6 - Case Management and Costs

Question 1

What are the main civil procedure rules related to costs?

Answer 1

• CPR 44.2-44.4 & 44.7 (in relation to costs generally)
• 44 PD 6.1-6.2 (in relation to the standards and indemnity bases).

Question 2

Why are costs an important consideration in litigation?

Answer 2

Not only is the expense of litigation very significant, but the court’s power to order a party to pay an opponents costs is used to influence parties’ behaviour.

Question 3

What is the court’s jurisdiction to order costs?

Answer 3

The court has full power to determine by whom and to what extent costs of proceedings are to be paid.

This includes:
- Costs prior to proceedings, such as when complying with a pre-action protocol.
- Costs spent negotiating in connection with pending litigation.

The court may consider making a costs order at the end of any interim hearing as well as at the end of a trial.

If the judge does not make an order as to costs (or gives an order that there is “no order as to costs”), each party will simply pay its own costs.

Question 4

What are the different types of litigation costs?

Answer 4

The types of litigation costs most commonly encountered in practice are:
Solicitor-client costs: Costs payable by the client to the solicitor under the contract of retainer.

Inter-party costs: The costs awarded by the court which one party has to pay the other party.

Non-party costs: Costs awarded against a non-party, such as a ‘funder’ who is financing the litigation.

Question 5

What are solicitor-client costs?

Answer 5

Solicitor-client costs refer to the costs a client is responsible for paying to their solicitor under the retainer contract.

Even if a party is successful in litigation, there may still be a shortfall between the costs recovered from the other party and the sum the client must pay their solicitor, as recorded on the solicitor’s bill.

The indemnity principle dictates that a party cannot recover more than their liability to their own solicitor.

Question 6

What are inter-party costs?

Answer 6

Inter-party costs refer to the actual amount of costs one party is ordered to pay another following court proceedings.

These costs are typically awarded after the case has been decided, but the court retains discretion in how much is awarded.

Question 7

What are non-party costs?

Answer 7

Non-party costs involve the court’s power to award costs against a person not directly involved in the proceedings, such as a funder.

Principles applied by the court for awarding non-party costs include:
- Such orders are “exceptional” but can be made if it is just to do so.
- Where the non-party both funds and substantially controls or benefits from the proceedings, justice usually requires that they pay the successful party’s costs if the proceedings fail.

Question 8

What is the court’s discretion regarding costs, and what is the general rule?

Answer 8

When determining costs, the court has discretion over:
- Whether costs are payable by one party to another.
- The amount of costs payable.
- When the costs are to be paid.

The general rule is that costs follow the event, meaning the unsuccessful party pays the successful party’s costs (CPR 44.2(2)(a)).

However, the court can depart from this rule and take factors such as conduct and success on only some issues into account when making a costs order.

Question 9

What is the general rule for determining whether costs are payable by one party to another?

Answer 9

The general rule is that the losing party pays the winning party’s costs.

However, the court has full discretion to depart from this rule based on several factors, including:
- The conduct of the parties, including engagement in ADR and settlement offers.
Success on only certain issues or parts of the claim.

Example: Unreasonable refusal to engage in ADR can impact the costs award, although a finding of unreasonable refusal does not automatically result in a costs penalty.

Question 10

What is the basis of assessment for costs (CPR 44.3)?

Answer 10

When making a costs order, the court specifies the basis of assessment, which can be either:

Standard basis: The court will allow costs which are proportionately and reasonably incurred and are proportionate and reasonable in amount. Any doubt is resolved in favour of the paying party.

Indemnity basis: The court will allow costs that have been reasonably incurred and are reasonable in amount. Any doubt is resolved in favour of the receiving party.

In either case, costs that have been unreasonably incurred or are unreasonable in amount will not be allowed.

Standard basis: Typically, only around 60% of the costs will be recoverable.
Indemnity basis: Between 70-80% of the costs may be recoverable.
In neither scenario will a party likely recover 100% of its costs.

Indemnity costs are awarded where a party’s conduct warrants disapproval.

Question 11

What is meant by “proportionate” in terms of recoverable costs?

Answer 11

Proportionate costs must bear a reasonable relationship to specific criteria under CPR 44.3(5), including:
- The sums in issue in the proceedings.
- The value of non-monetary relief sought.
- The complexity of the litigation.
- Additional work caused by the paying party’s conduct.
- Any wider factors, such as reputation or public importance.

Example: In a £50,000 dispute, legal costs of £60,000 might be deemed disproportionate, though large costs do not automatically mean they are disproportionate.

Question 12

What factors does the court take into account when deciding the amount of costs?

Answer 12

The court considers all circumstances, including:
- The conduct of the parties.
- The complexity of the case.
- The location and circumstances in which the work was done.
- The receiving party’s last approved or agreed budget (CPR 44.4(3)).

These factors help the court assess the actual amount of costs after determining whether one party should pay the other’s costs.

Question 13

What is the time frame for complying with an order for costs?

Answer 13

Unless otherwise specified, a party must comply with a costs order within 14 days of either:
- The date of the judgment or order if the amount is specified.
- The date of the certificate stating the amount of costs if determined later.

The process of deciding costs at a later time is called detailed assessment (CPR 44.7).

Question 14

What is Qualified One Way Costs Shifting (QOCS)?

Answer 14

QOCS is the costs regime for claims involving personal injury or death (CPR 44.13).

It restricts the defendant’s ability to enforce a costs order against the claimant, providing protection for claimants in such cases.

Question 15

What is costs management?

Answer 15

Costs management relates to the court’s power to control costs, including by making costs orders at the end of interim hearings or trials.

It is also part of the court’s wider costs management regime, which is detailed in separate elements on costs management procedures.

Question 16

Provide a summary overview of costs.

Answer 16

• The court has the power to determine who should pay the cost of and the costs incidental to litigation proceedings.
• There are different types of litigation costs that you will come across in practice including: solicitor-client costs, inter-party costs and non-party costs
• The general rule on costs recovery is that the loser pays the winners costs (CPR 44.2(2)(a).
• There are two bases for assessing how costs should be calculated: the standard and indemnity basis, the latter leading to an award of a greater proportion of costs.
• Conduct is a critical factor for the court when exercising its discretion as to a) what costs order to make (CPR 44.2(1)) and b) the amount of those costs (CPR 44.4(3)).

