Costs Budgeting – More Changes to Come

BudgetJohn Plunkett, Costs Lawyer, explains the upcoming changes to the Costs Budgeting Rules


Following a consultation last summer; at the recommendation of the Master of the Rolls, Lord Dyson, and Deputy Head of Civil Justice, Lord Justice Richards; costs budgeting amendments, subject to Parliamentary approval, will apply to CPR 3.12, 3.15 and Practice Direction 3E; and will come into force on 22nd April 2014.

More importantly; Rule 3.12 now applies to all Part 7 multitrack claims commenced on or after 22 April 2014; where the amount on the claim form is less than £10 million and includes non-monetary claims. This means a significant amount of new litigation will be brought into the regime.

Notably; Rule 3.15 has been amended in order to allow that, where Costs Budgets have been filed and exchanged, the Court will make a Costs Management Order “unless it is satisfied that the litigation can be conducted justly and at proportionate cost in accordance with the overriding objective without such an order being made”. In fact; Rule 3.15 (3) forewarns of the Courts active role in case and costs management and states: “If a costs management order has been made, the court will thereafter control the parties’ budgets”.

Practice Direction 3E has also now been significantly expanded in order to give new and further guidance to cases where the requirement for budgeting is not automatic. This change means that a Cost Management Order will be particularly appropriate in cases that relate to:

(a)   unfair prejudice petitions under section 994 of the Companies Act 2006;

(b)   disqualification proceedings pursuant to the Company Directors Disqualification Act 1986;

(c)   applications under the Trusts of Land and Appointment of Trustees Act 1996;

(d)   claims pursuant to the Inheritance (Provision for Family and Dependants) Act 1975;

(e)   any part 8 claims or other applications involving a substantial dispute of fact and/or likely to require oral evidence and/or extensive disclosure; and

(f)     Personal injury and clinical negligence cases where the value of the claim is £10m or more.

Furthermore; it states that “at an early stage in the litigation, the parties should consider and, where practicable discuss whether to apply for an order for the provision of costs budgets, with a view to a costs management order being made”.  In essence; a Costs Budget which requires amendment, either upwards or downwards, should be submitted to your opposite number for agreement and that, in default of agreement, the same should be submitted to the Court.

Remember though, that the transitional Rules specify this only applies to cases commenced after 22nd April 2014 and that cases which pre-date the 22nd follow the old rules.