Costs management

Question 1

When will costs be ‘proportionate’?

Answer 1

Where they bear reasonable relationship to sums in issue in proceedings, value of non-monetary relief in proceedings, complexity of litigation, any wider factor of public importance etc.

Question 2

What are the 2 limitations of cost assessment?

Cost assessment = limit costs one party can recover from another - only ordering party to pay costs that were reasonably and proportionately incurred

Answer 2

1. Limited information when making case management decisions -
2. Uncertainty about what a court would consider to be disproportionate costs

Question 3

How does costs management address the limitations of cost assessment?

At case management stage

Answer 3

Parties provide a future budget of costs to court at early stage so court can tailor directions and amend/approve agreed budgets between parties to indicate what costs they deem proportionate (less uncertainty)

Question 4

When does the costs management regime not apply?

Answer 4

• Small, fast and intermediate track
• Claim form states £10m or more
• Claims on behalf of a person under 18
• Claims subject to fixed/scale costs
• Claims which are for a monetary claim which is not (fully) quantifies or a non-monetary claim and CF states £10m or more

Question 5

Can the court disapply or apply CMR when it would usually (not) apply?

Answer 5

Yes!

Question 6

What is a cost budget and when is it filed?

Answer 6

• Costs budget = estimate of reasonable and proportionate costs (inc disbursements) which party intends to incur in proceedings
• Should be filed 21 days before first CMC

Question 7

Where the stated value of the claim is less than £50,000, will the budget be filed 21 days before CMC?

Answer 7

No - where the stated value of the claim is less than £50,000, should be filed with directions questionnaire

Question 8

How do solicitor’s fees (governed by retainer) relate to what the party might hope to recover?

Answer 8

• Solicitor fees need not bear any relation to recoveable costs - can end up claiming a lesser amount than what solicitor is charging to ensure budget is both reasonable and proportionate!
• Budget relates to what party might hope to recover - not what solicitor can charge client

Important to involve client in budgeting process to avoid solicitor/client cost issues and warn clients they may not be able to recover all the money they spend on their case

Question 9

What is the prescribed form for the costs budget? What 2 things must practicioners set out in it?

Answer 9

• Precedent H
• Must set out:

1. Assumptions budget is based on
2. Contingencies - things anticipated but potentially unnecessary (e.g. app for disclosure)

Must be signed with own statement of truth

Question 10

Will incurred costs (pre-budget) be included on Precedent H?

Answer 10

Yes but cannot be altered by court

Rule that a party will only recover budgeted costs unless there is good reason does not apply to costs incurred prior to costs budget

Question 11

Once costs budgets are filed and exchanged by parties, what are they required to do with one another?

Answer 11

Discuss budgets and agree costs figures where possible in a budget discussion report

Question 12

When must a budget discussion report be filed and exchanged? What will be indicated in them?

Answer 12

• No later than 7 days before first CMC
• Indicate figures agreed and not agreed for each phase of ligitation and brief summary of grounds of dispute

Question 13

Will cost management always happen at a CMC?

Answer 13

Usually, but can convene solely for purposes of cost management at a costs management conference

Question 14

When must court have regard to available costs budgets?

Answer 14

When making any case management decision (particularly case management decisions at first CMC)

Question 15

Why would a costs management order not be made?

Answer 15

Where court satisfied that litigation can be conducted justly and at proportionate cost in accordance with OO without an order

Question 16

What will a costs management order do for agreed and not agreed figures?

Answer 16

1. Agreed figures = record extent to which costs budgets are agreed between parties (for both parties)
2. Not agreed figures = record court’s approval of a party’s costs budget after making appropriate revisions and setting figures for costs for each party for each stage of proceedings (for each party)

I.e. will end up with 1) figures agreed between the two parties and 2) figures for each party not agreed between the two parties but deemed reasonable and proportionate by the court

Question 17

What cannot be changed by the court?

Answer 17

Costs agreed between the parties

Question 18

Where a court approves a costs budget, what does this indicate?

Answer 18

That budgeted costs are reasonable and proportionate

Question 19

If a CMO has been made, what will the court have regard to when assessing costs on standard basis?

Answer 19

The party’s last approved/agreed costs budget

Question 20

Will the court depart from the agreed costs budget? I.e. allow costs in excess to be recovered

Where CMO has been made and court are assessing costs on standard basis

Answer 20

Not unless there is a good reason to do so

Question 21

If no costs management order is made, what is the relevance of the budgets?

Answer 21

They can stil be taken into account

Question 22

If the budget provides for a greater sum than a party incurs, can they recover this from the opponent?

Answer 22

No; budget effectively becomes a cap

Question 23

If there is no costs management order made, when must the receiving party provide a statement of reasons with a bill of costs for difference between costs claimed and costs shown in budget filed by party?

Answer 23

If there is a difference of 20% or more between costs claimed by receiving party on detailed assessment and costs shown in budget filed by that party

Cf making a CMO - court won’t depart from budget unless a good reason to do so

Question 24

If the paying party reasonably relied on the budget, what may the court do?

In situation where receiving party has claimed more than in costs budget (where no CMO made)

Answer 24

Reduce recoverable sum

Question 25

If significant developments in litigation warrant a revision to party’s budget (up or down), what must happen?

Answer 25

1. Amended budget submitted to other parties for agreement if possible (Precedent T)
2. Amended budget submitted to court for consideration

Question 26

What will ‘significant developments’ not include?

Re things that warrant a revision to party’s budget

Answer 26

Inadequacies/mistakes in preparation of costs budget

Question 27

What is the consequence for a party which fails to file a costs budget when required?

Answer 27

They are automatically treated as having filed costs budget comprising of only applicable court fees unless court orders otherwise

Question 28

What happens if the court ‘approves’ the automatic budget?

Answer 28

This becomes the starting point for what can be awarded in future assessment proceedings

Dangerous - costs likely to be significantly more than court fees

Question 29

When should the budget and budget discussion report be filed?

Answer 29

• Budget = not later than 21 days before first CMC
• Budget discussion report = at least 7 days before first CMC

Question 30

List everything due for a costs and case management conference and when it should be filed by?

Answer 30

• Budget (Precedent H) - no later than 21 days before first CMC
• Disclosure report (and e-docs questionnaire) - not less than 14 days before first CMC
• Draft (agreed/proposed) directions - at least 7 days before CMC
• Budget discussion report (Precedent R) - at least 7 days before CMC