Question 17

What are the main CPR rules supporting costs procedure?

Answer 17

The main CPR that support the content of this element are:
- CPR 45: In relation to fixed costs.
- CPR 44.6: In relation to assessment generally.
- 44 PD 8-9: In relation to assessment generally and fixed costs.
- CPR 47: In relation to detailed assessment.
- 47 PD: In relation to detailed assessment.

Question 18

What are fixed costs in the fast track and intermediate track, how do they apply, and what discretion do judges maintain in relation to this?

Answer 18

What are fixed 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).

From 1 October 2023, fixed costs now apply to all small claims (CPR 27.14), fast and intermediate track cases (section VI and VII CPR 45).

If the court awards fixed costs for that item, the sum awarded will be as set out in the CPR, unless the court orders otherwise

Fast track fixed costs:
There are four complexity bands (1 to 4 in ascending order of complexity) with associated grids of costs for the stages of a claim (Table 12 in PD 45) that determine the amount of costs that can be claimed from the other party in the event that a costs order is made.

The amount of costs depends on:
- The complexity band; and
- The stage at which the case concludes.

Intermediate track fixed costs:
There are also four complexity bands (1 to 4 in ascending order of complexity) with associated grids of the costs for the stages of the claim (Table 14 in PD 45).
The stages of the claim are more extensive than for the fast track.

Parties’ agreement on complexity bands:
The parties are required to state on the directions questionnaire, either:
- The agreed complexity band; or
- If there is a dispute, the complexity band considered appropriate by each party.

Judges’ discretion:
Judges retain the discretion to allocate more complex cases valued at under £100,000 to the multi-track so that complex cases will not be inappropriately captured by the extended fixed recoverable costs regime.

Question 19

What are the cost consequences of an unaccepted Part 36 offer under the fixed recoverable costs regime?

Answer 19

Part 36 (offers to settle) and fixed recoverable costs:
The fixed costs regime introduced a change to Part 36.

When the claim is subject to the fixed recoverable costs regime, instead of indemnity costs, the additional costs awarded for a claimant’s unaccepted Part 36 offer will be an amount equivalent to 35% of the difference between:
- The fixed costs at the time the relevant period expires; and
- The fixed costs at the date of judgment.

Question 20

What are assessed costs and how do they differ from fixed costs?

Answer 20

Assessed costs: The court determines the amount payable through a process of assessment, which can be either summary or detailed.
- Summary assessment: Costs are determined immediately at the end of a hearing.
- Detailed assessment: A more complex process where costs are thoroughly examined and assessed in detail.

In contrast, fixed costs are predetermined amounts based on:
- The complexity band.
- The stage of the claim’s conclusion, with no need for a detailed assessment.

Question 21

What is summary assessment of costs and when is it used?

Answer 21

Summary assessment: The court determines the amount payable by way of costs immediately at the end of a hearing.

To enable the court to carry out a summary assessment:
- Parties must prepare statements of costs (preferably on the standard form N260, 44 PD 1.2) and file and serve them on each other not less than 24 hours before the hearing (44 PD 9.5(4)(b)).
- The court reviews these cost statements in a relatively broad brush manner, hears the parties’ short submissions, and then decides the payable amount.

Use of summary assessment: The court should use this procedure unless there is good reason not to:
- In fast track cases, at the end of the trial (where the costs of the entire case are assessed).
- At the end of a hearing of an interim application or matter, which has not lasted more than a day (where usually only the costs of the interim application are assessed).

Question 22

What is the detailed assessment of costs and how is it carried out?

Answer 22

Detailed assessment: A more complex procedure for determining the amount of costs payable.

The procedure involves:
- The court orders detailed assessment if the parties cannot agree on costs. At this point, the court does not set a figure on the amount of costs.
- The receiving party serves a notice of commencement and a copy of the bill of costs (which is more detailed than the summary assessment statement) on the paying party.
- The paying party then serves points of dispute regarding any item in the bill of costs within 21 days of receiving the notice.
- If the parties cannot reach an agreement, the receiving party requests a detailed assessment hearing, where a costs officer determines the amount payable.

Question 23

How do parties’ budgets influence the amount of costs payable?

Answer 23

The parties’ respective budgets and the costs management procedure influence how the court considers costs orders.

These budgets can affect the assessment of costs, even if a costs management order was not made.

Question 24

Provide a summary of the procedural aspects of the assessment of costs.

Answer 24

• Fixed costs are specific amounts that are recoverable by one party from another in certain circumstances in litigation; assessed costs are those where the court will need to be involved with the decision as to the amount payable (unless the parties agree the amount).
• Assessed costs requires there to be either a summary assessment or detailed assessment carried out by the court prior to a costs order being made.
• Summary assessment is used in fast track proceedings and in other cases where a hearing has lasted no more than a day (e.g., interim applications).
• Detailed assessment is the appropriate option in most other cases where costs fall to be assessed.

Question 25

Which CPR rules support the topic of interim costs?

Answer 25

• 44 PD 4.2

Question 26

What is the effect of a “Costs in any event” order?

Answer 26

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.

This means the costs are payable immediately and do not depend on the outcome of the main case.

Question 27

What are the effects of a “Costs in the case” order and a “Costs Reversed” order?

Answer 27

Costs in the case order:
- The party who eventually wins at trial (usually the successful party) will recover its costs of the interim hearing from the other party.
- This is linked to the final outcome, so the party that wins the trial will recover the costs of the interim application as part of the overall costs order made at trial.

Costs Reserved order
- The decision about who pays the costs of the interim hearing is deferred to a later point, usually at trial.
- If no decision is made later, the costs will be in the case, meaning that the party who wins at trial will recover the costs of the interim hearing. This deferral allows for further consideration based on the case outcome.

Question 28

What is the effect of a “Claimant’s costs in the case” or “Defendant’s costs in the case” order?

