Chapter 9: Case and costs management Flashcards
1
Q
1 Introduction
A
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.
2
Q
1 Introduction
A
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)
3
Q
1 Introduction
A
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. Also, exchanging evidence before trial gives the opportunity for the parties to explore settlement in the knowledge of the evidence which has been exchanged.
4
Q
Court gives directions
A
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 (CPR 1.1(1)). The aims of justice and proportionate cost mean that different cases will require different directions
5
Q
1 Introduction
A
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’. Managing the case goes hand in hand with managing the costs of the litigation.
6
Q
Costs are proportionate if they bear a reasonable relationship to:
A
- 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.
7
Q
Costs are proportionate if they bear a reasonable relationship to:
A
For example, it is generally going to be disproportionate to spend £50,000 in legal costs seeking to recover a £10,000 debt, if the claim is straightforward, the parties have behaved reasonably
and there are no issues of reputation / public importance involved. The court wants to discourage this. How can the aim of dealing with cases at proportionate cost be achieved? The court encourages proportionate costs by giving directions for the litigation which are proportionate.
8
Q
Costs management regime is only really a concern on
the multi-track
A
Whilst costs are important in all cases, the ‘costs management’ regime is only really a concern on the multi-track. The costs management regime involves the parties providing a budget of future costs to the court at an early stage so that the court can tailor the steps to be taken (directions) in the light of the parties’ indications as to the costs of those steps.
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 there is a costs order and the amount of costs needs to be assessed.
9
Q
2 Case management powers and striking out
2.1 The court’s general case management powers
A
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.
10
Q
2.1 The court’s general case management powers
A
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)). 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.
11
Q
2.1 The court’s general case management powers
A
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.
12
Q
2.2 The court’s power to strike out
A
Strike out: 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
13
Q
2.2 The court’s power to strike out
A
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.
14
Q
2.2 The court’s power to strike out
A
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.
15
Q
2.2.1 What is the difference between strike out and summary judgment?
A
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.
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Q
2.2.2 What is the difference between strike out and default judgment?
A
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.
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Q
2.2.3 Grounds for strike out
A
(a) No reasonable ground for bringing/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.
18
Q
Example: No reasonable ground for bringing the claim
A
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.
19
Q
Example: No reasonable ground for defending the claim
A
A defence denies a claim without giving any reasons for the denial. This is incoherent and in breach of the rules.
20
Q
(b) Abuse of process / likely to obstruct just disposal of proceedings
A
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)
21
Q
Example: Abuse of process
A
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.
22
Q
Example: Abuse of process
A
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) 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.
23
Q
Example: Failure to comply
A
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.
24
Q
Example: Failure to comply
A
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 another section
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2.2.4 Judgment after strike out
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).
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2.3 Summary
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.
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3 Allocation to track
Allocation: Deciding which ‘track’ a claim should be allocated to.
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3 Allocation to track
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 later sections, but brief summaries are in the table immediately below.
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3 Allocation to 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.
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3.1 The scope of each track
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.
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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)).
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Multi-track (CPR 29)
The multi-track is the normal track for all other types of case (CPR 26.6(6))
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3.1.1 The scope of the small claims track – personal injury claims
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 th claim is not more than £10,000 (as with other claims); and in addition
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3.1.1 The scope of the small claims track – personal injury claims
(a) 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;
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3.1.1 The scope of the small claims track – personal injury claims
(b) in relation to other road traffic claims, the damages for the personal injuries are valued at not more than £5,000;
(c) in any other personal injury claim (not road traffic claims), the damages for the personal injuries are valued at not more than £1,500.
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3.2.1 Notice of proposed allocation
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)).
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3.2.1 Notice of proposed allocation
The notice of proposed allocation will indicate which track is proposed for the claim.
It will also require the parties to:
(a) File and serve a directions questionnaire
(b) On the fast track or multi-track, file proposed directions; and
(c) For claims under the costs management regime, file and serve a costs budget and an agreed budget discussion report. It will also state the deadlines for these steps.
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3.2.2 The directions questionnaire
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.
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Pre-action protocol
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.
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Settlement
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.
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Settlement
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.
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Disclosure
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).
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Disclosure
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 Chapter
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Witnesses
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
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Expert evidence
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.
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Trial
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.
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Costs
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 here, but later in this chapter.
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Directions
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)).
