Case management - Costs and case management conferences

Learning Outcomes

This article explains how Costs and Case Management Conferences (CMCs) operate in practice and how the costs management regime functions under the Civil Procedure Rules (CPR). It outlines the court’s duty to actively manage cases and control costs, details the typical directions considered at a CMC, the documents parties must prepare and file, and the mechanics and purpose of costs budgets, budget discussion reports, and Costs Management Orders (CMOs). It examines when budgets apply, how the court controls incurred and future (“budgeted”) costs, and how and when budgets may be varied for significant developments, including the use of Precedent T and CPR 3.15A. It discusses the influence of the overriding objective and proportionality on decisions at CMCs and the assessment of costs, and reviews the consequences of non-compliance, including automatic and discretionary sanctions, the Mitchell and Denton approach to relief from sanctions, and typical exam traps, to support accurate, time-efficient application of these rules in multi-track claims, problem-style questions, and client-focused case strategy.

SQE1 Syllabus

For SQE1, you are required to understand civil case management in multi-track proceedings, including Case Management Conferences (CMCs) and the costs management regime under the Civil Procedure Rules (CPR), with a focus on the following syllabus points:

• Explain the purpose and typical directions dealt with at a Case Management Conference (CMC), including disclosure scope (standard or tailored), witness and expert evidence, timetabling, and ADR.
• Identify the requirements, content, and timing for filing and exchanging costs budgets (Precedent H), including budget phases, assumptions, contingencies, statements of truth, and when only the first page is used.
• Describe and prepare Budget Discussion Reports (Precedent R), including the need to mark agreed figures, disputed figures, and concise grounds of dispute.
• Understand the court’s powers in making Costs Management Orders (CMOs), the non-approval of incurred costs, and the effect of CPR 3.18 on later standard-basis assessment.
• Recognise when costs management applies and key exclusions (e.g., claims over £10 million, cases subject to fixed recoverable costs), and that the court may nevertheless order budgeting where appropriate.
• Apply the rules for varying budgets following significant developments (Precedent T/CPR 3.15A) and the need for prompt action.
• Anticipate sanctions for failures to comply with budgeting rules and other directions (including CPR 3.14, 3.4, unless orders), and the structured relief test in Denton v TH White Ltd under CPR 3.9.
• Integrate proportionality and the overriding objective (CPR 1.1 and 1.4) into case and costs management decisions and advice.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. In which track are Costs and Case Management Conferences most commonly held?
   1. Small Claims Track
   2. Fast Track
   3. Multi-Track
   4. They are mandatory in all tracks.
2. What is the primary purpose of a Costs Budget (Precedent H) in multi-track claims?
   1. To provide a final bill for the client.
   2. To allow the court to manage the costs incurred throughout the litigation.
   3. To guarantee recovery of all costs from the opponent if successful.
   4. To set out only the costs already incurred before the first CMC.
3. What is the potential consequence if a party, other than a litigant in person, fails to file a costs budget when required?
   1. The claim is automatically struck out.
   2. The party receives an automatic extension of time.
   3. The party may be limited to recovering only the applicable court fees for budgeted costs.
   4. The party must pay the opponent's costs budget in full.

Introduction

The Civil Procedure Rules (CPR) place a duty on the court to actively manage cases and to further the overriding objective of dealing with cases justly and at proportionate cost (CPR 1.1). Active case management (CPR 1.4) includes encouraging cooperation, focusing on genuine issues, fixing timetables, considering ADR, and controlling costs. In modern civil litigation, especially in multi-track claims, the CMC is the court’s main forum for setting tailored directions and engaging with costs management. Alongside timetabling disclosure, witness and expert evidence, and trial windows, the court typically deals with costs budgets and the prospect of a Costs Management Order. Understanding the interplay between directions, costs control, and proportionality is fundamental to conducting litigation efficiently and advising clients accurately on both procedural strategy and costs risk.

Key Term: Case Management Conference (CMC)
A procedural hearing, primarily in multi-track cases, where the court gives directions for the management of the case, sets timetables, encourages ADR, and addresses costs management issues (including approving, revising, or recording budgets).

Case Management Conferences (CMCs)

Case Management Conferences are hearings primarily used in multi-track claims (CPR Part 29) where the judge actively reviews the case and sets directions for its future conduct. They provide an opportunity to align the case trajectory with the overriding objective and proportionality.