Answer 28

Claimant’s costs in the case:
- If the claimant is successful at trial and is awarded costs, they will be able to recover their costs of the interim application as part of the overall costs order.
- If the defendant is awarded costs at trial, the claimant will not have to pay the defendant’s costs of the interim application.

Defendant’s costs in the case:
- The same principles apply but in reverse.
- If the defendant wins at trial, they will recover their costs of the interim application, and if the claimant wins, the defendant will not have to pay the claimant’s interim costs.

Question 29

What is the effect of a “Costs thrown away” order?

Answer 29

If a judgment or order is set aside, the party in whose favour the costs order is made is entitled to recover the costs incurred as a result of the judgment or order being set aside.

These costs may include:
- Hearing costs, including preparation and attendance at both the hearing where the original order was made and the hearing where the order was set aside.

The rationale behind this is that the judgment or order should not have been made, and the party at fault is required to pay for the costs involved in both making and setting aside the order.

Question 30

What is the effect of a “Costs of and caused by” order?

Answer 30

A party is required to pay the costs resulting from something that party has done.

For example, if a claimant amends its particulars of claim, the defendant may incur additional costs as a direct result of this amendment. In this situation, the costs of and caused by the amendment would be payable by the claimant to cover the defendant’s additional expenses.

Question 31

What is the effect of a “Costs here and below” order?

Answer 31

The party in whose favour the costs order is made is entitled to recover not only their costs in the current proceedings but also their costs in any lower court where previous proceedings took place.

For example, in the case of an appeal from a Divisional Court, the party may recover costs incurred in that Divisional Court but not any costs incurred in a court below the Divisional Court.

Question 32

What is the effect of a “No order for costs” (or if no order is made) order?

Answer 32

In cases where no order for costs is made, each party will bear their own costs of the hearing.

This means neither party is entitled to recover costs from the other, and each must pay their own legal expenses for the interim application or hearing.

Question 33

What are examples of when certain interim costs orders might be made?

Answer 33

Costs in any event:
Example: A judge grants a defendant’s application to extend the time for serving its defence due to financial difficulties and related employment issues, finding in the defendant’s favour. The judge orders costs in any event, as the defendant was justified in making the application.

Costs in the case:
Example: The judge allows the extension but has sympathy for both parties’ positions. Rather than ordering costs immediately, the judge links the costs of the interim application to the final hearing. Whoever wins at trial will recover the costs in the case, including those of the interim application.

No order as to costs:
Example: The judge allows a short extension but is critical of both parties’ conduct. The judge decides that neither party is deserving of recovering their costs for the application, so no order as to costs is made. Each party bears its own costs.

Question 34

Provide a summary of the most common types of interim costs order.

Answer 34

There are certain types of interim costs orders that can be made following the hearing of an interim application.

The most common are:
- Costs in any event - the party in whose favour this order is made is awarded his costs of the interim hearing.

• 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.
• Costs reserved - the decision about who pays the costs of the interim hearing is put off to a later occasion.

Question 35

What are the main CPR rules that support the topic of case management powers and striking out?

Answer 35

• CPR 3.1 to 3.5
• 3A PD

Question 36

What are the court’s general case management powers?

Answer 36

The court has a wide range of powers to manage cases and control costs under CPR 3.1(2).

Examples of these powers include:
- Extending or shortening the time for compliance with any rule, practice direction, or court order.
- Adjourning hearings or bringing them forward.
- Requiring a party or their legal representative to attend court.
- Staying the whole or part of the proceedings or judgment, either generally or until a specified event occurs.
- Ordering any party to file and serve a costs budget.

The court also has a general provision under CPR 3.1(2)(m) that allows it to take any other step or make any order for the purpose of managing the case and furthering the overriding objective.

Question 37

What is the court’s power to make orders of its own initiative?

Answer 37

Under CPR 3.3, the court has the power to make an order of its own initiative, even if no application has been made by either party.

This allows the court to provide new directions or terminate a case without either party taking a step.

If the court makes an order of its own initiative without a hearing and without giving the parties the chance to make representations:
- The order must include a statement that the parties have the right to apply to set aside, stay, or vary the order.
- If no specific period is mentioned in the order, the parties must make any application to set aside, stay, or vary the order within seven days from the date the order was served on the party making the application.

Question 38

What is strike out, and what are the court’s powers to strike out?

Answer 38

Strike out involves the deletion of written material from a statement of case so that it cannot be relied upon in the proceedings by any party.

It can extend to the deletion of the entire statement of case, meaning the case may effectively be over.

Strike out is particularly used to address cases that are poorly drafted or constitute an abuse of process.

The court’s power to strike out is found in CPR 3.4 and can be exercised either on the court’s own initiative or upon the application of a party.
- Applications to strike out should be made as soon as possible, ideally before allocation.
- When the court strikes out of its own initiative, it often does so around the allocation/case management stage, when the court first engages with the substance of the dispute.

Strike out is used sparingly, as there are often better ways to handle defective cases, such as ordering amendments or imposing sanctions for failure to comply with court orders.

Question 39

What is the difference between strike out and summary judgment?

Answer 39

Strike out (under CPR 3.4) focuses on the statement of case itself and targets cases that do not constitute a legally recognisable claim or defence.
- It applies where the case, as pleaded, is weak from a legal standpoint. Either duty, breach, causation, or loss are missing.

Summary judgment (under CPR 24) focuses on the facts of the case, allowing the court to dismiss a case if there is no real prospect of success, even if the statement of case is correctly pleaded.
- Summary judgment applies to cases that are weak in their factual basis, regardless of the legal sufficiency of the pleadings.

There is considerable overlap between the two, and applications are often made for both strike out and summary judgment in the alternative, depending on the issues in the case.

Question 40

What is the difference between strike out and default judgment?

Answer 40

Default judgment (under CPR 12) arises when the defendant fails to respond to a claim, either by not filing an acknowledgment of service or failing to submit a defence within the required time limits.
- It is a procedural tool and does not involve the court assessing the merits of the case.
- Default judgment is available simply because the defendant has not complied with the procedural rules, and the claimant can apply for judgment without any consideration of the substantive issues.

