Rule committee bids to ease burden of costs management

Report: costs management has created significant hostility

Report: costs management has created significant hostility

Cases relating to children are to be excluded from the scope of costs management, the Civil Procedure Rule Committee (CPRC) has decided, while there will be new provisions to encourage agreement of budgets.

But the review of costs management carried out by a sub-committee chaired by Mr Justice Coulson showed the difficulty of addressing what it identified in a report to the CPRC as the “critical problem”: costs management is causing “significant delays in the pre-trial process” and “eating up hard-pressed judicial resources”.

The report continued: “We think that there are broadly two reasons for the problems. One is that costs management is being carried out in just about every case, regardless of its particular features. And the other is that, because of rule 3.18, there is a natural nervousness that, if you don’t include everything in your costs budget, you won’t get it back on detailed assessment.”

The sub-committee said children cases could be removed from the regime, “principally because of the time many such cases take to get to trial. It takes years for injuries to stabilise before a proper prognosis can be given and a trial date fixed. Budgeting for 5 -10 years is not sensible”. The CPRC agreed.

“One of the most striking things about the discussion was the evidence of the significant hostility that cost management has now created,” the sub-committee found.

“The fact that, for example, those instructed on behalf of the NHS take every point about the claimant’s cost budget only points up the importance of encouraging the parties to agree costs budgets where possible.

“We agreed unanimously that there should be greater emphasis on encouraging the parties to agree their respective costs budgets. One practical way in which this can be done is to order the exchange of costs budgets 21 days before the CMC and putting into the rules an express requirement that the other side either agree the cost budget or, where that was not possible, agree as many component elements of it as possible.

“We suggest that, seven days before the CMC, the parties exchange alternative figures for the phases not agreed.” Again, the CPRC supported this.

As an example of the difficulties the sub-committee faced, however, it reported how originally there was also broad agreement that the rules should be tweaked so as to ensure that costs management was short, simple and quick.

“However, when we came to consider the detail of this, we could not think of any specific changes that we wanted to make to the rules or PD as they presently are.”

In looking at other options for reform, the sub-committee was agreed on some points but not on others and sought guidance from the CPRC. The minutes of last month’s meeting of the CPRC revealed that it decided:

  • Cases involving protected parties, and clinical negligence/personal injury cases involving adults, should remain within the scope of costs management;
  • Terminal illness/short life expectancy cases should be dealt with by an indication in the practice direction that it may be appropriate to exercise the discretion to disapply costs management (or to deal with it on the papers only);
  • No specific provision was needed for split trials;
  • The existing £10m value band, below which costs management is the norm, should not be modified either generally or for individual categories of case;
  • Defendants’ costs budgets should continue to be provided;
  • The practice direction should make clear that the approval of the court relates to the totals for each phase; that it is not the role of the court to fix or approve the hourly rates; and more generally that the underlying detail behind the totals for each phase is provided for reference and back-up and not for the purposes of approval of that detail;
  • Whether to deal with costs management on the papers alone was a matter for individual judicial discretion and should not be the subject of specific provision;
  • Precedent H should be improved in presentation as well as content. Provision for contingencies should continue to be included, but with a steer that it applies only where an event is more likely than not to happen. An attempt should be made to limit the amount of detail provided by way of schedules of assumptions;
  • No change should be made to rule 3.18;
  • No change should be made in relation to incurred costs, which should be left for detailed assessment in the normal way;
  • The simplified Form H should be used for cases up to £50,000 in value, though it was agreed that the aim should be to introduce fixed costs as soon as possible for all such cases; and
  • The costs-capping rules should be removed.

The sub-committee is now working to prepare amendments for consideration at the CPRC’s October meeting.

Its other members are: Master Roberts, District Judge Lethem, Nick Bacon QC, Ed Pepperall QC, claimant solicitor Amanda Stephens and defendant solicitor Andrew Underwood.

In a separate report to the CPRC giving its perspective on costs management, the Judicial College said “it is undeniable that there remains a residual scepticism amongst the judiciary (both full and part time) as to the merits of the costs management discipline”.

It emphasised its teaching that costs management does not involve setting hourly rates, determining time to be spent or breaking down the budget sum for a phase between disbursements and estimated solicitors’ costs.

The college suggested that reducing Form H to the first page only “should steer both the preparation of budgets and the setting of budgets away from the flawed hourly rate multiplied by time approach. This will assist in achieving consistency of outcome and simplify both processes, reducing the time and costs involved in preparation and hearings and, in consequence, the waiting times for such hearings”.

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