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Other matters
In addition to the above, the DQ also asks for information in relation to:
(a) Which court the claim should be heard in;
(b) 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);
(c) Whether the parties have already made any interim applications and whether they intend to make any in the future; and
(d) Any other facts or documents the parties wish the judge to consider on allocation
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Exercise: Challenge yourself
Imagine a commercial dispute that might lead to court proceedings. When you have one clear in your mind, take a few minutes to reflect on the work that needs to be carried out before the DQ can be completed. How easy is it to identify all the witnesses? To understand the scope and cost of disclosure? To predict the length of trial?
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3.2.3 Allocation decision
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).
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3.3 Criteria for allocation
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:
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3.3 Criteria for allocation
(a) The financial value of the claim;
(b) The nature of the remedy sought;
(c) The likely complexity of the facts, law or evidence;
(d) The number of parties or likely parties;
(e) The value of any counterclaim or other additional claim (the court will not aggregate claims but will look at the value of the largest claim);
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3.3 Criteria for allocation
(f) The amount of oral evidence which may be required;
(g) The importance of the claim to any persons who are not parties;
(h) The views expressed by the parties; and
(i) The circumstances of the parties.
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So the approach to be taken is to:
(a) Identify the normal track (see the table on the for ‘The scope of each track’).
(b) 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.
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3.4 Conclusion of allocation stage
At the conclusion of the allocation stage, the claim will have been allocated to a track. If the claim is allocated to the small claims track or the fast track, it is likely that the court will also give directions as to how the claim should proceed. If the claim has been allocated to the multi-track, the court will likely either give directions, or fix a case management conference at which such directions will be considered.
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3.5 Summary
* Allocation is about allocating a claim to the small claims track, the fast track or the multitrack.
* 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.
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3.5 Summary
* After receiving the directions questionnaires, the court will allocate the claim to the small claims track, the fast track or multi-track. 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 multitrack) it might fix a case management conference for directions to be considered.
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4 Small claims track and fast track
In a previous section you were introduced to the procedure of allocating a claim to a track, what purpose it serves, and the ‘scope’ of the three tracks. This section introduces the key features of the small claims track and the fast track.
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4.1 The small claims track
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
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4.1 The small claims track
The very limited costs recovery means that 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). There are fewer formalities because 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.
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The standard abbreviated directions usually include:
(a) 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);
(b) Original documents to be brought to the hearing;
(c) 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
(d) That the court must be informed if, by agreement between the parties, the case settles.
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4.2 The fast track
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:
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5 Case management on the multi-track
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.
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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)
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5.1 Purpose of a CMC
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:
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5.2 Who should attend the CMC?
Any legal representative attending a CMC must be familiar with the case and 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.
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5.3 Procedure
5.3.1 Directions in multi-track cases
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).
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5.3.1 Directions in multi-track cases
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)
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5.3.1 Directions in multi-track cases
If the parties have agreed all the directions required for the future management of the case and
the court is satisfied of the appropriateness of the directions it may ‘vacate’ the CMC – cancel it.
However, where the parties have been unable to agree directions then the CMC will be used for the court to give directions. The court will likely hear submissions from the representatives at the CMC before deciding what directions to make.
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5.3.2 The requirement for a disclosure report
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
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5.3.2 The requirement for a disclosure report
(a) Briefly describes what documents exist, or may exist, that are, or may be, relevant to the matters in issue in the case;
(b) Describes where, and with whom, those documents are, or may be, located;
(c) Describes how any electronic documents are stored;
(d) 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
(e) States which of the disclosure directions are to be sought.
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5.3.2 The requirement for a disclosure report
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.
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5.3.2 The requirement for a disclosure report
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 section – it is covered in a different Chapter
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5.3.3 Case summaries and applications
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.
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The case summary should contain:
(a) A chronology of the claim;
(b) Factual issues agreed and in dispute; and
(c) The nature of the evidence needed to decide them. 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.
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5.4 CMCs at other stages in the proceedings
In this section we have focused on directions for use at the CMC. It is also possible to have a CMC later in the case, to assess how the case is progressing and perhaps to give further directions. In
very complex cases the CMC may be reconvened on several different occasions. The court can also ask for a hearing to decide what directions to give in a claim outside the multi-track (for
example, on the fast track), but this would be much less common.
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5.5 Summary
* 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.
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5.5 Summary
* 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.
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6 Costs management
6.1 Scope of the costs management regime
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.
