By now, many of us will no doubt have touched upon recent articles or reports confirming that the Costs Budgeting Light Pilot Schemes are being partially rolled out in an effort to bring us a simplified approach to costs budgeting in certain types of civil case in England and Wales.
These pilots are intended to simplify and streamline the budgeting process for cases valued up to £1 million in an effort to make the process more efficient both for the parties and the Courts involved.
The pilot schemes are scheduled to run from 6 April 2025 and apply to cases issued on or after 1 April 2025 and before 1 April 2028.
They will be applicable to certain Part 7 Multi-Track claims, including those in the Business and Property Courts and certain other cases valued at less than £1 million. Claims valued at £10 million or more and claims brought on behalf of children continue to be excluded. Litigants in person remain exempt from costs budgeting.
There are several key aspects to be aware of to ensure compliance and to determine if cases fall under the pilot scheme since any non-compliance may lead to procedural issues.
The pilot scheme will apply to specific Business and Property Courts and certain Business and Property work in the County Courts, including those in Manchester, Leeds and Central London.
It will also be introduced for claims with a value of less than £1 million to which budgeting would apply for cases proceeding in the Central London County Court or the Leeds or Bristol District Registries.
Legal professionals will need to ascertain if their cases fall in the jurisdiction of these Courts to ensure they follow the correct budgeting process.
The pilot brings with it the introduction of some new forms, namely, Precedent Z which is a simpler two-page costs budgeting form, replacing the more detailed Precedent H, Precedent ZR, being the budget discussion report and Precedent ZT, the form to be used when seeking budget variations. The forms are intended to be both shorter and easier to complete.
Having now had chance to consider these new forms which have just been published by the MOJ, it is apparent that whilst on the face of it, the Simplified Costs Budget does appear to require much less information, accurate breakdowns are still required for all incurred and estimated time costs, Counsel’s fees and disbursements.
The same Statement of Truth applies to verify that “This budget is a fair and accurate statement of incurred and estimated costs which it would be reasonable and proportionate for my client to incur in this litigation”. Therefore, the need for Budgets to be as accurate and uptodate as possible remains as important as ever to avoid any threat of being in contempt of the rules.
Simplified Costs Budgeting forms (Precedent Z) will need to be filed 21 days before the first CMC unless otherwise ordered by the Court although the parties can be required to file and serve updated simplified Costs Budgets where no Costs Management Order has been made in the proceedings before Trial or at any other stage in the proceedings. Precedent ZR, the simplified Budget Discussion Report is to be filed 7 days before the CMC. At the first CMC, the court will give Case Management Directions and, unless satisfied in accordance with rule 3.15(2) that a Costs Management Order is not required, make a Costs Management Order by reference to the Simplified Costs Budget.
Whilst the Simplified Costs Budgeting Scheme aims to introduce a streamlined process, legal professionals must still ensure that their budgets are comprehensive and realistic, ensuring all anticipated costs at each stage are provided for.
It will be essential to monitor developments so as to stay informed as changes and updates will inevitably occur during the pilot phase and it will remain crucial to ensure compliance with these evolving rules as they may very well be expanded to cover more Courts and claims in the future.
Nevertheless, whilst the process of Cost Management might be simplified by the introduction of this scheme, it remains crucial to regularly review costs as cases progress and ensure that spending stays withing budgeted limits and the need for an accurate and fully costed Budget from the outset will also remain of paramount importance.