Strike out, on the other hand, is not merely procedural and involves a more substantive review of the statement of case to determine if it discloses a claim or defence that can proceed in law.

Question 41

What are the grounds for strike out, and which CPR rule are they found under?

Answer 41

The power to strike out is found under CPR 3.4, and the grounds for strike out include:
(a) No reasonable grounds for bringing or defending the claim:
A claim that does not set out the necessary legal details (e.g., duty, breach, and causation) can be struck out.
Example: A claim stating “money owed £5,000” without explaining how and why the debt arose.
Example: A defence that simply denies the claim without providing reasons.

(b) The statement of case is an abuse of process or is otherwise likely to obstruct the just disposal of proceedings.
Abuse of process involves the misuse of court procedure, such as a vexatious litigant filing a claim without intending to take it forward.
Obstructing the just disposal of proceedings includes cases that are vexatious or ill-founded.

(c) Failure to comply with a rule, practice direction, or court order:
Non-compliance with rules, such as late service of documents or failing to attend court when ordered, can lead to strike out.
If a fair hearing is still possible despite the non-compliance, the court may impose a lesser sanction rather than striking out the case.

Question 42

What happens after a judgment following a strike out?

Answer 42

When the court makes an order stating that a statement of case will be struck out unless a party complies with the court’s order (e.g., providing a copy of a document referred to in the particulars of claim), and the party fails to comply, the statement of case will be struck out.

In such cases, the opposing party can obtain judgment with costs by filing a simple request at court.

In rare instances, an application to the court may be required to obtain the judgment, but generally, the process is straightforward following non-compliance.

Question 43

Provide a summary of the court’s case management powers and the power to strike out a statement of case.

Answer 43

The court has a non-exhaustive list of case management powers to enable it to actively manage cases either using its own initiative or on application by a party.

The court can make orders of its own initiative – without any prompt or application by a party

The court can strike out all or part of a statement of case when a statement of case shows no reasonable grounds for brining or defending the claim or is an abuse of the court’s process or there has been a failure to comply with a rule, practice direction or court order.

If the whole of a statement of case is struck out, the court might also give judgment for a party.

The court can make an order for strike out of its own initiative or upon an interim application by one of the parties.

Question 44

What are the relevant CPR rules for sanctions and reliefs?

Answer 44

• CPR 3.7-3.9

Question 45

What are sanctions, and what can they relate to?

Answer 45

Sanctions are measures that are adverse to a party and are imposed to ensure compliance with court rules and court orders.

They can relate to:
- Interest: e.g., reducing the interest payable to the claimant as a sanction imposed on the claimant for their non-compliance.
- Costs: e.g., 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: This sanction is considered in more detail under the element “Case management powers and striking out.”

Other adverse measures: There is no definitive list of sanctions in the CPR, meaning sanctions could encompass other measures that negatively affect a party.

Question 46

What is the court’s power to impose sanctions?Court’s power to impose sanctions

Answer 46

The court has the power to impose sanctions by a court order.

The court may either:
- Impose a sanction immediately, or
- Make an unless order, which:
Provides for an automatic sanction if the party fails to comply with the order.
The unless order must clearly specify the date and time within which the act must be done (CPR 2.9).

Example: “Unless the defendant serves its list of documents at or before [time and date], its defence will be struck out, and judgment entered for the claimant.”

Question 47

What sanctions are imposed by the CPR?

Answer 47

The CPR itself imposes various automatic sanctions for default.

Examples include:
- Failure to disclose an expert report: This results in the party being prevented from using that expert report at trial (CPR 35.13).
- Failure to file a costs budget: This results in the party being treated as having only filed a costs budget for applicable court fees (CPR 3.14).

Question 48

What are the rules regarding sanctions and time limits?

Answer 48

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 written agreement between the parties, unless:
- A rule or practice direction provides otherwise, or
- The court orders otherwise.

Exceptions to this rule include 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:
- The parties can agree to an extension of time by prior written agreement (before the deadline is reached) for a maximum of 28 days, provided it does not put at risk any hearing date, unless the court orders otherwise.

Question 49

What happens in cases of non-compliance with orders imposing sanctions?

Answer 49

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

Question 50

What is the relief from sanctions, and what are the key principles?

Answer 50

Relief from sanctions is granted where the court decides to set aside or mitigate a sanction for breach of court rules or orders.

The rules encourage a strict approach. On an application for relief, the court will consider all the circumstances of the case to deal justly with the application (CPR 3.9(1)).

The court will specifically 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.

Question 51

What is the three stage test founded by the CoA for deciding whether to grant relief from sanctions in Denton?

Answer 51

The key case is Denton and others v TH White Ltd and others [2014] (collectively known as Denton).

The Court of Appeal set out a three-stage test for deciding whether to grant relief from sanctions:
1. Identify and assess the seriousness and significance of the failure to comply with the relevant rule, practice direction, or court order. If the breach is neither serious nor significant, relief should be granted.

Stage one: A useful test for assessing whether a breach is serious or significant is whether it has imperilled future hearing dates or disrupted the conduct of litigation.
If the breach is not serious or significant, relief will usually be granted.

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

Stage two: The court does not provide specific examples of good and bad reasons for default.

3. Having considered the reason, the court should evaluate all the circumstances to ensure the case is dealt with justly. Particular weight is given to the need for litigation to be conducted efficiently and for compliance with rules to be enforced.

Stage three: Majority view of the Court of Appeal (Lord Dyson and Lord Vos) is that the two factors under CPR 3.9 should be given particular importance and weight.

Question 52

What is an in-time application, and how does it differ from relief from sanctions?

Answer 52

In-time applications occur when a deadline is looming, and a party realises they will not meet it. They apply for an extension before the deadline expires.

This is different from relief from sanctions, which applies when a deadline has passed, and the party seeks to avoid the consequences of missing it.

Example: An application for an extension of time to take a step in litigation is an in-time application if filed before the deadline, even if the court deals with it after the deadline.

