances of the case.

A statement of case which discloses no reasonable ground may also be an abuse of the court’s process; there is no exact dividing line between ground (a) and ground (b).

(c) There has been a failure to comply with a rule, practice direction or court order.

Ground (c) covers cases where the abuse is not in the statement of case itself, but is in the way the claim or defence has been conducted.

Examples of the failure to comply with a rule, practice direction or court order would be late service and exchange of documents, not attending court when ordered to do so or being unprepared for court hearings.

If a fair hearing will still be possible it is unlikely that the court will strike out a statement of case on this ground as it would not be carrying out justice to bar a litigant from proceedings due to a technical breach of the rules. Instead, the court would be more likely to make an order imposing a lesser sanction for non-compliance. Sanctions are addressed in the element ‘Sanctions and relief from sanctions’.

Question 23

Judgment after strike out

Answer 23

Where the court makes an order which includes a term that the statement of case of a party will be struck out if the party does not comply with the order (for example, “If the claimant does not provide a copy of the contract referred to in the particulars of claim, the particulars claim will be struck out”), and the party does not comply and so the statement of case is struck out, the other party can generally obtain judgment with costs by filing a simple request at court (on rare occasions, an application to court will be required).

Question 24

Sanctions

Answer 24

Sanctions are measures which are bad for a party, and which aim to ensure compliance with court rules and court orders.

Sanctions can relate to:

Interest - (eg reducing the interest payable to the claimant as a sanction imposed on the claimant)

Costs - (eg ordering the defendant to pay costs on the indemnity rather than standard basis, as a sanction imposed on the defendant)

Striking out a statement of case - (striking out a statement of case is considered in more detail in the element ‘Case management powers and striking out’).

Other measures adverse to a party could also be considered sanctions: there is no definitive list of sanctions in the CPR

Question 25

Court’s power to impose sanctions

Answer 25

The court can impose sanctions by a court order.

The court may either:

• Impose a sanction immediately; or
• Make an unless order. An unless order is an order which provides for an automatic sanction in the event of non-compliance with the order. The unless order must specify the date and time within which the act must be done (CPR 2.9).

Question 26

Sanctions imposed by the CPR

Answer 26

In addition to the court’s direct powers to impose sanctions, there are also various provisions of the CPR that impose automatic sanctions for default, examples include where failure to disclose an expert report prevents a party from using that report at trial (CPR 35.13) and where failure to file a costs budget will be treated as only filing a costs budget of applicable fees (CPR 3.14).

Question 27

Sanctions and time limits

Answer 27

The general rule is that the time specified by a CPR or court order for a party to do any act may be varied by the written agreement of the parties, unless a rule or practice direction provides otherwise or the court orders otherwise (the rules prevent the parties from agreeing to vary the date for a case management conference, and most other types of hearing, for example).

However, by way of exception to this rule, where a rule, practice direction or court order –

• Requires a party to do something within a specified time, and
• Specifies the consequence for failure to comply,

the time for doing the act may not be extended by agreement between the parties except that the parties can agree an extension of time by prior written agreement (ie before the deadline is reached) for a maximum of 28 days provided that this does not put at risk any hearing date. This is unless the court orders otherwise.

Non-compliance with orders imposing sanctions

If a party fails to comply with a rule, practice direction or court order imposing a sanction, the sanction takes effect unless the party applies for and obtains relief from that sanction (CPR 3.8(1) and 3.9).

Question 28

Relief from sanctions

Answer 28

The rules on granting relief from sanctions for breach of rules or court orders encourage a strict approach. On an application for relief from sanctions, the court will consider all the circumstances of the case so as to enable it to deal justly with the application (CPR 3.9(1)). The rules expressly require the court to consider the need:

• For litigation to be conducted efficiently and at proportionate cost.
• To enforce compliance with rules, practice directions and orders.

An application for relief must be supported by evidence.

Key case: Denton and others v TH White Ltd and another, Decadent Vapours Ltd v Bevan and others and Utilise TDS Limited v Davies and others [2014] EWCA Civ 906 (collectively known as Denton). There has been a huge number of cases regarding the application of this provision, but this is the current leading authority, explained on the following pages.

