Costs budgeting: Is the future light?
Costs budgeting light – Pilot intended to start from 1st April 2025 (in certain claims under £1m)
The matter of costs budgeting light was introduced at the Civil Procedure Rule Committee’s (CPRC) June 2024 meeting (paragraphs 42 to 46 of those minutes refer). Full Approved minutes from the CPRC’s latest committee meetings, touching on the now approved Pilot scheme, held on 4th October 2024 [paragraphs 48 to 56 of those minutes refer] and 1st November 2024 [paragraphs 55 to 68 of those minutes refer], can be located here:
APPROVED MINUTES 4 OCTOBER 2024 (FULL)
APPROVED MINUTES 1 NOVEMBER 2024 (FULL)
In summary, it has now been clarified by the CPRC, within its November 2024 minutes, that the Pilot for certain claims valued up to £1m – Costs budgeting light, to introduce a simplified costs budgeting regime in certain cases, is intended to operate from 1st April 2025 to 31st March 2028, i.e. for 3 years (unless varied), and thus the intention is that the Pilot Practice Directions will not apply to clams issued after 1st April 2028.
What is the costs budgeting light Pilot and why is it being introduced (a recap)?
A final report of the Civil Justice Council (CJC) was published on 10 May 2023 by the CJC Costs Working Group set up in April 2022 (Civil Justice Council Costs Review – Final Report – Courts and Tribunals Judiciary), this group was tasked to review costs budgeting at 10 years following the introduction of costs budgeting, amongst other matters. Recommendations made for “a more flexible approach to costs budgeting”, referencing the fact that since costs budgeting was introduced it has improved case management and proportionality of costs, however, most respondents to the consultation agreed that, whilst useful and costs budgeting should be retained, it requires a new approach. As a result, the following three Pilots have now emerged:
i) Business and Property Courts (BPC): Specifically, cases within the BPC were identified as different from the norm and that “one size does not necessarily fit all”. Clarification has been provided as to the scope of the meaning of “Business and Property Courts (BPC) of England and Wales” in the context of the proposals, namely that this referred to the BPC within the Rolls Building, London, not all BPC matters more widely.
ii) Costs budgeting light: For certain other cases, which are not in the BPC and that are valued at under £1m, the Pilot will introduce a simplified budgeting regime.
iii) QOCS: In a case involving qualified one-way costs shifting (QOCS), particularly in Clinical Negligence cases involving NHSR, a majority of the Working Group recommended that “full budgets are dispensed with for defendants but the Precedent H front sheet only is supplied to the claimant and the court. This would be subject to the court having the power to direct the defendant to produce a full budget” (paragraph 1.17 of the CJC’s Final Report refers).
Work continues on the drafting of Pilot Practice Directions for a simplified costs budgeting regime for QOCS cases, and the Committee’s aim was to present draft proposals at its December meeting.
The first two Pilots have now been agreed by the CPRC at its November 2024 meeting, presented by His Honour Judge Bird, albeit subject to final drafting revisions of the Practice Directions (51ZG1 and 51ZG2), together with the new proposed Precedent Z Costs Form (Simplified Costs Budget), modelled on the existing Precedent H Form, and RZ Form (Budget Discussion Report).
In explaining the new Precedent Form, HHJ Bird highlighted that “parts of the draft form had been populated to serve as a worked example; a guidance note also accompanied it, just as there is for the existing Precedent H form.”
In practice, what does that mean for future costs budgeting in cases with a value under £1m?
It is anticipated that that the Pilot scheme will capture “very few claims” under the £1m value, however, until the proposed District Registries in which the pilot scheme is expected to operate (anticipated to be in at least two District Registries) have been named, there are as yet no further details as to which claims, nor how many, will be captured in practice.
The Pilot for cases valued at under £1m will, in essence, test the benefit of the “costs budget light” proposal, with a tailored approach specific for Part 7 cases in the multi-track valued up to £1m, in terms of saving both court time and the parties’ money in those cases captured, in line with the CJC’s Final Report recommendations.
It was noted that the Pilot maintains the exclusions set out in CPR 3.12 (including those claims valued at £10m or more and claims brought by children), with the intention of limiting the changes.
The BPC Pilot provides (as a default position) for:
- The new Precedent Form to be filed in all cases by represented parties;
- No costs management in cases valued at or more than £1m; and
- Costs management using the new Precedent Form in cases valued at less than £1m.
The non-BPC under £1m Pilot mirrors the BPC under £1m position, as above.
Further details are anticipated in the near future, once drafting revisions of the new proposed Precedent Z Costs Form and RZ Form (Budget Discussion Report) have been finalised, and participating District Registries are named, with the Pilot intended to commence in April 2025. The final new Precedent Z Costs Form is expected to be a simplified 2-page form.
Following the CPRC’s November 2024 meeting, the Sub-Committee were also to consider whether an equivalent to Precedent T (budget variations) Form is also required as part of the simplified costs budgeting regime.
The CPRC’s awaited December 2024 minutes are expected to provide further clarification once published.
How can PIC assist?
PIC will continue to advise on any developments and would be delighted to assist in the preparation of any costs budgets required.
Katherine Davies, Legal Costs Consultant
23.01.2025