Question 53

How does relief from sanctions apply to setting aside default judgment?

Answer 53

An application to set aside default judgment is treated as an application for relief from sanctions when the defendant relies on the discretionary ground to set aside the judgment (CPR 13.3).

In such cases, the court applies the Denton principles when deciding whether to grant relief.

Question 54

Provide a summary of the court’s power to impose sanctions and how a party obtains relief from sanctions.

Answer 54

The court has the power to make any order subject to a sanction which could be specific conditions or specific consequences of a failure to comply with the order.

If a party fails to comply with an order imposing a sanction, the sanction takes effect (CPR 3.8) unless the party applies for relief from it (CPR 3.9).

Parties can agree an extension of time of up to 28 days provided it does not put at risk a hearing date or it is not contrary to CPR or a court order.

The test the court will apply for granting relief from sanctions alongside CPR 3.9 is in the Denton case.

Question 55

What are the main CPR rules for allocation to track?

Answer 55

• CPR 26
• 26 PD

Question 56

What is allocation and its purpose in the context of civil claims?

Answer 56

• ‘Allocation’ is about deciding which ‘track’ a claim should be allocated to.
• There are four separate tracks a case can be allocated to: the small claims track, the fast track, the intermediate track, and the multi-track.
• The tracks matter because the court manages the claims on the different tracks in different ways.
• 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 57

What is the scope of each track in civil claims?

Answer 57

Small claims track (CPR 27): Normal for cases valued not more than £10,000, including tenant claims against landlords for repairs not exceeding £1,000. Special rules apply to personal injury claims.

Fast track (CPR 28): Normal for claims up to £25,000, provided the trial lasts no longer than one day and there is only one expert per party in each of no more than two expert fields.

Intermediate track (CPR 28): Normal for claims up to £100,000, with trials likely lasting no longer than three days and limited to two experts per party.

Multi-track (CPR 29): Normal for all other types of cases.

Question 58

What are the special rules regarding the small claims track for personal injury claims?

Answer 58

The small claims track is normal for personal injury claims not exceeding £10,000, and additionally:
- For road traffic claims occurring before 31 May 2021, if the claimant is a child or protected party, or riding a motorcycle, damages must not exceed £1,000.
- For other road traffic claims, damages must not exceed £5,000.
- For any other personal injury claims (not road traffic), damages must not exceed £1,500.

Question 59

What is the process of allocation in civil claims?

Answer 59

• A defence is filed.
• The court sends out the notice of proposed allocation, provisionally allocating the claim to a track.
• Parties file directions questionnaires (DQ).
• If allocated to fast track, intermediate track, or multi-track, parties file proposed directions.
• The court allocates the claim and serves a notice of allocation. Directions are usually given based on the track allocation.

Question 60

What is the purpose of the notice of proposed allocation?

Answer 60

Following the receipt of a defence, a court officer provisionally decides the suitable track and serves a notice of proposed allocation.

This notice indicates the proposed track and requires parties to:
- File and serve a directions questionnaire.
- File proposed directions for fast track, intermediate track, or multi-track cases.
- File a costs budget and an agreed budget discussion report for claims under the costs management regime.
- It also states deadlines for these steps.

Question 61

What information is provided in the directions questionnaire (DQ)?

Answer 61

The DQ, completed by the parties, contains questions to help the court determine the most appropriate track.

It requires parties to confirm compliance with pre-action protocols, request stays for settlement, and provide case management information regarding future trial preparation, including:
- Extent of disclosure.
- Witnesses to be called.
- Expert evidence required.
- Estimated trial length.
- Proposed directions, if applicable.

Question 62

What are some specific sections included in the directions questionnaire (DQ)?

Answer 62

Pre-action protocol: Parties confirm compliance or explain non-compliance.

Settlement: A section to request a stay for settlement discussions, confirming legal representatives have advised clients about potential costs consequences.

Disclosure: Parties provide information about document exchange.

Witnesses: Parties name witnesses and detail their relevance.

Expert evidence: Court permission is required to rely on expert evidence.

Trial estimate: Parties estimate the time needed for the trial, consulting counsel for accuracy.

Costs: Multi-track cases require filing a costs budget.

Directions: Parties attempt to agree on directions for the case.

Question 63

What additional matters are included in the directions questionnaire (DQ)?

Answer 63

The DQ also asks for information regarding:
- The preferred court for the claim.
- The track parties think the case should be allocated to.
- Complexity band for fast or intermediate track allocation.
- Any interim applications made or intended.
- Other facts or documents the parties wish the judge to consider.

Question 64

What happens after the directions questionnaires have been filed regarding allocation?

Answer 64

Once all specified documents, including the DQ, are filed, the court will allocate the claim to a track if it considers it necessary. For cases allocated to the fast or intermediate track, a complexity band may be assigned.

The court might require more information for allocation or hold an allocation hearing, although these are rare. Following the allocation decision, a notice of allocation will be sent to the parties along with copies of the DQs.

Question 65

What criteria are considered for allocating a case to a track?

Answer 65

The principal criterion for allocating a case is the financial value of the claim. However, the court may consider other factors, including:
- The nature of the remedy sought.
- Likely complexity of facts, law, or evidence.
- Number of parties involved.
- Value of counterclaims.
- Amount of oral evidence required.
- Importance of the claim to non-parties.
- Views expressed by parties.
- Circumstances of the parties.

Question 66

How does a court determine the correct track for a case?

Answer 66

1. Identify the normal track for the claim, primarily based on the claim’s value.
2. Consider whether there is a good reason to allocate the claim to a different track, taking into account broader criteria.
3. Allocate to the identified track based on the above considerations.

Question 67

What is the conclusion of the allocation stage in civil claims?

Answer 67

At the conclusion of the allocation stage, the claim will be allocated to a track.
- If allocated to the small claims track or fast track, the court is likely to give directions on how the claim should proceed.
- For intermediate track or multi-track allocations, the court will likely either give directions or schedule a case management conference to consider such directions.