The Court of Appeal took the opportunity to hear three appeals concurrently all relating to cases in which one of the parties was seeking relief from sanctions. The court felt that previous case law had been misinterpreted and it set out the approach that should be applied to future cases. Applications for relief from sanctions should be approached in three stages:

Identify and assess the seriousness and significance of the failure to comply with the relevant rule, practice direction or court order which engages CPR 3.9(1). If the breach is neither serious nor significant, then relief should be granted.

If the breach is serious or significant, consider why the default occurred.

3. Having considered the reason for the default, the court should then evaluate all the circumstances of the case to ensure that the court deals with the matter justly, but with particular weight to be given to the requirements under CPR 3.9 that (1)(a) litigation must be conducted efficiently and at proportionate cost and (1)(b) the court must enforce compliance with rules, practice directions and orders.

Regarding stage one, the Court of Appeal held that a useful test of whether a breach has been serious or significant is whether it has imperilled future hearing dates or otherwise disrupted the conduct of litigation. Lord Dyson also made it clear that an assessment of the seriousness or significance of a breach should not involve, at the first stage, an assessment of the general conduct of the parties (for example, if the breach is the latest in a series of failures to comply, this aspect of previous conduct should be left to the third stage). If the breach is not serious or significant, relief from sanctions will usually be granted and it will not be necessary for the court to spend much time on the second and third stages.

For stage two, the court declined to give particular examples of good and bad reasons for failure to comply with rules, practice directions or court orders.

There was disagreement between their Lordships regarding stage three. The majority of the court, Lord Dyson and Lord Vos, were of the view that the two factors described in CPR 3.9 should be given particular importance and weight when the court considers all the circumstances of the case. The other judge, Lord Jackson, disagreed stating that although CPR 3.9 required the court to consider those two factors in every case, it did not require any special weight to be attached to them. Rather, the weight to be attached to the two factors is a matter for the court having regard to all the circumstances.

If you have been separately directed to read White Book commentary, then note that you can find additional commentary on stages one, two and three in the White Book at paragraphs 3.9.4, 3.9.5 and 3.9.6 respectively.

The Court of Appeal reached the following conclusions on the three cases before it (and these serve as examples of how the relief from sanctions are applied):

Denton

The parties had served all their witness statements, but 18 months later, the defendant sought to serve a further six statements. At first instance, the court granted relief from sanctions for late service of evidence and as a consequence the trial was adjourned. The Court of Appeal reversed the judge’s decision because the breach was serious and significant in that it caused the trial date to be vacated and there was no good reason for the breach.

Decadent Vapours

The claimant failed to pay court fees on time because the cheque was delayed in the post. At first instance, the court refused to grant relief from sanctions and the claimant’s case was struck out. The Court of Appeal allowed the appeal because the breach was “near the bottom of the range of seriousness” and the breach did not cause problems to the efficient conduct of the litigation at proportionate cost.

Utilise TDS Ltd

The claimant filed a costs budget 45 minutes late in breach of a court order and was 13 days late in notifying the court of the outcome of settlement negotiations. At first instance, the court struck out the claim. The Court of Appeal allowed the appeal as the delay in filing the budget was neither serious nor significant and did not imperil the future hearing date or the conduct of the litigation.

Question 29

In-time applications

Answer 29

The rules about relief from sanctions apply when a deadline has passed and the application is made after the deadline. This must be contrasted with the position where a deadline is looming and a party realises that it is not going to be able to comply with that deadline. This is known as an in-time application and should not be confused with relief from sanctions.

For example, an application for an extension of time to take any particular step in litigation is not an application for relief from sanctions provided that the applicant files his application before expiry of the permitted time period. This is the case even if the court deals with the application after the expiry of the relevant period.

Question 30

Relief from sanctions and setting aside default judgment

Answer 30

An application to set aside default judgment is treated as an application for relief from sanctions when the defendant is relying on the discretionary ground to set aside judgment in default (CPR 13.3). In other words, when considering whether to set aside judgment in these circumstances, the court should apply the Denton principles.

Question 31

Allocation

Answer 31

‘Allocation’ is about deciding which ‘track’ a claim should be allocated to.

There are three separate tracks a case can be allocated to: the small claims track, the fast track and the multi-track.

The tracks matter because the court manages the claims on the different tracks in different way. The tracks are described in more detail in the elements ‘Overview of the small claims track and fast track’ and ‘Early case management on the multi-track’.

The decision about which track to allocate a claim to is based primarily, but not only, on the value of the claim. When assessing the value of the claim, the court will disregard interest, costs, any amount not in dispute and any contributory negligence.