The main purposes of a CMC include:

• Reviewing the steps already taken by the parties and their compliance with prior orders and practice directions.
• Deciding the necessary steps to progress the case efficiently (e.g., disclosure scope and method, witness statements, expert evidence, questions to experts).
• Setting a realistic timetable for those steps, including trial windows or a specified trial period and, if appropriate, a pre-trial review.
• Considering whether steps and proposed costs are proportionate to the value, importance, and complexity of the case.
• Encouraging settlement or the use of Alternative Dispute Resolution (ADR), including stays (CPR 26.4) and Early Neutral Evaluation (CPR 3.1(2)(m)).
• Dealing with costs management and, where appropriate, making a Costs Management Order (CMO).

Before the CMC, parties are expected to liaise and attempt to agree directions. Each party must file a Directions Questionnaire (N181), proposed directions, and typically a case summary to assist the judge. In multi-track claims, parties usually file a disclosure report (N263), consider PD 31B’s Electronic Documents Questionnaire (for electronic disclosure), and file costs budgets and a budget discussion report.

Attendance at a CMC must be by someone familiar with the case and with authority to deal with issues likely to arise. Inadequate attendance or a lack of authority can lead to adjournment and wasted costs orders against the responsible legal representative. The court may conduct shorter case-management hearings by telephone or video where suitable (PD 23A).

The court can approve agreed directions or issue directions of its own initiative (PD 29). Where directions are given without a CMC, PD 29 para 4.10 sets out the court’s general approach, commonly including standard disclosure, simultaneous exchange of witness statements and experts’ reports where appropriate, discussions between experts (CPR 35.12), a trial period, and directions requiring the parties to consider ADR.

Costs Management

Fundamental to modern case management is the control of costs to ensure proportionality. Costs management primarily applies to multi-track proceedings. As a general rule, costs management applies to multi-track cases commenced after 22 April 2014 where the amount of money claimed is less than £10 million, unless excluded or the court orders otherwise. It is commonly disapplied where a claim is subject to fixed recoverable costs or in specified circumstances; however, the court retains discretion to order costs management when appropriate even outside the default scope.

Costs management has two components:

• Judicial control of steps through directions in furtherance of the overriding objective.
• Judicial control of recoverable future costs through the budgeting process (Precedent H, Precedent R, and CMOs).

Key Term: Costs Budget
A detailed statement in Precedent H setting out costs already incurred and estimated future costs for each phase of the litigation, verified by a statement of truth by a senior legal representative.

Costs Budgets (Precedent H)

Parties (except litigants in person) in most multi-track cases must file and exchange costs budgets in Precedent H. The budget breaks down costs by phases (e.g., pre-action, issue/statements of case, CMC, disclosure, witness statements, expert reports, trial preparation, trial, ADR/settlement discussions, contingencies). Each phase sets out time costs and disbursements, supported by clear assumptions. The budget must be dated and verified by a statement of truth (signed by a senior legal representative). Where total costs (incurred plus estimated) do not exceed £25,000 or the stated value of the claim is less than £50,000, only the first page of Precedent H is used.

Timing requirements (CPR 3.13):

• Where the stated claim value on the claim form is less than £50,000: file and exchange with the directions questionnaire.
• In any other case: file and exchange not later than 21 days before the first CMC.

Failure to file a costs budget on time carries the automatic sanction under CPR 3.14: the defaulting party is treated as having filed a budget comprising only the applicable court fees for budgeted phases. This severely restricts recovery of future costs unless relief is granted. The strict approach in Mitchell MP v News Group Newspapers Ltd was refined in Denton v TH White Ltd, which set out the structured three-stage test for relief (seriousness and significance; reasons; all the circumstances), but compliance remains essential.

Key Term: Precedent H
The court-approved template used to present a party’s costs budget, broken into phases, with assumptions and contingencies, and verified by a statement of truth.

Worked Example 1.1

A claimant in a £200,000 multi-track breach of contract claim is required to file their costs budget 21 days before the first CMC. Their solicitor misses the deadline by two days due to an oversight. The defendant objects to the late filing. What is the immediate consequence for the claimant under CPR 3.14, and what should their solicitor do?

Answer:
The immediate consequence under CPR 3.14 is that the claimant is treated as having filed a budget comprising only the applicable court fees for the budgeted phases. Their solicitor should immediately apply to the court under CPR 3.9 for relief from this sanction, explaining the reason for the default and addressing the Denton criteria (seriousness/significance of the breach, reason for default, and all the circumstances including promptness and the need for litigation to be conducted efficiently and at proportionate cost).

Budget Discussion Reports (Precedent R)

Before the CMC, parties who have filed budgets must discuss them and file a budget discussion report (Precedent R) not later than 7 days before the CMC. The report sets out agreed figures per phase, disputed figures per phase, and brief grounds for dispute, enabling the court to focus on what is in reality disputed.

