On 6 April 2025, two simplified Costs Budgeting Pilot Schemes will be launched to enhance efficiency, control litigation expenses, and improve transparency in costs budgeting.
Pilot Schemes Overview:
PD51XG1 applies to Part 7 multi-track claims valued at less than £1 million, issued between 1 April 2025 and 31 March 2028 in the Business and Property Courts (BPC) at the Rolls Building, London, as well as Business and Property cases in the Leeds, Manchester, and Central London County Courts. Claims valued at £1 million or more are excluded from this pilot unless the court orders otherwise.
PD51ZG2 applies to claims valued at less than £1 million, issued between 1 April 2025 and 31 March 2028, and proceeding in the Central London County Court or the Leeds or Bristol District Registries.
The Business and Property Courts pilot will cover commercial, financial, and property disputes. The Central London County Court, Leeds, and Bristol District Registries pilot will include a wider range of cases, including multi-track personal injury and clinical negligence claims under £1 million. In both pilots, litigants in person are not required to file costs budgets but can object to other parties’ costs budgets by submitting a simplified budget discussion report.
New Forms and Requirements:
- Precedent Z (replacing Precedent H): This two-page spreadsheet lists totals for incurred and estimated costs per case phase. The assumptions used to calculate the estimates are also provided on the second page. While detailed breakdowns (e.g., profit costs, counsels’ fees, disbursements) are no longer required, they are still necessary to calculate the figures. A Statement of Truth is still required.
- Precedent RZ (replacing Precedent R): This form mirrors the existing Precedent R but includes columns for claims and offers for counsel fees. Budget discussions will focus on broader factors set out in CPR rather than specifics like individual fee-earner hours.
- Precedent TZ (replacing Precedent T): This form includes a column for variations in counsel fees, but otherwise, the process is largely unchanged.
Key Points of the Practice Directions:
Cases Covered by the Pilots:
- PD51ZG1 applies to multi-track claims valued under £1 million, issued between 1 April 2025 and 31 March 2028 in the Business and Property Courts (London, Leeds, Manchester, and Central London County Courts).
- PD51ZG2 applies to claims under £1 million issued between 1 April 2025 and 31 March 2028 in the Central London County Court and Leeds or Bristol District Registries.
Litigants in Person: Not required to file a simplified Precedent Z costs budget unless ordered by the court.
Filing and Service Timetable:
- Precedent Z must be filed and served no later than 21 days before the first Case Management Conference (CMC), unless the court orders otherwise.
- Precedent RZ must be filed and served no later than 7 days before the first CMC.
Case Management Orders (CMOs):
- At the first CMC, the court may make a CMO based on the simplified costs budget.
- If no CMO is made, updated simplified costs budgets must be filed no later than 7 days before trial, the trial window, or the Pre-Trial Review (PTR), whichever is earlier.
Variation of Costs Budgets:
- If a CMO is made, any changes to the costs budget must be applied for using the simplified Precedent ZT form.
Sanctions for Non-Compliance:
- The court may impose sanctions for failing to comply with the pilot schemes’ directions, which may include limiting recoverable costs to court fees only.
Conclusion
The pilots will test whether a simplified costs budgeting process can be effective. While much of the work leading up to the Case Management Conference will still be necessary, the reduced amount of information provided in the budgets may help limit disputes between parties. The key challenge will be determining what is reasonable and proportionate for each phase of litigation, with factors like claim value, complexity, and lawyer responsibility playing a central role in that calculation.
As sanctions for non-compliance remain strict, it is crucial that all involved parties are well-versed in the pilots and their requirements. Goodwin Malatesta will monitor the progress of these pilots and provide regular updates.
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