Case management - Costs and case management conferences

Learning Outcomes

This article explains the court's role in managing civil litigation cases, particularly focusing on Costs and Case Management Conferences (CMCs) and the associated costs management regime under the Civil Procedure Rules (CPR). After reading this article, you should understand the purpose and procedure of CMCs, the requirements for costs budgeting, the significance of Costs Management Orders, and the consequences of non-compliance. This knowledge is essential for managing case progression and advising clients effectively in preparation for the SQE1 assessment.

SQE1 Syllabus

For SQE1, you are required to understand the court's active role in managing cases and costs. The assessment will test your knowledge of the procedural steps and principles involved in case management, particularly in multi-track claims. As you revise this topic, ensure you can:

• Explain the purpose and typical directions given at a Case Management Conference (CMC).
• Identify the requirements for filing costs budgets (Precedent H) and budget discussion reports.
• Understand the court's powers in making Costs Management Orders (CMOs) and their effect.
• Recognise the consequences of failing to comply with costs budgeting rules and other case management directions.
• Apply the principles of proportionality and the overriding objective in the context of case and costs management.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. In which track are Costs and Case Management Conferences most commonly held?
   1. Small Claims Track
   2. Fast Track
   3. Multi-Track
   4. They are mandatory in all tracks.
2. What is the primary purpose of a Costs Budget (Precedent H) in multi-track claims?
   1. To provide a final bill for the client.
   2. To allow the court to manage the costs incurred throughout the litigation.
   3. To guarantee recovery of all costs from the opponent if successful.
   4. To set out only the costs already incurred before the first CMC.
3. What is the potential consequence if a party, other than a litigant in person, fails to file a costs budget when required?
   1. The claim is automatically struck out.
   2. The party receives an automatic extension of time.
   3. The party may be limited to recovering only the applicable court fees for budgeted costs.
   4. The party must pay the opponent's costs budget in full.

Introduction

The Civil Procedure Rules (CPR) place a duty on the court to actively manage cases. This involves controlling the progress of litigation, ensuring compliance with rules and directions, and managing the costs involved. A key feature of this management, particularly in multi-track claims, is the Costs and Case Management Conference (CMC). This article examines the role of CMCs and the key area of costs management, including costs budgeting and the implications of Costs Management Orders (CMOs). Understanding these procedures is essential for advising clients on the efficient and cost-effective conduct of litigation. The court's approach is always guided by the overriding objective: dealing with cases justly and at proportionate cost (CPR 1.1).

Case Management Conferences (CMCs)

Case Management Conferences are hearings, primarily used in multi-track claims (CPR Part 29), where a judge actively reviews the case and sets directions for its future conduct. Think of a CMC as an essential planning meeting where the court maps out the journey to trial.

The main purposes of a CMC include:

• Reviewing the steps already taken by the parties.
• Deciding the necessary steps to progress the case efficiently (e.g., disclosure, witness statements, expert evidence).
• Setting a timetable for those steps.
• Considering whether the costs involved are proportionate.
• Encouraging settlement or the use of Alternative Dispute Resolution (ADR).
• Dealing with costs management and making Costs Management Orders (CMOs).

Parties (or their legal representatives who are familiar with the case and have authority to deal with issues likely to arise) are required to attend. Before the CMC, parties are expected to liaise and attempt to agree directions. They must file specific documents, such as proposed directions, disclosure reports, and, significantly, costs budgets and budget discussion reports (discussed below).

Key Term: Case Management Conference (CMC)
A procedural hearing, primarily in multi-track cases, where the court gives directions for the management of the case, sets timetables, and deals with costs management issues.

Costs Management

Fundamental to modern case management is the control of costs. The court aims to ensure that the costs incurred by parties are proportionate to the value, complexity, and importance of the claim, aligning with the overriding objective. Costs management primarily applies to multi-track cases valued under £10 million.

Costs Budgets (Precedent H)

Parties (except litigants in person) in most multi-track cases must file and exchange costs budgets using a specific form, Precedent H.

Key Term: Costs Budget
A detailed statement filed by a party setting out the costs already incurred (incurred costs) and the estimated future costs (budgeted costs) for each stage of the litigation.

The budget breaks down costs by 'phases' (e.g., pre-action, issue/statements of case, CMC, disclosure, witness statements, expert reports, trial preparation, trial). This allows the court to scrutinise the estimated expenditure for each stage.

Costs budgets must usually be filed:

• With the directions questionnaire if the claim is valued at less than £50,000.
• Otherwise, not later than 21 days before the first CMC (CPR 3.13).

Failure to file a costs budget on time carries a severe sanction under CPR 3.14: the defaulting party is treated as having filed a budget comprising only the applicable court fees. This effectively prevents recovery of their legal costs for the budgeted phases, unless relief from sanctions is granted. The case of Mitchell MP v News Group Newspapers Ltd [2013] EWCA Civ 1537 initially demonstrated a very strict approach to this rule, although Denton v TH White Ltd [2014] EWCA Civ 906 later introduced a three-stage test for relief, providing slightly more flexibility but still emphasising compliance.

