Costs Management Flashcards
What is the main purpose of the costs management regime under CPR?
A. To cap solicitor-client fees in all litigation
B. To reduce delays caused by filing statements of case
C. To regulate interim applications before they are made
D. To ensure costs remain proportionate and manageable during litigation
D. To ensure costs remain proportionate and manageable during litigation
Explanation:
Costs management exists to help courts control costs early in a case, especially multi-track cases. It ensures that parties do not incur disproportionate legal costs relative to the value and complexity of the dispute.
What must parties provide to support early costs management in multi-track cases?
A. Disclosure statements
B. Costs budgets
C. Consent orders
D. Skeleton arguments
B. Costs budgets
Explanation:
In multi-track cases, parties must provide a budget that outlines estimated future costs. This allows the court to give directions based on cost expectations and manage proportionality from the outset.
Which of the following is NOT a factor considered when determining whether costs are proportionate?
A. The financial status of the paying party
B. The value of non-monetary relief
C. The complexity of the litigation
D. Whether public importance is involved
A. The financial status of the paying party
Explanation:
The court looks at the issues in the case, not the individual party’s finances. Proportionality is based on case value, complexity, conduct, and broader significance.
A judge is considering directions for a multi-track case. She wants to ensure the steps are proportionate in cost. What will help her make informed decisions?
A. A chronology of events
B. A disclosure report
C. A pre-trial checklist
D. A costs budget from each party
D. A costs budget from each party
Explanation:
The judge needs early information about projected costs to make case management decisions. The costs budget provides this, so steps taken (like disclosure or expert reports) are cost-effective.
Alice is pursuing a £15,000 claim. Her solicitor’s bill is £40,000. There are no complex issues. What is the most likely outcome at costs assessment?
A. Alice will recover all £40,000
B. Alice will recover only costs deemed proportionate and reasonable
C. Alice will be ordered to pay the defendant’s costs
D. Alice will automatically recover 80% of her costs
B. Alice will recover only costs deemed proportionate and reasonable
Explanation:
The costs must be proportionate to the case. Spending £40,000 on a straightforward £15,000 case is likely disproportionate. Only reasonable and proportionate costs will be recoverable.
In a commercial dispute valued at £80,000, both parties have submitted costs budgets of £90,000. There are limited legal issues and no expert evidence. What is the most likely view of the court?
A. The budgets are acceptable
B. The court will treat the budgets as agreed
C. The court is likely to find the budgets disproportionate
D. The court will ignore the budgets until trial
C. The court is likely to find the budgets disproportionate
Explanation:
Legal costs exceeding the value of a moderately complex case with no experts are likely disproportionate. The court may revise budgets or limit recovery of excessive costs.
Which of the following is a key limitation of relying on costs assessment alone (rather than using costs management)?
A. Courts cannot reduce costs retrospectively
B. It only applies in fast-track cases
C. Parties cannot predict what the court will view as proportionate
D. It prevents courts from giving case directions
C. Parties cannot predict what the court will view as proportionate
Explanation:
Costs assessment occurs at the end, leaving uncertainty during the case. Costs management introduces predictability by allowing courts to approve or amend budgets early on.
Which of the following best describes the function of the costs management regime at the case management stage?
A. It replaces all other forms of cost control
B. It helps courts tailor case directions based on expected costs
C. It allows parties to avoid filing witness evidence
D. It applies only in small claims
B. It helps courts tailor case directions based on expected costs
Explanation:
The regime enables courts to make proportionate directions early, based on parties’ cost budgets. It ensures steps like disclosure or expert evidence are worthwhile and cost-justified.
In which track is the costs management regime most relevant?
A. Multi-track
B. Fast track
C. Small claims track
D. All tracks equally
A. Multi-track
Explanation:
Costs management is only used in multi-track cases because these cases involve higher value and complexity. Small claims and fast track cases usually use fixed costs or simplified processes.
The parties in a multi-track case agree costs budgets and file them before the first CMC. What is the court’s likely response?
A. Reject the budgets and impose its own
B. Assess the budgets after trial
C. Approve the budgets or suggest amendments
D. Ignore the budgets unless a dispute arises
C. Approve the budgets or suggest amendments
Explanation:
The court reviews agreed budgets early and can approve them or amend them to keep costs in proportion. This helps shape case directions and gives parties clarity on recoverable costs.
When must parties in a multi-track case exchange their costs budgets if the claim is worth more than £50,000?
