Akenhead J has considered a number of practical points regarding costs when considering and entering into settlement. He also determined that there would be no difference in approach when dealing with costs whether the settlement was a ‘commercial ‘ one or representative of the amount the party would obtain on judgment.

ARCHIVED: this archived Practice Note is not maintained and is for background information purposes only. Further, some of the links may not direct you to the provisions as at the date the guidance in this Practice Note was published. Key litigation funding cases 2016—what do you need to know? Some of the key points which have arisen out of decisions in the commercial or third party litigation or funding arena in 2016 are: • the Supreme Court has considered the construction of an exclusion clause in a solicitor's professional indemnity insurance contract (Impact Funding v AIG), see below • the Supreme Court has agreed to hear three appeals seeking to balance rights under the European Convention of Human Rights (ECHR) against the ability to recover costs associated with third party funding (Frost v MGN, Miller v Associated Newspapers Limited and Times Newspaper v Flood) which will determine these matters in the context of post-Jackson reform funding arrangements. Currently the courts are treating the ability to recover additional liabilities

Explanation—the courts are required to undertake costs management in addition to the pre-existing case management. Costs management is achieved through costs budgeting and costs management orders, which essentially seek to ensure proactive and proportionate costs management.

ARCHIVED: this archived Practice Note is not maintained and is for background information purposes only. Further, some of the links may not direct you to the provisions as at the date the guidance in this Practice Note was published. Costs management and costs budgeting—what do you need to know? The issue of costs is important for practitioners and needs to be balanced alongside the legal issues of the proceedings and management of the strategy of the case. For many in practice there is a dearth of specific guidance in the rules and practice directions, such that practitioners need to always be aware of developing guidance from case law in this area. Here are some of the key practical considerations arising from cases in 2016: • CPR 3.13 states that a party will only be able to recover court fees if they do not file their costs budgets in time. While the draconian approach in the high profile decision in Mitchell has softened with the principles set out in Denton v White, the Court of Appeal

This Practice Note looks at the general principles of the costs management regime. The main documents in this regime are cost budgets and costs management orders (CMO). This Practice Note considers the purpose of costs management, how it is achieved through costs budgeting and CMOs, the key information governing the costs management regime (CPR 3 and CPR PD 3D), exceptions to the regime, the court’s discretion to apply (order) or disapply costs management. It also explains what costs budgets are and the purpose behind them. It also considers electronic filing of bundles for costs management conferences. Costs management—introduction The purpose of costs management is that the court should manage the costs to be incurred by the parties to the proceedings alongside the steps to be taken (known as case management). Taken together these are used to further the overriding objective (CPR 3.12(2)). CPR 3.12–CPR 3.18 and CPR PD 3D set out the key rules and guidance governing the costs management regime. The court’s costs management powers under these provisions are specifically applicable

This Practice Note looks at costs management orders (CMOs). It considers what they are, their purpose and to what extent they are used by the courts. It considers when a CMO will be made, which is usually at or following the first case management conference (CMC) but they can be made at any time. It also covers the information a CMO contains, whether a CMO can be superseded or revoked and challenging a CMO using CPR 3.1(7). What are the CPR provisions for CMO? Provisions in relation to CMOs are found in CPR 3.15 and CPR PD 3D, para 12 (section F). Note that prior to 1 October 2020, these provisions were set out in old CPR PD 3E. Rule or practice direction Contents of rule or practice direction Comment CPR 3.15(5) Save for exceptional circumstances, the following costs are recoverable:—the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% of the approved or agreed budget—all other recoverable costs of the budgeting and costs management process shall not exceed 2% of

Explanation—a CMO is a means by which the court may manage the costs incurred by any party to the proceedings (CPR 3.15(1)). It also gives the court control of the parties' costs budgets in respect of recoverable costs (CPR 3.15(3)). Essentially, this means that a party who only expends costs up to the amount set out for each phase in the approved costs budgets will be able to recover those costs in the event that they are the successful party. Such costs will be recoverable on assessment on a standard basis. Note: at costs assessment the court will only depart from the approved costs if there is a 'good reason' to do so (CPR 3.18).

Restructuring & Insolvency analysis: The court made a costs management order (CMO) in litigation valued many times higher than the cap of £10m which would ordinarily take a case outside the costs management provisions of CPR 3.12-3.18. For practitioners, the case is a very useful walkthrough of how the court decides whether or not to exercise its unfettered discretion to make a CMO and the different factors that must be considered. In firmly concluding that a CMO was appropriate, the court placed great weight on the need for parties, particularly parties using litigation funding, to have a clear understanding of their potential exposure. Also weighing the scales heavily in favour of an order was that the cost estimates before the court showed large variance as against each other and revealed the potential for significant costs savings. Although proportionality on high value claims (contrasting the potential costs against the high value) would usually weigh against a CMO, in the circumstances, this factor was not sufficient to outweigh the factors in favour. Written by Damian Murphy, barrister at Enterprise Chambers.

ARCHIVED: This Practice Note is archived, and is no longer maintained. This Practice Note sets out the paragraphs in the old practice direction 3E dealing with costs management orders and identifies the new or existing rules and paragraphs in CPR PD 3E that replaced them on 1 October 2020 under both the Civil Procedure (Amendment No 3) Rules 2020, SI 2020/747 and the 122nd Update—Practice Direction Amendments: Previous practice direction provision Exiting or new rule Comment Practice Direction 3E, para 7.1Where costs budgets are filed and exchanged, the court will generally make a costs management order under rule 3.15. If the court makes a costs management order under rule 3.15, the following paragraphs shall apply. Existing rule: CPR 3.15(2)Where costs budgets have been filed and exchanged the court will make a costs management order unless it is satisfied that the litigation can be conducted justly and at proportionate cost in accordance with the overriding objective without such an order being made.  The guidance in the practice direction

Dispute Resolution analysis: Dr Mark Friston, barrister at Hailsham Chambers, discusses what the amendment to the existing CPR PD 3E, para 7.4 means for practitioners involved in costs budgeting.

Note, the 152nd PD update, which came into force on 1 December 2022, formally renumbered CPR PD 3E (costs management) as CPR PD 3D to reflect the cross referencing amends that were made in the Civil Procedure (Amendment No 2) Rules 2022, SI 2022/783 and 149th PD update, which provide that CPR PD 3E is renamed as CPR PD 3D. Where the court guides refer to CPR PD 3E, until formally updated, they should be read as referring to CPR PD 3D. This Practice Note provides a route map through to the costs management provisions within the following court guides: Commercial Court guide, Chancery guide, guide to the Financial List, Circuit Commercial (Mercantile) Court guide, Patents Court guide, Intellectual Property Enterprise Court guide, guide to the Intellectual Property Enterprise Court Small Claims Track, King’s Bench guide, Senior Courts Costs Office guide and the Technology and Construction Court guide. This Practice Note is to be read alongside the CPR and for further general guidance, see Practice Notes: Costs management and costs budgeting—general principles, Costs budgets—filing and exchange

Where a claimant withdraws his claim, it is open to the respondent to make an application for costs straight away, and the tribunal has power to determine that application, even if the claimant's claim has not been dismissed, and even if the respondent has not applied for the claim to be dismissed. EAT: Turning Point Scotland v (1) Perry (2) Hamilton.