Key Term: Budget Discussion Report
Precedent R, filed at least 7 days before the first CMC, summarising phase-by-phase agreements and disputes on budgets and the short grounds for any disputes.

Key Term: Precedent R
The prescribed format for the budget discussion report, which the court uses to identify key areas of disagreement in costs management ahead of the hearing.

Worked Example 1.2

A defendant’s approved costs budget allows £15,000 for the ‘expert reports’ phase in a multi-track claim. During disclosure, unexpected technical documents are revealed, requiring the defendant’s expert to undertake significant additional analysis not originally foreseen. The estimated cost for this extra work is £8,000. What should the defendant’s solicitor do?

Answer:
This constitutes a significant development. The defendant’s solicitor should promptly prepare a revised costs budget (showing the increased estimated cost for the expert phase) and seek the claimant’s agreement to the revision using Precedent T. If not agreed, the defendant must apply promptly to the court under CPR 3.15A for approval to vary the Costs Management Order, explaining why the additional costs are reasonable and proportionate due to the unforeseen development. Delay is risky; without timely approval, the court may later disallow the extra costs for lack of a good reason to depart from the last approved budget.

Costs Management Orders (CMOs)

At the CMC (or a discrete costs management hearing), the court reviews the parties’ budgets. It may record agreement between the parties and, for disputed budgeted costs, it may approve, revise, and approve revised budgeted costs (CPR 3.15). Incurred costs are not approved in advance, but the court may record comments on them and will take incurred costs into account when considering the reasonableness and proportionality of subsequent budgeted costs.

Key Term: Costs Management Order (CMO)
An order recording agreed or court-approved budgeted costs and any court comments on incurred costs. It manages recoverable future costs, subject to the CPR 3.18 “no departure without good reason” rule at assessment.

The effect of a CMO is significant. On standard-basis assessment at the end of the case, the receiving party’s last approved or agreed budgeted costs form a controlling framework: the court will not depart from those budgeted costs unless satisfied there is a good reason to do so (CPR 3.18). Examples of good reason include justified overspends where a prompt variation application was not practicable but subsequent evidence shows the change was unavoidable, or where a phase was not undertaken at all (underspend), though underspending is not in itself a good reason to depart. The safer route for unexpected developments is budget variation under CPR 3.15A.

Key Term: Precedent T
The form used to propose a budget variation to reflect significant developments, to be submitted promptly to other parties (and the court if not agreed) under CPR 3.15A.

Key Term: Significant development
A material change in the scope or work required in the litigation (e.g., late disclosure of extensive technical documents, new expert disciplines, or additional necessary applications) that justifies prompt revision of an approved budget.

Worked Example 1.3

Both parties have exchanged Precedent H budgets. The claimant’s disclosure phase shows £22,000 and the defendant’s shows £12,000. After a budget meeting, the claimant proposes £18,000 and the defendant proposes £14,000. How should this be presented, and what will the judge look for at the CMC?

Answer:
In Precedent R, record the claimant’s and defendant’s figures per phase, marking any agreement (e.g., if both move to £16,000) or stating the numbers that remain disputed with concise reasons (e.g., claimant: higher volume of third-party disclosure requests anticipated; defendant: scope limited to standard disclosure). At the CMC, the judge will cross‑refer proposed directions and assumptions to assess whether the figures fall within a range of reasonable and proportionate costs, noting incurred costs and complexity, and will approve, reduce, or increase the phase totals accordingly.

Worked Example 1.4

The claimant’s last approved budget for trial preparation is £25,000. Owing to the late replacement of the defendant’s counsel and a consequential change in trial dates, the claimant incurs an extra £8,000 preparing supplemental bundles and witness availability arrangements. No variation application was made before trial. On detailed assessment, can the claimant recover the overspend?

Answer:
The court will not depart from the last approved budgeted costs unless satisfied there is a good reason (CPR 3.18). The claimant can argue that the counsels’ change and trial date movement required unavoidable additional work outside the original assumptions. If the claimant acted promptly and kept accurate records, the court may find a good reason to depart in part, but the safer course would have been to seek a budget variation under CPR 3.15A as soon as the development crystallised.

Exam Warning

Do not underestimate the importance of costs budget deadlines. Mitchell and Denton show that while relief from sanctions is possible, failing to file a budget on time (CPR 3.14) can severely restrict a party’s ability to recover costs. Always prioritise timely filing or seek extensions before deadlines expire, and file Precedent R on time even if the other side’s budget is late.

