Costs Budgeting Light Pilot Schemes: The 179th Practice Direction Update
Cost management is evolving with the introduction of a simplified approach to cost budgeting, aimed at making the costs management process more efficient and accessible. With the latest Practice Direction updates, solicitors are required to familiarise themselves with the newly implemented procedures and forms.
The Simplified Costs Budgeting Pilots
The recent update to the 179th Practice Direction introduces the Simplified Costs Budgeting pilots. This approach presents an opportunity for solicitors and the Court to manage costs more efficiently, particularly in civil claims with a value of £1 million or less.
At the heart of this scheme are the simplified budget forms:
- Precedent Z – An abridged version of the standard costs budget form, designed to reduce the time and complexity associated with preparing costs budgets.
- Precedent ZR – The abridged budget discussion report, offering a simplified framework for budget discussions.
- Precedent ZT – A streamlined version of the Precedent T form, which serves to simplify the process for agreeing a revised budget.
While the forms themselves have not yet been released, their introduction signals a move towards a more straightforward approach to cost budgeting. We understand that the forms “will be published in due course”.
Key Practice Directions: 51ZG1 and 51ZG2
Accompanying these changes are two new Practice Directions that set the framework for the application of the Simplified Costs Budgeting scheme:
- 51ZG1: This Practice Direction concerns Part 7 multi track claims in Certain Business and Property Courts and Certain Business and Property work in the County Court, issued on or after 1 April 2025, for a period of 3 years. It applies in the Business and Property Court of England and Wales (Rolls Building), in the BPC in Manchester and Leeds or as Business and Property work in the County Court in Manchester, Leeds or Central London. This will automatically apply to claims with a pleaded value of less than £1m and for a claim value of £1 million or more, the court shall not manage the costs of the parties unless satisfied that the litigation can only be conducted justly and at proportionate cost if a costs management order is made. Where the pilot does apply however the Court does not make a costs management order, each party shall file and serve an updated simplified costs budget no later than 28 days before either the start of the trial, the start of any trial window or 7 days before any pre-trial review.
- 51ZG2: This Practice Direction concerns claims with a value of less than £1 million, to which neither PD51ZG1 nor rule 44.13 (QOCS) applies, which are proceeding in the County Court at Central London or at the Leeds or Bristol District Registries. This will automatically apply to claims with a pleaded value of less than £1m. Where the pilot does apply but the Court does not make a costs management order, each party shall file and serve an updated simplified costs budget no later than 28 days before either the start of the trial, the start of any trial window or 7 days before any pre-trial review.
Enforcement and Penalties
These new Practice Directions will come into force for claims issued on or after 1 April 2025 until before 31 March 2028. Solicitors will need to be aware of these dates to ensure they’re operating within the pilot. While the automatic penalty under CPR 3.14 for failing to file a budget will not apply, the practice directions state that the court ‘may’ impose sanctions for non-compliance.
Why You Should Care (And How We Can Help!)
While the shift to simplified cost budgeting might seem like a minor adjustment at first, the impact of this change should not be underestimated particularly with the interplay of the extended Fixed Recoverable Costs Regime. Understanding the new Practice Directions, knowing which cases fall under the new scheme, and ensuring compliance with the new forms are essential to avoid complications. If your team is not fully prepared for the new Costs Budgeting Pilots, navigating these changes could lead to unnecessary hurdles, delays, or even penalties.
As cost experts, we are here to guide you through the complexities of the new process, ensuring that your costs budgeting is handled smoothly and accurately. Whether you need assistance understanding the new Practice Directions, help with completing the simplified forms, or advice on how to best implement the new rules in your practice, we’re ready to assist.