Worked Example 1.1

A claimant in a £200,000 multi-track breach of contract claim is required to file their costs budget 21 days before the first CMC. Their solicitor misses the deadline by two days due to an oversight. The defendant objects to the late filing. What is the immediate consequence for the claimant under CPR 3.14, and what should their solicitor do?

Answer: The immediate consequence under CPR 3.14 is that the claimant is treated as having filed a budget comprising only the applicable court fees for the budgeted phases. Their solicitor should immediately apply to the court under CPR 3.9 for relief from this sanction, explaining the reason for the default and addressing the Denton criteria (seriousness of breach, reason for default, all circumstances).

Budget Discussion Reports (Precedent R)

Before the CMC, parties who have filed budgets must discuss them and file a budget discussion report (using Precedent R) not later than 7 days before the CMC.

Key Term: Budget Discussion Report
A report filed before a CMC, setting out which figures in the parties' costs budgets are agreed, which are not agreed, and a brief summary of the grounds for disagreement.

This report helps the judge identify the key areas of dispute regarding costs before the CMC hearing.

Costs Management Orders (CMOs)

At the CMC (or a specific costs management hearing), the court will review the parties' budgets. It may record the extent to which budgets are agreed between the parties. For budgeted costs that are not agreed, the court may make a Costs Management Order (CMO) approving those costs, potentially after revising them (CPR 3.15).

Key Term: Costs Management Order (CMO)
A court order recording the extent to which the parties' costs budgets are agreed or approved by the court.

A CMO manages the recoverable costs going forward. When costs are assessed at the end of the case on the standard basis, the court will not depart from the receiving party's last approved or agreed budgeted costs unless satisfied that there is good reason to do so (CPR 3.18). This makes adhering to the budget imperative.

If circumstances change significantly during the litigation (a 'significant development'), a party may need to revise their budget. They should seek the agreement of other parties and, if not agreed, apply promptly to the court to vary the CMO (CPR 3.15A).

Worked Example 1.2

A defendant's approved costs budget allows £15,000 for the 'expert reports' phase in a multi-track claim. During disclosure, unexpected technical documents are revealed, requiring the defendant's expert to undertake significant additional analysis not originally foreseen. The estimated cost for this extra work is £8,000. What should the defendant's solicitor do?

Answer: This constitutes a 'significant development'. The defendant's solicitor should promptly prepare a revised costs budget (showing the increased estimated cost for the expert phase) and seek the claimant's agreement to the revision using Precedent T. If the claimant does not agree, the defendant must apply to the court without delay for approval to vary the Costs Management Order, explaining why the additional costs are reasonable and proportionate due to the unforeseen development. Waiting until the end of the case is risky, as the court may disallow the extra costs if prior approval wasn't sought.

Exam Warning

Do not underestimate the importance of costs budget deadlines. The Mitchell and Denton cases show that while relief from sanctions is possible, failing to file a budget on time (CPR 3.14) can severely restrict a party's ability to recover costs. Always prioritise timely filing or seek extensions before deadlines expire.

Compliance and Sanctions

Case management directions, including those related to costs budgeting, are court orders. Failure to comply can lead to sanctions under CPR Part 3. As seen with costs budgets, sanctions can be automatic (CPR 3.14) or imposed by the court (CPR 3.4). Common sanctions include costs orders, striking out a statement of case, or debarring a party from relying on evidence.

If a party fails to comply with a rule, practice direction, or court order, they may apply for relief from the resulting sanction under CPR 3.9. The court will apply the three-stage Denton test:

1. Assess the seriousness and significance of the breach.
2. Consider why the default occurred.
3. Evaluate all the circumstances of the case to deal justly with the application, including the need for litigation efficiency and compliance enforcement.

Revision Tip

While this article focuses on CMCs and costs, remember that case management is broader. Judges actively manage disclosure, evidence, and trial timetables. Understanding the court's proactive role and the overriding objective is key to appreciating why procedures like costs budgeting exist.

Key Point Checklist

This article has covered the following key knowledge points:

• Case management involves the court actively controlling the progress of litigation, guided by the overriding objective (CPR 1.1).
• Costs and Case Management Conferences (CMCs) are key hearings, primarily in multi-track cases, for setting directions and managing costs.
• Costs budgeting (using Precedent H) is mandatory in most multi-track claims under £10 million, requiring parties to estimate future costs.
• Failure to file a costs budget on time triggers a severe sanction under CPR 3.14, limiting recoverable costs to court fees unless relief is granted.
• Budget Discussion Reports (Precedent R) must be filed before the CMC, highlighting agreed and disputed budget figures.
• The court may make Costs Management Orders (CMOs) approving budgets, which largely control recoverable costs on the standard basis (CPR 3.18).
• Parties must apply promptly to vary CMOs if significant developments occur (CPR 3.15A).
• Failure to comply with case management directions can lead to sanctions (CPR 3.4), with relief assessed under the Denton test (CPR 3.9).

Key Terms and Concepts

• Case Management Conference (CMC)
• Costs Budget
• Budget Discussion Report
• Costs Management Order (CMO)