Question 68

Provide a summary for the scope of the three tracks to which a claim could be allocated and the procedure leading to allocation

Answer 68

Allocation is about allocating a claim to the small claims track, the fast track, the intermediate track or the multi-track.

Once the defence has been filed, the court provisionally allocates a claim, based primarily on its value, and directs the parties to file and serve directions questionnaires.

The directions questionnaires give information about documents, witnesses, experts and trial that the court needs to determine the steps that should be taken to prepare the claim for trial, and when those steps should be taken.

After receiving the directions questionnaires, the court will allocate the claim to the small claims track, the fast track, the intermediate track or multi-track (and assign a complexity band where appropriate). This involves identifying the ‘normal track’ and then considering whether there is a good reason to allocate a claim to a track other than the normal track.

The court will usually also give directions, or (in the case of a claim allocated to the intermediate track or multi-track) it might fix a case management conference for directions to be considered.

Question 69

What are the main CPR rules for the small claims, fast and intermediate tracks.

Answer 69

• CPR 27 (in relation to the small claims track)
• 27A PD (also in relation to the small claims track)
• CPR 28 (in relation to the fast track and intermediate track)
• 28 PD (also in relation to the fast track and intermediate track)

Question 70

What are the key features of the Small Claims Track under the Civil Procedure Rules (CPR)?

Answer 70

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 (court fees and witness expenses).

Fewer Formalities:
Certain CPR rules do not apply to cases allocated to the small claims track.
Hearings on the small claims track are informal, with parties generally representing themselves, encouraging litigants to proceed without solicitors or barristers.

Abbreviated Directions:
Parties must file and serve copies of documents they intend to rely upon no later than 14 days before the hearing, in place of more detailed directions for disclosure, witness, and expert evidence as seen in other tracks.
Original documents must be brought to the hearing.
Notice of the hearing date will usually provide at least 21 days’ notice, including the time allowed for the hearing.
The court must be informed if the case settles by agreement between the parties.

Question 71

What are the key features and standard directions of the Fast Track under the Civil Procedure Rules (CPR)?

Answer 71

Directions Timelines:
- Disclosure: The court may order no disclosure, standard disclosure, or disclosure of particular documents, with a timeline of 4 weeks after notice of allocation.
- Exchange of witness statements: Must occur 10 weeks after notice of allocation.
- Exchange of experts’ reports: Within 14 weeks, subject to limits on the number of experts (usually no more than one expert per party in two expert fields).
- Filing of pre-trial checklists: 22 weeks after notice of allocation.
- Trial date or period fixed: The trial must be fixed within 30 weeks, with the trial lasting no longer than one day. Fixed costs apply to the trial.

Fast Track Trials:
Trials will typically be held in the County Court and should last no longer than one day.
There may be no opening speeches, and oral evidence will be limited.

Question 72

What are the complexity bands in the Fast Track and their relevance to claims under the Civil Procedure Rules (CPR)?

Answer 72

Complexity Band 1:
Covers road traffic accident-related, non-personal injury claims, and defended debt claims.

Complexity Band 2:
Applies to road traffic accident-related personal injury claims which are or should have been started under the RTA Protocol.
Also applies to personal injury claims to which the Pre-action Protocol for Resolution of Package Travel Claims applies.

Complexity Band 3:
Applies to road traffic accident-related personal injury claims that do not fall under the RTA Protocol.
Covers employer’s liability (accident) and public liability personal injury claims, possession claims, housing disrepair claims, and other money claims.

Complexity Band 4:
Covers more complex claims such as employer’s liability disease claims (other than noise-induced hearing loss), complex possession and housing disrepair claims, property and building disputes, professional negligence claims, and any claim normally allocated to the fast track but which is nonetheless complex.

Question 73

What are the key features of the Intermediate Track introduced on 1 October 2023 under the Civil Procedure Rules (CPR)?

Answer 73

Claim Value: The intermediate track is the normal track for claims where the case is suitable for neither the small claims nor the fast track and is valued up to £100,000.

Trial Duration: The trial is likely to last no longer than 3 days if managed proportionately.

Expert Evidence: Oral expert evidence is likely to be limited to two experts per party.

Document Limits:
- Witness statements and summaries are limited to 30 pages.
- Expert reports are limited to 20 pages, excluding necessary attachments like photographs, plans, and academic/technical articles.

Question 74

What are the complexity bands in the Intermediate Track under the Civil Procedure Rules (CPR), and how are claims assigned to them?

Answer 74

Complexity Band 1:
For claims where only one issue is in dispute and the trial is not expected to last longer than one day.
Includes personal injury claims where liability or quantum is not in dispute, road traffic accident-related non-personal injury claims, and defended debt claims.

Complexity Band 2:
For less complex claims where more than one issue is in dispute.
Includes personal injury accident claims where liability and quantum are in dispute.

Complexity Band 3:
For more complex claims with more than one issue in dispute, but unsuitable for Complexity Band 2.
Includes noise-induced hearing loss and other employer’s liability disease claims.

Complexity Band 4:
For claims normally allocated to the intermediate track but unsuitable for Complexity Bands 1-3.
Includes personal injury claims where there are serious issues of fact or law.

Question 75

What are additional requirements and procedures for the Intermediate Track under the Civil Procedure Rules (CPR)?

Answer 75

Complexity Band Agreement: Parties are required to state the agreed complexity band in the directions questionnaire, or if there is a dispute, each party must state the band they consider appropriate.

Case Management Conference (CMC):
- The court may fix a CMC or a pre-trial review.
- Parties must endeavour to agree on appropriate directions and submit them to the court 7 days before the CMC (if one is listed).
- If the court approves the directions or issues its own, the CMC will be vacated.

Trial Timing: The trial of an intermediate track case should take place within 30 weeks of allocation.

Judicial Discretion: Judges retain discretion to allocate more complex cases valued under £100,000 to the multi-track to prevent inappropriately capturing complex cases under the extended fixed recoverable costs regime.

Question 76

Provide an overview of the small claims, fast track, and intermediate track.

