Costs Management in Part 8 Claims

In the case of Ian Kershaw v (1) Marion Roberts (2) James Gerard Jones [2014] EWHC 1037 (Ch) containing a Part 8 claim, the Claimant’s contended that a “directions hearing” was the first CMC and as the Defendant’s served their costs budget late, it should be restricted to court fees only.

By way of a brief background, the matter was listed for a “directions hearing” at Taunton County Court on 21st November 2013. Without any attempt to agree the budget before the hearing, the Claimant’s filed their budget on 14th November 2013. In response, the Defendant filed a budget on 19th November 2013.

The Claimant contended that the hearing was in fact a CMC and therefore the Defendant’s failure to serve the budget on time meant that they “should be treated as having filed a budget comprising only the applicable court fees” (CPR 3.14).

At first instance, Judge Hughes ordered that the directions hearing was not a CMC and therefore the Defendants were under no obligation to file a budget.

On appeal, the Claimant, contended that the rules for filing and exchanging budgets under CPR 3.13 applied to all multi-track cases and that Part 8 claims are “automatically allocated” to the multi-track.  Therefore, if no date to exchange budgets is specified (as was the case) the budget must be filed seven days before the first case management conference.

The Claimant submitted that in a Part 8 claim, there is no difference between a “directions hearing” and a CMC and that the two are “interchangeable”. Therefore, as the Defendant’s failed to file the budget seven days before the directions hearing/CMC without any good reason, the sanction of a costs budget restriction must apply.

In his appellant judgement, Mr Justice Hickinbottom dismissed the Claimant’s argument. He held that Part 8 claims are not in fact automatically allocated to the mulit-track as the Claimant had contended. Moreover, the case management provisions under CPR Part 29 which enable the Court to fix a CMC are only triggered by the actual allocation of the claim. As the claim was not allocated to the multi-track until the district judge specifically allocated it at the Taunton hearing, the hearing itself could not have been a CMC.

In respect of the Claimant’s proposition that all directions hearings were inevitably CMC’s, Mr Justice Hickinbottom held that such a suggestion would mean that costs budgets would be required in all forms of cases which normally proceed by way of Part 8. This would result in unnecessary costs being expended on preparations of costs budgets before the CMC in every claim when  only those positively allocated to the multi-track would actually require the budget. This would fly in the face of the overriding objective that costs should be proportionate and would also go against the spirit of the Jackson reforms which were designed to reduce the costs of litigation.