Question 32

The scope of each track

Answer 32

Small claims track (CPR 27): This is the normal track for cases with a value of not more than £10,000 and also claims by a tenant of residential premises against a landlord for repairs where neither the repairs nor any claim for damages total more than £1,000. There are special rules for personal injury claims – see the next page.

Fast track (CPR 28): The fast track is the normal track for claims (other than those for which the small claims track is the normal track) up to £25,000, provided that:

a. the trial is likely to last no longer than one day (five hours); and

b. there will only be oral expert evidence from one expert per party in each of no more than two expert fields (CPR 26.6(4) and (5)).

Multi-track (CPR 29): The multi-track is the normal track for all other types of case (CPR 26.6(6))

Question 33

The scope of the small claims track – personal injury claims

Answer 33

In relation to the small claims track, there are special rules which apply to personal injury claims. Broadly, the small claims track is the normal track for a personal injury claim if the value of the claim is not more than £10,000 (as with other claims); AND IN ADDITION

• in relation to road traffic claims where the accident occurred before 31 May 2021, or the claimant is a child or protected party, or the claimant was riding a motorcycle, the damages for the personal injuries (pain, suffering and loss of amenity) are valued at not more than £1,000;
• in relation to other road traffic claims, the damages for the personal injuries are valued at not more than £5,000;
• in any other personal injury claim (not road traffic claims), the damages for the personal injuries are valued at not more than £1,500.

Question 34

Overview of allocation

Answer 34

• Defence is filed
• Court sends out the notice of proposed allocation, provisionally allocating the claim to the small claims track, fast track or multi-track
• Parties file directions questionnaires
• If the claim has been provisionally allocated to the fast track or multi-track, the parties also file proposed directions
• The court will allocate the claim to a track (after a hearing if necessary), and serve a notice of allocation

Allocated to small claims track: The court will usually give directions

Allocated to fast track: The court will usually give directions

Allocated to multi-track: The court will give directions or fix a case management conference at which directions will be considered

Question 35

Notice of proposed allocation

Answer 35

Following the receipt of a defence, a court officer will provisionally decide the track which appears to be most suitable for the claim and then serve on each party a notice of proposed allocation (CPR 26.3(1)).

The notice of proposed allocation will indicate which track is proposed for the claim.

It will also require the parties to:

• File and serve a directions questionnaire (explained on the following pages);
• On the fast track or multi-track, file proposed directions; and
• For claims under the costs management regime, file and serve a costs budget and an agreed budget discussion report (the costs management regime is not addressed in this element).

It will also state the deadlines for these steps.

Question 36

The directions questionnaire

Answer 36

The information required to enable the court to determine which track the case will be allocated to is provided by the parties completing the directions questionnaire (DQ)(Form N180 for small claims track cases and Form N181 for fast track and multi-track cases).

The DQ contains a number of questions to help the court decide which track is most appropriate for the case.

Question 37

Pre-action protocol

Answer 37

The parties must confirm in the DQ whether they have complied with the pre-action protocols. If there is no specific pre-action protocol, then parties are expected to comply with the practice direction on Pre-Action Conduct. If a party fails to comply with the pre-action protocols it must explain why and there may be sanctions as a result.

Question 38

Settlement

Answer 38

There is a section in the DQ for the parties to request that the court stay the proceedings so the parties can try to settle. A stay is a period of time during which the proceedings are paused, and the parties are prevented from taking any steps in the proceedings, apart from steps allowed by the CPR or the terms of the stay. Legal representatives have to confirm in the DQ that they have explained to their client the need to consider settling the claim and that there could be costs consequences against them if the client unreasonably refuses to try to settle.

If all parties request a stay, the claim will be stayed for a month (CPR 26.4(2)).

In any other circumstances, including if one party (but not all parties) requests a stay, the court can stay the claim if it considers it appropriate (CPR 26.4).

Cases are usually stayed for one month at a time. If the case is not settled at the end of that period and the parties have not applied for an extension of the stay to continue negotiations, the case will be referred to a judge for allocation and directions.

Question 39

Disclosure

Answer 39

The DQ also asks the parties to provide a lot of case management information as to the future preparation of the case for trial including the extent of disclosure.

