Commercial Litigation Costs: disapplying budgeting when the £10m claim value threshold is disputed

Section D2.2 of the 11th edition of the Commercial Court Guide (2022) sets out how parties should approach costs budgeting where there is disagreement over whether costs management is applicable.

The Costs Management section of CPR 3 and PD3E applies in the Business and Property Courts so that all parties, except litigants in person, must file a costs budget unless the claim commenced before 22 April 2014 or where the claim value is stated on the claim form as £10m or more.

In a situation where the parties sit on different sides of this fence in relation to the £10m threshold, the guidance steers the parties towards discussion with a view to resolving the point by agreement or otherwise. If this proves impossible, the matter should be raised with the Court at the first opportunity (which may be the first Case Management Conference).

The guidance states that the requirements for filing and exchanging costs budgets will not apply until the matter is resolved.

This assumed disapplication is however contrary to the requirement in CPR 3.12 (1) (e) and CPR 3.13 (1) for budgets to be filed unless the court has specifically ordered otherwise.

Caution should therefore be exercised when seeking to rely on this guidance, firstly because it is only guidance and secondly because the civil procedure rules by their very nature carry more weight.

Where there is disagreement over whether a budget is required, best practice would be to contact the court for clarity as soon as the issue arises and in good time before the first listed Case Management Conference to avoid missing the costs budget deadline in line with CPR 3.13 (1) (b).

The CPR 3.14 sanction of court fees only for failing to file a budget could be catastrophic compared to unnecessarily incurring a costs budget drafting fee.

This article originally featured in our March 2022 newsletter which can be found here.

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