COSTS MANAGEMENT RULES TO CHANGE FROM 06 APRIL 2016

The Civil Procedure Rules Committee has announced changes to the CPR to come into force on 06 April 2016.

These changes include significant modifications to the current rules relating to costs budgeting.

In particular, the following changes are of note:

• Costs budgeting rules will no longer apply where a claim has been made by or on behalf of a child (defined in CPR Part 21.1(2)(b) as a person under the age of 18 years). Upon the child reaching the age of majority the exemption will continue to apply unless the court orders otherwise.
• Costs budgeting rules will no longer apply in cases where a claimant has a life expectancy of 5 years or less.
• The deadline for filing costs budgets is to change. Following the change to CPR 3.13, budgets must be filed and served as follows:
  • where the stated value of the claim on the claim form is less than £50,000 – with the parties’ directions questionnaires; or
  • in any other case, not later than 21 days before the first case management conference.
• Parties will be obliged to file and serve a ‘budget discussion report’ (the form of which will be set out in a new form Precedent R) no later than 7 days before the first case management conference. This report will set out a party’s proposed budgeted figures in respect of each phase of the litigation, the opponent’s counter-offer, and brief details of areas of dispute.
• The category of cases for which the short form Precedent H (i.e. the front page only) is to be used will to expand to include all cases where the value of the claim as stated on the claim form is less than £50,000. This appears to be in accordance with plans to bring cases with a value of up to £50,000 within the fixed costs regime.
• CPR Practice Direction 3E is to be amended to provide specifically that it is not the role of the court in a cost management hearing to fix or approve hourly rates claimed in a party’s budget. The underlying details will be used for reference purposes only, to assist the court in fixing a party’s budget.
• The Precedent H guidance document is to be updated to provide further indication to parties of what items are to be included in relation to each phase of the costs budget.

It is hoped that by requiring parties to exchange budgets earlier in advance of the first case management conference, there will be increased time for preparation and negotiations in advance of any costs management hearing. The requirement to file a new ‘budget discussion report’ will assist in focussing parties on the areas in dispute, and in identifying the areas which will require judicial determination at the costs management hearing.

Despite the removal of some categories of cases from the costs management regime (most notably those involving children), costs budgeting will remain an important tool for insurers in limiting total spend on cases, and in exercising some control over the direction that the litigation will take. Accordingly, a robust and well prepared response will continue to be important in ensuring favourable outcomes at costs management hearings.

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