Briefly, disclosure is the stage in the proceedings where the parties will exchange documents. In most cases, this is done by each party serving a list of documents which exist and then the recipient being permitted to inspect or to receive copies of the listed documents (with some exceptions). You will have discussed gathering documentary evidence with your client at the very first meeting with them and it is now, when you complete the DQ, that you will need to think about what type of disclosure order is needed for any particular case. Disclosure is not covered in detail in this element.

Question 40

Witnesses

Answer 40

Each party will also be required to name the witnesses that it would like to call to trial and detail what it hopes they will help that party to prove. It is important to note that there is ‘no property in a witness’ ie there is no rule preventing a party from approaching a witness that it has seen listed in the other party’s DQ and seeking their views / assistance (although of course there are rules which prohibit any party from putting pressure on a witness to give particular evidence). It is advisable therefore to speak to witnesses before you list them in the DQ.

Question 41

Expert evidence

Answer 41

In a civil claim, judges often have to consider not just legal issues but also scientific, technical, medical or other issues of which they may have no direct experience or knowledge. The judge will be assisted by experts in the relevant area (so in relation to a medical issue, an expert practitioner such as a hospital consultant).

If your client wishes to rely on expert evidence then it will need the court’s permission to do so.

Question 42

Witnesses

Answer 42

Each party will also be required to name the witnesses that it would like to call to trial and detail what it hopes they will help that party to prove. It is important to note that there is ‘no property in a witness’ ie there is no rule preventing a party from approaching a witness that it has seen listed in the other party’s DQ and seeking their views / assistance (although of course there are rules which prohibit any party from putting pressure on a witness to give particular evidence). It is advisable therefore to speak to witnesses before you list them in the DQ.

Question 43

Expert evidence

Answer 43

In a civil claim, judges often have to consider not just legal issues but also scientific, technical, medical or other issues of which they may have no direct experience or knowledge. The judge will be assisted by experts in the relevant area (so in relation to a medical issue, an expert practitioner such as a hospital consultant).

If your client wishes to rely on expert evidence then it will need the court’s permission to do so.

Question 44

Trial

Answer 44

Parties are also required to estimate the time needed for the trial and it would be useful to consult counsel at this stage for an accurate estimate. This trial estimate will be included in the directions given by the judge and parties are required to notify the court if there is any change to the estimate given.

Question 45

Costs

Answer 45

In multi-track cases which fall within automatic costs management, the parties will need to file a costs budget with the DQ. This is part of the costs management regime, and is not addressed in detail in this element.

Question 46

Directions

Answer 46

The DQ also requires parties to attempt to agree directions and to attach them, if the case has been provisionally allocated to the fast or multi-track. Proposed directions must be filed with the DQ, whether the parties have managed to reach agreement or not (CPR 26.3(1)(b)(v)).

Question 47

Other matters

Answer 47

In addition to the above, the DQ also asks for information in relation to:

• Which court the claim should be heard in;
• Which track the parties think the case should be allocated to (ie whether the parties dispute the track it is proposed the claim be allocated to);
• Whether the parties have already made any interim applications and whether they intend to make any in the future; and
• Any other facts or documents the parties wish the judge to consider on allocation.

Question 48

Allocation

Answer 48

Once all the documents specified in the notice of proposed allocation have been filed including the DQ, the court will allocate the claim to a track. However, the court may consider it needs more information in order to allocate, therefore it may order a party to provide further information about the case or hold an allocation hearing (CPR 26.5(3) and (4)). Allocation hearings are quite rare.

Once the court has made an allocation decision, it will send a notice of allocation to the parties together with a copy of the DQs (CPR 26.9).

Question 49

Criteria for allocation

Answer 49

We have set out above the type of cases for which each track is the normal track (see ‘The scope of each track’). The principal criterion (but not the only criterion) for allocating a case to one of the three tracks is how much the claim is worth.

However, when it comes to allocating the claim to a track, the court can decide not to allocate a claim to the normal track. The matters the court will consider when deciding to which track a case should be allocated include:

• The financial value of the claim;
• The nature of the remedy sought;
• The likely complexity of the facts, law or evidence;
• The number of parties or likely parties;
• The value of any counterclaim or other Part 20 claim (the court will not aggregate claims but will look at the value of the largest claim);
• The amount of oral evidence which may be required;
• The importance of the claim to any persons who are not parties;
• The views expressed by the parties; and
• The circumstances of the parties.

So the approach to be taken is to:

• Identify the normal track (see the table on the page headed ‘The scope of each track’).
• Decide whether there is a good reason to allocate the claim to a track other than the normal track, taking into the considerations listed immediately above.