Compliance and Sanctions

Case management directions, including those related to costs budgeting, are court orders. Failure to comply can lead to sanctions under CPR Part 3. Sanctions may be automatic (CPR 3.14 for budgets) or imposed by the court (CPR 3.4 for strike-out and debarring orders). The court’s general case management powers (CPR 3.1) include varying timetables, adjourning hearings, consolidating proceedings, ordering separate trials of issues, staying proceedings, and requiring attendance by legal representatives.

Common sanctions for non-compliance include:

• Debarment from relying on evidence or documents if deadlines are missed (often via an unless order).
• Striking out a statement of case in whole or part (CPR 3.4(2)), typically where there is persistent or serious default or an abuse of process.
• Costs orders (including indemnity costs) against the defaulting party and, where appropriate, wasted costs against legal representatives.
• Limiting recovery of budgeted costs to court fees for failure to file budgets (CPR 3.14).

Key Term: Unless order
A conditional order specifying that unless a party takes a required step by a specified deadline (e.g., serve witness statements), a defined sanction will be imposed automatically (e.g., debarment from calling witnesses or strike-out).

When a party fails to comply with a rule, practice direction, or court order, it may apply for relief from the resulting sanction under CPR 3.9. The court will apply Denton’s three-stage test:

1. Assess the seriousness and significance of the breach.
2. Consider why the default occurred.
3. Evaluate all the circumstances of the case to deal justly with the application, including the need for litigation efficiency and compliance enforcement.

Promptness is critical. Parties should also consider whether a short extension can be agreed in writing between them (CPR 2.11, subject to rules and orders), but trial dates are sacrosanct and will rarely be moved absent exceptional circumstances.

Key Term: Relief from sanctions
The discretionary removal or mitigation of a sanction under CPR 3.9, granted after the court applies the Denton test to the breach and circumstances.

Worked Example 1.5

The court orders witness statements to be exchanged by 4:00 p.m. Friday. The defendant serves at 3:58 p.m., but the claimant serves at 4:45 p.m. that day. The defendant refuses to agree a retrospective extension. What is likely to happen?

Answer:
The lateness (45 minutes) is unlikely to be serious or significant, and there was immediate compliance. The claimant should promptly apply for relief (CPR 3.9), addressing Denton. The court is likely to grant relief and may make a wasted costs or adverse costs order if the fault lies with the claimant’s representative. The trial date should not be affected.

Revision Tip

CMC preparation is front‑loaded. Have a concise case summary ready; ensure proposed directions align with the overriding objective and proportionality; prepare budgets and Precedent R early; check disclosure scope (including electronic disclosure) is realistic; and anticipate expert fields, joint experts, and expert discussions (CPR 35.12). Where settlement is viable, seek a short stay under CPR 26.4 and consider mediation.

Key Point Checklist

This article has covered the following key knowledge points:

• The court actively manages cases, guided by the overriding objective (CPR 1.1) and duties under CPR 1.4, including controlling timetables and costs.
• CMCs are central to multi-track case management: the court reviews compliance, sets tailored directions, encourages ADR, and deals with costs management.
• Parties must prepare and file appropriate documents for the CMC: Directions Questionnaire, case summary, disclosure report (including electronic disclosure considerations), and usually costs budgets and a budget discussion report.
• Costs budgeting (Precedent H) is mandatory in most multi-track claims where applicable; budgets must be verified, phased, and supported by assumptions and contingencies, with timing governed by CPR 3.13.
• Failure to file a costs budget on time triggers the CPR 3.14 sanction (limited to court fees), subject to Denton relief.
• Budget Discussion Reports (Precedent R) must be filed before the CMC, identifying agreed and disputed figures with concise grounds.
• The court may make a Costs Management Order (CMO) approving budgeted costs and recording comments on incurred costs. On standard-basis assessment, the court will not depart from the last approved or agreed budget without good reason (CPR 3.18).
• Significant developments require prompt budget variation (Precedent T/CPR 3.15A); relying on “good reason” after overspending is riskier than seeking timely variation.
• Case-management non-compliance attracts sanctions (including unless orders and strike-out under CPR 3.4), with relief governed by CPR 3.9 and Denton’s structured test.
• Proportionality (CPR 44.3) and the overriding objective inform both directions and the reasonableness of budgets and costs.

Key Terms and Concepts

• Case Management Conference (CMC)
• Costs Budget
• Precedent H
• Budget Discussion Report
• Precedent R
• Costs Management Order (CMO)
• Significant development
• Precedent T
• Unless order
• Relief from sanctions