Answer 76

The small claims track is characterised by:
- Fewer formalities
- Very limited ability to recover costs from an opponent
- Much simplified directions
- These features encourage parties to avoid legal representation and represent themselves.

The fast track and intermediate tracks are characterised by:
- Directions that bring a claim to trial within 30 weeks of allocation
- In the fast track directions being given following directions questionnaires, generally without the need for a case management conference. In the intermediate track a CMC may be fixed.
- The claim being assigned to a complexity band that will determine the level of fixed costs that can be recovered at the conclusion of the claim.

Question 77

What arte the relevant CPR rules for early case management on the multi-track?

Answer 77

• CPR 29 (in relation to the multi-track)
• 29 PD (in relation to the multi-track)
• CPR 31.5 (in relation to disclosure reports and electronic documents.

Question 78

What is the nature of case management on the multi-track under the Civil Procedure Rules (CPR)?

Answer 78

Flexibility: The multi-track covers a wide range of cases, from simple disputes just over £100,000 to very large and complex claims involving millions. The way each case is managed, and the type of directions given, is flexible and differs according to the nature of the case. This flexibility is a hallmark of the multi-track.

Next Steps: If the notice of proposed allocation indicates that the case will be allocated to the multi-track, the next likely steps are either:
- The court giving directions, more likely in less complex cases or where the parties have agreed directions when filing their directions questionnaires; or
- Convening a Case Management Conference (CMC), which is a hearing, conducted by telephone or face to face, to determine the future conduct of the case.

Question 79

What is the purpose of a CMC in multi-track cases?

Answer 79

A CMC is intended to do more than merely provide directions. Its purpose is to ensure that the real issues between the parties are identified and understood, both by the parties and the court, and to explore whether these issues can be narrowed before trial.

Specifically, the court will test the parties on:
- The suitability of the case for settlement.
- The progress the parties have made in the litigation so far.
- The steps already taken by the parties.
- Compliance with any previous directions or court orders.
- The estimated costs of the litigation and whether these are proportionate.
- The future steps that need to be taken in the case.

Question 80

What issues are likely to be considered at a CMC in a multi-track case?

Answer 80

At a CMC, the court will likely consider:
- Whether the claim is clear and whether any of the statements of case need to be amended.
- The disclosure required, if any.
- The expert evidence needed, if any, and how and when it should be obtained.
- The factual evidence (such as witness statements) that needs to be provided.
- Whether any further information is required.
- Whether it would be just and cost-saving to order a split trial or trial of one or more preliminary issues (29 PD 5.3).

Question 81

Who should attend a CMC and what are the consequences of non-attendance?

Answer 81

Any legal representative attending a CMC must:
- Be familiar with the case.
- Have sufficient authority to deal with any issues that may arise (such as discussing directions or identifying the key issues).

If such a representative does not attend and the CMC has to be postponed as a result, it is likely to result in a wasted costs order, which is a costs order payable by the solicitor rather than the client.

The court may also require the client to attend the CMC (CPR 29.3(2)).

Question 82

What is the procedural timeline and requirements before and during a CMC?

Answer 82

Not less than 14 days before the first CMC: Both parties must file a disclosure report and an electronic documents questionnaire (if applicable).

At least 7 days before the CMC: The parties must file draft directions.

Before the CMC: The parties may also need to prepare a bundle and/or case summary and file any applications.

During the Case Management Conference itself, the court will give directions for the future management of the case.

Question 83

What is the obligation regarding directions in multi-track cases, and how does the court deal with them?

Answer 83

Parties are under an express obligation to try to agree directions before any CMC. This aligns with the overriding objective to save time and money.

If the parties can agree on directions, or if proposed directions are not agreed, they must be submitted to the court at least 7 days before the CMC (CPR 29.4).

The Ministry of Justice has published standard directions orders for different types of cases, along with a menu of model paragraphs. Both the parties and the court must use these as the starting point when drafting directions, adapting them as appropriate (CPR 29.1).

If the court is satisfied with the agreed directions, it may vacate (cancel) the CMC.

If directions are not agreed, the court will give directions during the CMC, likely hearing submissions from the representatives before making a decision.

Question 84

What are the requirements for a disclosure report in multi-track cases?

Answer 84

In multi-track cases, unless the claim involves personal injury, both parties must prepare a disclosure report at least 14 days before the first CMC (CPR 31.5(3)-(8)).

The report, verified by a statement of truth, must:
- Briefly describe what documents exist or may exist that are relevant to the case.
- Describe where those documents are located.
- Explain how any electronic documents are stored.
- Estimate the costs of giving standard disclosure, including searching for and disclosing electronically stored documents.
- State which disclosure directions are sought.
- The Disclosure Report (Form N263) is used for this purpose, and where there are electronic documents, the Electronic Documents Questionnaire (Form N264) should also be used (CPR 31.5(4)).

Question 85

What are the requirements for case summaries and applications at a CMC?

Answer 85

Case summaries: The parties should consider whether a case summary will be useful at the CMC (29 PD 5.6(3), 5.7). This summary, prepared by the claimant and ideally agreed with the other parties, should be no more than 500 words and should help the court understand the issues.

It should include:
- A chronology of the claim.
- Factual issues agreed and in dispute.
- The nature of the evidence needed to decide these issues.

Applications: If any party needs to make an application (e.g., to amend a statement of case), it should be made as soon as it becomes clear that it is necessary and ideally be considered at any existing hearing, including the CMC.

Question 86

Can CMCs be held at other stages in the proceedings?

Answer 86

Yes, CMCs can be reconvened at various stages throughout the case to assess progress and give further directions as needed. In complex cases, the CMC may be held on several different occasions.

Additionally, while rare, the court may call for a CMC in other types of cases (such as fast-track cases) to determine what directions are needed, though this is less common.

Question 87

Provide a summary of the aspects of case management, particularly a characteristic of the multi-track.

Answer 87

When a claim has been allocated to the multi-track, the court is likely to give directions or to fix a case management conference for directions to be considered.

The purpose of a CMC is not limited to dealing with directions.

The parties should attempt to agree directions before the CMC, and submit agreed or proposed directions at least 7 days before the CMC.