Question 50

The small claims track

Answer 50

This track typically hears a very wide variety of cases ranging from consumer disputes, personal injury cases where damages for pain, suffering and loss of amenity are less than £1,500 (although there are different limits for personal injuries arising from road traffic accidents), to disputes about enforcement of parking charges and holiday claims.

The key features are:

VERY LIMITED COSTS RECOVERY - The court will rarely order one party to pay any costs to the other party, other than very limited fixed costs (and court fees and witness expenses).

FEWER ‘FORMALITIES’ - Certain CPR rules do not apply to cases allocated to the small claims track and hearings on the small claims track are informal with parties generally representing themselves.

These two features encourage litigants to represent themselves – without a solicitor / barrister

ABBREVIATED DIRECTIONS:

The standard directions usually include:

• Parties to file and serve on every other party copies of documents they intend to rely upon no later than 14 days before the main hearing (this in place of more detailed directions for disclosure, witness and expert evidence that you might expect on other tracks);
• Original documents to be brought to the hearing;
• Notice of the hearing date (at least 21 days’ notice will usually be given) and time allowed for the hearing (CPR 27.4(2)); and
• That the court must be informed if, by agreement between the parties, the case settles.

Question 51

The fast track

Answer 51

In fast track cases, the court will usually give directions on the basis of the directions questionnaire but occasionally can hold a hearing (28PD2). Standard directions exist for the fast track (although the standard directions can be modified) which include the following:

Within how many weeks of notice of allocation for each direction? (Directions/steps allowed will be proportionate to the value/complexity of the claim)

Disclosure (the direction will generally be for either no disclosure, standard disclosure, or disclosure of particular documents) - 4

Exchange of witness statements – 10

Exchange of experts’ reports (with associated directions for questions etc) – 14 (Limits on amount of experts. SJE preferred)

Filing pre-trial checklists at court – 22

Trial date / period fixed or trial – 30 (Trial lasts no longer than 1 day. Fixed costs apply to trial)

Fast track trials will usually be held in the County Court, and should last no longer than one day, so there may be no opening speeches and limited oral evidence.

Question 52

Case management on the multi-track

Answer 52

Multi-track cases cover a range of cases from simple disputes of just over £25,000 to very large claims involving millions of pounds. As such, the way each multi-track case is dealt with (in terms of case management and type of directions) is flexible and differs according to the type of case involved: indeed, this flexibility is itself a hallmark of the multi-track.

If the notice of proposed allocation indicates that the case will be allocated to the multi-track, the most likely next steps are either (CPR 29.2):

• The court giving directions (more likely in less complex cases / where parties have agreed directions at the time of filing their directions questionnaires); OR
• Convening a case management conference (CMC) (this is a hearing, by telephone or face to face, to determine the future conduct of the case)

Question 53

Purpose of a CMC

Answer 53

It should be noted that a CMC is more than just a directions hearing. It is intended to ensure that the real issues between the parties are identified and understood by the parties and the court, and to see if they can be narrowed before trial. In particular the court will test the parties on matters such as:

• The suitability of the case for settlement
• The position the parties have reached in the litigation
• The steps the parties have already taken
• Compliance with previous directions / orders
• Estimated costs of litigation and whether this is proportionate
• Steps to be taken in the future

Question 54

Issues to be considered at a CMC

Answer 54

At a CMC, the court is likely to consider:

• Whether the claim is clear;
• Whether any statements of case need to be amended;
• What disclosure is required, if any;
• What expert evidence is required, and how and when it should be obtained;
• What factual evidence (eg witness statements) should be provided for;
• Whether any further information is required; and
• Whether it will be just and will save costs to order a split trial or the trial of one or more preliminary issues.

Question 55

Who should attend the CMC?

Answer 55

ANY LEGAL REPRESENTATIVE ATTENDING A CMC MUST

Be familiar with the case

Have sufficient authority to deal with any issues likely to arise (like discussing directions / identifying issues)

(CPR 29.3(2)

If such a representative does not attend and the CMC is postponed as a consequence, it is likely to result in a wasted costs order (a costs order payable by the solicitor as opposed to by the client). The court can also order the client to attend the CMC.