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6.1 Scope of the costs management regime
* 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 – 3E PD 1), or require compliance with the regime even when it would not normally apply.
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6.2 The costs management procedure
6.2.1 Filing and exchanging costs budgets
Budget: An estimate of the reasonable and proportionate costs (including disbursements) which a party intends to incur in the proceedings.
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6.2.1 Filing and exchanging costs budgets
The budget at the end of the statement of truth must read (22 PD 2.2A): 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.
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6.2.1 Filing and exchanging costs budgets
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
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6.2.1 Filing and exchanging costs budgets
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.
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6.2.1 Filing and exchanging costs budgets
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
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6.2.2 Preparing the costs budget
Parties should prepare the budgets carefully and revise them if necessary.
There is a prescribed form for the costs budget, Precedent H (3E PD 4).
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6.2.2 Preparing the costs budget
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.
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6.2.2 Preparing the costs budget
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 (3E PD 4(b)). It should be noted that budgeting is all about future costs. Incurred costs (costs incurred prebudget) 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 section)
does not apply to costs incurred prior to the production of the costs budget (CPR 3.18(b)).
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6.2.3 Budget discussion reports
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)).
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By the budget discussion report, the parties indicate:
(a) The figures which are agreed and not agreed for each phase of the litigation; and
(b) 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.
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6.3 Costs management conference
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 several possible consequences.
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6.3.1 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.
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6.3.2 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:
(a) Record the extent to which the costs budgets are agreed between the parties. Agreed figures cannot be changed by the court.
(b) Where the figures are not agreed, “record the court’s approval of a costs budget, after making appropriate revisions”
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6.3.2 Costs management orders
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.
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6.3.2 Costs management orders
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
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6.3.3 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.
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6.4 Revising costs budgets
If significant developments in the litigation warrant a revision to a party’s budget (upwards or downwards), then:
(a) 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 3E PD); and
(b) The amended budget then needs to be submitted to court for consideration.
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Addressing ‘significant developments’
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.
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6.5 Failure to file a budget
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.
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6.6 Summary
* Costs management generally takes place at the first case management conference, when directions are also being considered. Such a hearing is therefore often known as a costs and
case management conference, or ‘CCMC’.
* The diagram illustrates a summary of the combined key procedural stages in preparing for a CCMC including the costs stages discussed in this section.
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Summary of costs and case management conference procedure
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.
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Summary of costs and case management conference procedure
* 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.
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7 Sanctions and relief from sanctions
7.1 Sanctions
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:
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7 Sanctions and relief from sanctions
* 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 earlier in this chapter).
Other measures adverse to a party could also be considered sanctions: there is no definitive list of sanctions in the CPR.
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7.1.1 Court’s power to impose sanctions
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).
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Example: Court’s power to impose sanctions
This is an example of an unless order: ‘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’
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7.1.2 Sanctions imposed by the CPR
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).
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7.1.3 Sanctions and time limits
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).
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7.1.3 Sanctions and time limits
However, by way of exception to this rule, where a rule, practice direction or court order –
(a) Requires a party to do something within a specified time, and
(b) 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
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7.1.4 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).
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7.2 Relief from sanctions
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.
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An application for relief must be supported by evidence.
Key case: Denton and others v TH White and another, Decadent Vapours Ltd v
Bevanand others and Ultilise 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.
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:
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Key case: Denton and others v TH White and another, Decadent Vapours Ltd v
Bevanand others and Ultilise TDS Limited v Davies and others [2014] EWCA Civ 906 (collectively known as Denton)
(a) 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.
(b) If the breach is serious or significant, consider why the default occurred.
(c) 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.
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Key case: Denton and others v TH White and another, Decadent Vapours Ltd v
Bevanand others and Ultilise TDS Limited v Davies and others [2014] EWCA Civ 906 (collectively known as Denton)
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
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Key case: Denton and others v TH White and another, Decadent Vapours Ltd v
Bevanand others and Ultilise TDS Limited v Davies and others [2014] EWCA Civ 906 (collectively known as Denton)
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.
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Key case: Denton and others v TH White and another, Decadent Vapours Ltd v
Bevanand others and Ultilise TDS Limited v Davies and others [2014] EWCA Civ 906 (collectively known as Denton)
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
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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.
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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.
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* 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
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7.2.1 In-time applications
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.
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7.2.2 Relief from sanctions and setting aside default judgment
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
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7.3 Summary
* 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.
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