Unless the claim is a personal injury claim, the parties should file a disclosure report at least 14 days before the first CMC.

The parties should consider whether a case summary will be useful at the CMC.

CMCs can happen at any stage in the proceedings, not only at the outset when directions need to be determined.

Question 88

What are the main CPR rules for cost management?

Answer 88

• CPR 3.12 to 3.18
• 3D PD

Question 89

What is the scope of the costs management regime?

Answer 89

The costs management regime applies by default except in specific cases (CPR 3.12), such as:
- Small claims track, fast track, or intermediate track claims.
- Claims commenced on or after 22 April 2014, where the amount claimed is £10 million or more.
- Claims after 22 April 2014 for unquantified, partly quantified, or non-monetary claims where the value is stated to be £10 million or more.
- Claims commenced after 6 April 2016, made by or on behalf of a person under 18.
- Claims subject to fixed or scale costs.

The court can disapply the regime, e.g., where a claimant has a limited life expectancy (5 years or less, 3D PD 1) or require compliance when the regime wouldn’t normally apply.

Question 90

What is the overview of the costs management regime?

Answer 90

Parties prepare and exchange budgets: Estimates of future costs, usually filed 21 days before the first CMC, and discussed between parties.

Budget discussion reports: Record the extent to which parties have agreed budgets, filed 7 days before the first CMC.

Court review: Budgets and reports are considered by the court.
Costs management order (CMO): The court can make a provisional decision on what would be reasonable and proportionate costs for later assessment.

Question 91

When should costs budgets be filed and exchanged - Page 1 Precedent H?

Answer 91

CPR 3.13(1)(b) Requirements:
Claims valued under £50,000: Budgets are filed with directions questionnaires.
Or if the party’s budgeted costs do not exceed £25,000. Any other case: Budgets are filed 21 days before the first CMC.

Definition of a budget (CPR Glossary):
An estimate of reasonable and proportionate costs (including disbursements) a party intends to incur in the proceedings.
Statement of truth (22 PD 2.3):

The budget must be fair, accurate, and relate to reasonable and proportionate costs.
The budget relates to what can be recovered from the other side (party/party costs), not what the solicitor can charge the client (solicitor/party costs).

Question 92

What are the key points when preparing the costs budget?

Answer 92

Budgets must be carefully prepared and revised if necessary.
- Precedent H: A prescribed form for the costs budget, requiring assumptions and contingencies to be set out.
- Statement of truth: A budget must be signed with a specific statement of truth.
- Incurred costs: Costs incurred before the budget are included but cannot be altered by the court; budgeted costs rule does not apply (CPR 3.18(b)).

Question 93

What is the purpose of budget discussion reports?

Answer 93

Requirement: These reports must be filed and exchanged seven days before the first CMC.

Precedent R: This is the prescribed form for the budget discussion report.

Content: The report must indicate which figures from the budgets are agreed upon and which are disputed. Additionally, it must provide a brief summary of the grounds for any disputes.

The primary purpose of the report is to assist the court in focusing on the areas of the budget that are contested.

Question 94

What happens at the costs management conference?

Answer 94

Court consideration: This occurs during the first case management conference or may be scheduled as a separate costs management conference specifically to address costs.

Two consequences of the conference:
1. Case management decisions: The court considers the costs budgets when making procedural and case management decisions.
2. Costs management orders (CMO): The court has the authority to issue a CMO that approves the reasonable and proportionate budgeted costs for the claim.

Question 95

What are the key features of a costs management order (CMO)?

Answer 95

The CMO serves to document both the agreed and disputed figures for the costs budget.

The court’s approval indicates which costs it finds to be reasonable and proportionate. In any future assessment, the court will not depart from the approved budget unless there is good reason to do so (CPR 3.18(b)).

Cap on recovery: It is crucial to understand that even if the budgeted sum is approved, a party cannot recover more than the actual costs incurred in relation to the proceedings.

Question 96

How is the assessment conducted if no costs management order is made?

Answer 96

If a CMO is not issued, a party must provide justifications for any discrepancies of 20% or more between the claimed costs and the submitted budget.

The court may reduce the recoverable costs if the paying party can demonstrate that they reasonably relied on the budget submitted.

Question 97

When can costs budgets be revised?

Answer 97

Budgets are eligible for revision in the event of significant developments during the course of the litigation, but revisions cannot be made simply to correct errors in the original preparation.

Amended budgets: Once a budget is revised, it must be submitted to other parties for agreement and then presented to the court using the prescribed Precedent T form.

Question 98

What is the consequence of failing to file a costs budget?

Answer 98

Automatic penalty: If a party fails to file a costs budget, they are automatically treated as having submitted a budget consisting only of the applicable court fees, unless the court orders otherwise (CPR 3.14).

Impact: If a CMO is subsequently made that approves such a budget, it will become the starting point for future assessment proceedings, regardless of whether the actual incurred costs are higher.

Question 99

What are the timing requirements for a costs and case management conference (CCMC)?

Answer 99

Timing: The CCMC takes place at the first CMC when the directions and costs budgets are discussed and considered.

The outcome of the CCMC includes a costs management order and establishes the directions necessary for the preparation of the case moving forward.

Question 100

Provide a summary of the nature and purpose of budgets and budget discussion reports, and other details of the costs management regime.

Answer 100

• In most multi-track cases, budgets need to be filed and exchanged not later than 21 days before the first CMC. Failure to file a budget on time leads to automatic and serious sanctions.
• A budget is an estimate of the reasonable and proportionate costs which a party intends to incur.
• In most multi-track cases, parties must discuss budgets before the CMC, and file and exchange a budget discussion report indicating the state of their agreement at least 7 days before the CMC.
• The court will consider budgets when making any case management decision.
• The court may make a costs management order, recording or fixing a costs figure for each party for each phase of the proceedings. When it comes to assessment, the court will not depart from approved / agreed budgets unless satisfied that there is good reason to do so.
• Parties can agree a revised budget if necessary, failing which a revised budget should be submitted to court.

Question 101

What does a budget include?

Answer 101

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.