Question 56

Directions in multi-track cases

Answer 56

In multi-track cases, parties are under an express obligation to try to agree directions before any CMC. This satisfies the overriding objective by saving time and money and is reinforced by the requirement that agreed directions (or proposed directions if agreement is not reached) have to be submitted to court at least seven days before any CMC (CPR 29.4).

The Ministry of Justice has published various sets of standard directions orders for different cases along with a menu of model paragraphs containing different individual directions on its website, which can be found at www.justice.gov.uk. When drafting case management directions both the parties and the court in multi-track cases must use these model and standard directions as their starting point and adapt them as appropriate to the circumstances of the particular case (CPR 29.1).

Question 57

The requirement for a disclosure report

Answer 57

In multi-track cases, both parties must produce a disclosure report in readiness for the CMC (CPR 31.5(3) - (8))(Disclosure Report), unless the claim includes a claim for personal injury. Under these provisions, not less than 14 days before the first CMC, each party must file and serve a report verified by a statement of truth that:

• Briefly describes what documents exist, or may exist, that are, or may be, relevant to the matters in issue in the case;
• Describes where, and with whom, those documents are, or may be, located;
• Describes how any electronic documents are stored;
• Estimates the broad range of costs that could be involved in giving standard disclosure in the case, including the costs of searching for and disclosing any electronically stored documents; and
• States which of the disclosure directions are to be sought.

The requirement for the disclosure report is part of the approach to the whole process of disclosure that was ushered in by the Jackson reforms and forms part of the strategy aimed at trying to keep the costs of disclosure in multi-track claims proportionate to the matters in dispute.

There is a disclosure report Form, N263, which can be used to provide the above information. Where there are electronic documents to be disclosed, parties should consider also using the Electronic Documents Questionnaire (EDQ) which is in Form N264 (schedule to PD 31B). If used, the EDQ needs to be filed with the Disclosure Report even where it has already been exchanged (CPR 31.5(4)).

Disclosure is not addressed in detail in this element – it is covered in a different topic.

Question 58

Case summaries and applications

Answer 58

Case summaries: Parties are required to consider whether a case summary will be useful at the CMC (29 PD5.6(3) and 5.7). This is a short document of not more than 500 words, prepared by the claimant and (if possible) agreed with the other parties, designed to assist the court in understanding and dealing with the issues raised.

The case summary should contain:

• A chronology of the claim;
• -Factual issues agreed and in dispute; and

The nature of the evidence needed to decide them.

Applications: If a party needs to make an application to court (for example, for permission to amend a statement of case) it should be made as soon as it becomes apparent that it is necessary or desirable, and ideally be made so that it can be considered at any other hearing already fixed, which includes a CMC.

Question 59

Proportionate Costs

Answer 59

The overriding objective is that claims should be dealt with ‘justly and at proportionate cost’ (CPR 1.1(1)).

What does proportionate mean? Costs are proportionate if they bear a reasonable relationship to:

• The sums in issue in proceedings;
• The value of any non-monetary relief in issue in proceedings;
• The complexity of the litigation;
• Any additional work generated by the conduct of the paying party; and
• Any wider factors in the proceedings, such as reputation or public importance.

How can the aim of dealing with cases at proportionate cost be achieved? One way is to limit the costs that one party can recover from the other. At the conclusion of a trial, the court will usually order one party to pay the other party’s costs. When deciding how much of those costs should be paid, the usual rule is that the court will only order a party to pay costs which were reasonably and proportionately incurred and reasonable and proportionate in amount.

This is costs assessment – not costs management - and it is addressed in a different element. Costs assessment as a means of encouraging claims to be dealt with at proportionate cost has two main limitations (which, as we will see, the costs management regime aims to address).

Question 60

Limitation 1 - Limited information when making case management decisions

Answer 60

One way a court could encourage proportionate costs would be by giving directions for the litigation which are proportionate. But to do this, the court needs information from the parties at an early stage about the likely costs for the parties of the possible directions. It cannot simply leave this to the end, when costs are assessed.

The costs management regime helps to address this limitation. As you will see, the costs management regime involves the parties providing a budget of future costs to the court at an early stage. By receiving the parties’ budgets at an early stage, the court can tailor the steps to be taken (eg directions) in the light of the parties’ indications as to the costs of those steps.

Question 61

Limitation 2 -Uncertainty about what a court would consider to be ‘disproportionate’ costs

Answer 61

The second limitation is that the parties cannot predict exactly how a court will interpret ‘reasonably and proportionately incurred and reasonable and proportionate” in amount for a particular case. They cannot keep their costs within a particular limit if they do not know what that limit is.