A. With the directions questionnaire
B. 7 days before the CMC
C. 14 days before the CMC
D. 21 days before the first CMC
D. 21 days before the first CMC
Explanation:
CPR 3.13 requires parties to exchange budgets 21 days before the first case management conference in cases over £50,000.
What form must be used to prepare and submit a party’s costs budget in multi-track litigation?
A. Precedent H
B. Precedent R
C. Precedent T
D. N181
A. Precedent H
Explanation:
Precedent H is the official form used to submit a party’s costs budget under the costs management regime.
You are preparing for a multi-track case with standard costs management. The parties file their budgets and then meet to discuss them. What document records which parts are agreed?
A. Precedent T
B. N263
C. Precedent R
D. N260
C. Precedent R
Explanation:
Precedent R is the budget discussion report, used to indicate agreed/disputed budget figures.
The court approves a party’s costs budget through a costs management order. Later, that party incurs significantly higher costs due to a new expert being required. What should they do?
A. Apply to court for relief from sanctions
B. File a new Precedent H
C. Submit a Precedent T to revise the budget
D. Wait until trial to raise the issue
C. Submit a Precedent T to revise the budget
Explanation:
Precedent T is used to revise a costs budget when there’s a significant development, like needing new expert evidence.
Which of the following is not a reason the costs management regime might not apply?
A. The claim is a multi-track case valued at £250,000
B. The claim is valued at over £10 million
C. The claim is on the fast track
D. The claimant is under 18
A. The claim is a multi-track case valued at £250,000
Explanation:
Multi-track claims under £10 million generally do fall within the costs management regime unless the court disapplies it.
You are preparing a budget for a client with a claim under £25,000. What is the correct approach under the Precedent H requirements?
A. Submit a full Precedent H with all phases
B. Submit a costs budget discussion report only
C. Only complete the first page of Precedent H
D. Submit Form N263 instead
C. Only complete the first page of Precedent H
Explanation:
If costs do not exceed £25,000, parties only complete the first page of Precedent H as per PD 3D.
What is the effect of a costs management order?
A. It limits the client’s total legal spend
B. It sets fixed recoverable costs
C. It binds the solicitor-client fee arrangement
D. It sets budgeted costs considered reasonable and proportionate
D. It sets budgeted costs considered reasonable and proportionate
Explanation:
A CMO is the court’s approval of the budgeted costs as reasonable and proportionate for later cost assessment.
A party fails to file a costs budget when required. What is the default consequence under CPR 3.14?
A. The party’s claim is struck out
B. The party can submit a late budget with court permission
C. The party is deemed to have submitted a budget limited to court fees
D. The party must serve a statement of costs in N260 form
C. The party is deemed to have submitted a budget limited to court fees
Explanation:
Failing to file a budget on time results in a default budget of court fees only, unless the court orders otherwise.
At assessment, the court considers departing from the approved costs budget. Which of the following justifies this?
A. The party wants to recover higher fees charged to its client
B. The costs are 15% higher than budgeted
C. A procedural error occurred during budgeting
D. There is a good reason to depart from the approved budget
D. There is a good reason to depart from the approved budget
Explanation:
The court can only depart from an approved/agreed costs budget if there is good reason (CPR 3.18(b)).
Which statement about incurred costs in a costs budget is correct?
A. Incurred costs are approved by the court in the CMO
B. The court can revise incurred costs during a CMC
C. Incurred costs are excluded from the budget
D. Incurred costs are listed but not approved or revised by the court
D. Incurred costs are listed but not approved or revised by the court
Explanation:
Precedent H includes incurred costs, but only future costs are subject to approval in a costs management order.
During a multi-track case, both parties submit budgets and attend the CMC. The court approves one party’s budget with minor revisions and issues a costs management order. Later, that party’s actual costs exceed the approved budget significantly due to unexpected procedural delays. At detailed assessment, what will the court require to award more than the budgeted amount?
A. The court must be satisfied there is a good reason to depart from the approved budget
B. The party must submit a revised budget after trial
C. The court must consider the client’s solicitor-client agreement
D. The party must demonstrate the delays were caused by the other party
A. The court must be satisfied there is a good reason to depart from the approved budget
Explanation:
Where a costs management order has been made, CPR 3.18 provides that the court will not depart from the approved/agreed budget unless it is satisfied there is a good reason to do so. This ensures parties remain within the agreed costs framework unless exceptional circumstances arise.