Again, the costs management regime helps to address this limitation. By allowing the parties to agree budgets or the court amending and approving budgets, the parties have an early indication of what will be considered to be proportionate costs and therefore less uncertainty as to what will happen if costs need to be assessed.

So that takes us to the flowchart. This stage where the parties exchange budgets, the court indicates what would be proportionate costs, and the court gives directions based on those costs, is at the case management stage. And costs management is only really a concern on the multi-track. By taking steps at this stage, the court hopes to better control the costs as the parties address disclosure, witness statements, expert evidence and other matters on the way to trial.

Question 62

Scope of the costs management regime

Answer 62

The costs management regime will not apply in all cases. By default, the costs regime applies to all cases except the following cases (CPR 3.12):

• Small claims track or fast track claims.
• Claims commenced on or after 22 April 2014 where the amount of money claimed as stated on the claim form is £10 million or more.
• Claims commenced on or after 22 April 2014 which are for a monetary claim which is not quantified or not fully quantified or is for a non-monetary claim and the claim form contains a statement that the claim is valued at £10 million or more.
• Claims commenced after 6 April 2016 made by or on behalf of a person under the age of 18.
• Claims that are the subject of fixed costs or scale costs.

Note, however, that the court can disapply the costs management regime even when it would normally apply automatically (for example, where a claimant has as a limited or severely impaired life expectation of 5 years or less remaining – 3D PD 1), or require compliance with the regime even when it would not normally apply.

Question 63

Overview of the costs management regime

Answer 63

• Parties prepare budgets: estimates of future costs. Filed and exchanged, usually 21 days before the first CMC. Subsequently discussed by the parties.
• Budget discussion reports record extent to which the parties have agreed budgets. Filed and exchanged, usually seven days before the first CMC.
• Budgets and budget discussion reports are considered by the court.
• Directions are determined in light of estimated costs. Court might make a costs management order: a provisional indication of what should be considered reasonable and proportionate costs in any later assessment proceedings.

Filing and exchanging costs budgets

When to file budgets (CPR 3.13(1)(b))?

• Stated value of the claim is less than £50,000: With the parties’ directions questionnaires
• Any other case: 21 days before the first CMC

Question 64

What is a budget?

Answer 64

‘Budget’ is defined in the CPR Glossary as:

“An estimate of the reasonable and proportionate costs (including disbursements) which a party intends to incur in the proceedings.”

The statement of truth at the end of the statement of truth must read (22 PD 2.3):

“This budget is a fair and accurate statement of incurred and estimated costs which it would be reasonable and proportionate for my client to incur in this litigation”

The budget relates to what a party might hope to recover from the other side (party/party costs) as opposed to the amount a solicitor can charge a client for acting on its behalf (solicitor/party costs). Solicitor’s fees (ie the amount charged to the client by the solicitor) are governed by the retainer (the contract between the solicitor and client), which does not need to bear any relation to recoverable costs. A solicitor may therefore be charging more than is in the budget for each stage of the litigation.

Points for practice

Discrepancies between budgets and charges to clients can lead to difficult conversations with clients, who will want to know why they should be paying their solicitor one amount, but claiming a lesser amount in the budget to ensure that it is both ‘reasonable and proportionate’.

It is important to involve the client in the budgeting process to try to avoid any such solicitor/client costs issues, and also to warn clients that they may not be able to recover all that they spend on their case.

Question 65

Preparing the costs budget

Answer 65

Parties should prepare the budgets carefully and revise them if necessary.

There is a prescribed form for the costs budget, Precedent H (3D PD 4). It requires practitioners to set out any assumptions on which the budget is based and any possible contingencies (things which are anticipated but which may not be necessary, for example, an application for specific disclosure). Note that it must be signed with its own form of statement of truth.

A blank copy is presented on the following page. Where the monetary value of the claim is less than £50,000 or if the party’s budgeted costs do not exceed £25,000, the parties must only use the first page of Precedent H (3D PD 4(b)).

It should be noted that budgeting is all about future costs. Incurred costs (costs incurred pre-budget) are included on the Precedent H, but they cannot be altered by the court and the rule that a party will only recover budgeted costs unless there is good reason (see later in this element) does not apply to costs incurred prior to the production of the costs budget (CPR 3.18(b)).

[a blank copy of Precedent H (the budget) is provided at this point]

Question 66

Budget discussion reports

Answer 66

Once the parties have filed and exchanged costs budgets, they are required to discuss budgets with each other in order to agree the costs figures where possible. The parties must file and exchange budget discussion reports (Precedent R) no later than seven days before the first CMC (CPR 3.13 (2)).

By the budget discussion report, the parties indicate:

• The figures which are agreed and not agreed for each phase of the litigation; and
• A brief summary of the grounds of dispute.

Completing the budget discussion report enables the court to focus on those parts of the costs budget where there is disagreement between the parties.

A blank copy is presented on the following page.

[a blank copy of Precedent R (the budget discussion report) is provided at this point]

Question 67

Costs management conference

Answer 67

The next stage of costs management is the court considering the parties’ budgets and the budget discussion reports. This generally takes place at the first case management conference (CPR 3.16). Alternatively, the court can convene a hearing solely for the purpose of costs management, in which case the hearing is called a costs management conference.

What does this consideration result in? There are two main consequences.

1. Case management decisions

When the court is making any case management decision, it is to have regard to any available costs budgets and the costs involved in each procedural step of the litigation (CPR 3.17). This applies at any stage in the litigation, but it is particularly significant when the court is making important case management decisions at the first case management conference, such as giving directions for the preparation of the case for trial.

2. Costs management orders

The court may, at any time, make a costs management order (‘CMO’).

The court will consider whether the budgeted costs fall within the range of reasonable and proportionate costs, and then the CMO will:

• Record the extent to which the costs budgets are agreed between the parties. Agreed figures cannot be changed by the court.
• Where the figures are not agreed, “record the court’s approval of a costs budget, after making appropriate revisions”.

When the court approves the costs budget, this is an indication that the budgeted costs are reasonable and proportionate. In any case where a CMO has been made, when assessing costs on the standard basis the court will have regard to a party’s last approved or agreed costs budget and will not depart from it unless satisfied that there is good reason to do so (CPR 3.18(b)). Departing from the costs budget in this situation means allowing costs in excess of those in the approved costs budget or CMO to be recovered.

Note that, in any assessment process, a fundamental principle is that party cannot recover a greater sum for costs from an opponent than it has in fact incurred: this is true even if the budget provides for a greater sum than has been incurred. The budget effectively becomes a ‘cap’ on what can be recovered.

3. Assessment if no costs management order

If no costs management order is made, then the position is less ‘strict’. If there is a difference of 20% or more between the costs claimed by a receiving party on detailed assessment and the costs shown in a budget filed by that party, the receiving party must provide a statement of the reasons for the difference with the bill of costs, and the court may reduce the recoverable sum if the paying party reasonably relied on the budget.

Question 68

Revising costs budgets

Answer 68

If significant developments in the litigation warrant a revision to a party’s budget (upwards or downwards), then:

An amended budget should be submitted to the other parties for agreement if possible (using a form prescribed specifically for variations – ‘Precedent T’, annexed to 3D PD); and

The amended budget then needs to be submitted to court for consideration.

This process is for addressing ‘significant developments’ in the litigation, not for correcting inadequacies or mistakes in the preparation of a costs budget in the first place, which is not generally allowed.

Question 69

Failure to file a budget

Answer 69

Any party that fails to file a costs budget, when required to do so, will be automatically treated as having filed a costs budget comprising of only the applicable court fees unless the court otherwise orders (CPR 3.14). Assuming the court then ‘approves’ such a budget by a costs management order, this becomes the starting point for what can be awarded in any future assessment proceedings. This is a draconian provision as in all cases the costs are likely to be significantly more than the court fees. Accordingly, this is a requirement that should never be overlooked by practitioners.

Question 70

Costs and case management conference

Answer 70

As explained above, costs management generally takes place at the first case management, when directions are also being considered. Such a hearing is therefore often known as a costs and case management conference, or ‘CCMC’. The following page illustrates the combined key procedural stages in preparing for a CCMC, and its product.

Overview of costs and case management conference procedure

Not later than 21 days before first CMC – Budget

Not less than 14 days before first CMC – Disclosure report (and Electronic Documents Questionnaire?)

No later than / at least 7 days before first CMC – Draft directions – Budget discussion report

Also before the CMC: applications? Bundle and/or case summary?

Cost and case management conference

Product of CCMC – Directions – Costs management order