From 6 April 2025 to 5 April 2028, the Business and Property Courts (“B&PCs”) in England and Wales will trial a new cost management regime under Practice Direction (“PD”) 51ZG1. This is part of a broader pilot scheme, reflecting a shift toward a more flexible and proportionate approach to managing costs for relevant claims.
Since the formal introduction of costs budgeting in 2013, there has been widespread acknowledgment of its value in fostering transparency and discipline in litigation costs. However, critics have long argued that the regime is overly rigid, applying the same framework to all relevant claims regardless of complexity or value.
The Civil Justice Council’s 2022 Costs Working Group conducted a review and consultation process. It was concluded that while costs budgeting should be retained, it must evolve to reflect the diversity of civil litigation. A central theme was that “one size does not fit all”. The recommendation for reform was clear, the system should be adaptable to suit the specific demands of different claims.
The pilot scheme brought the introduction of PD 51ZG1 in the B&PCs; PD 51ZG2 in the Central London County Court, Leeds and Bristol District Registries; and PD 51ZG3 in the Manchester and Birmingham District Registries, to resolve these issues and simplify the costs management process. This note focuses on PD 51ZG1 in the B&PCs.
Scope of PD 51ZG1
PD 51ZG1 applies to all relevant Part 7 multi-track claims issued on or after 6 April 2025 and before 6 April 2028 in the B&PCs, except:
- claims valued at £10 million or more;
- claims made by or on behalf of persons under the age of 18;
- claims subject to fixed costs or scale costs; or
- where the court otherwise orders.
In all relevant claims, unless the court orders otherwise, the parties are required (except litigants in person) to file and serve a simplified costs budget (Precedent Z) by no later than 21 days before the first case management conference (“CMC”). Following this, different provisions apply depending upon the claims value, namely (i) those claims valued at £1 million or more and (ii) those claims valued less than £1 million.
Unless the court otherwise orders, relevant claims which have no statement of value, seek only non-monetary relief, or the parties are unable to agree whether the claim value is £1 million or more, shall be treated for the purposes of PD 51ZG1 as having a value of £1 million or more.
Claims valued at £1 million or more
The court shall not manage costs unless it is satisfied that the litigation can only be conducted justly and proportionately if a cost management order (“CMO”) is made. Where a CMO is to be made, the court may give case management directions and shall give costs management directions.
Costs management directions may include, amongst others, the use of simplified costs budgets or the more detailed Precedent H.
Claims valued less than £1 million
Parties must file and serve a simplified budget discussion report (Precedent RZ) no later than 7 days before the first CMC. The court will then give case management directions and make a CMO in the first CMC, 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.
Where no CMO is made, unless the court orders otherwise, the parties shall file and serve an updated simplified costs budget no later than 28 days before (i) the start of trial (ii) the start of any trial window or (iii) 7 days before any PTR, whichever is earlier.
Implications for Practitioners
The direct implications of PD 51ZG1 include:
- In all relevant claims, unless the court orders otherwise, parties are required (except litigants in person) to file and serve a simplified costs budget, rather than the more detailed Precedent H which was previously required.
- The automatic sanction for a failure to file a costs budget (CPR 3.14), has been disapplied and replaced with “If a party has failed to comply with its obligations under [PD 51ZG1], including the failure to file a simplified costs budget or Precedent H, the court may impose sanctions which may include limiting the recovery of the costs to be incurred to the applicable court fees”.
- Where a CMO is not made, paragraphs 3.2 to 3.7 of Practice Direction 44 shall apply, namely relating to the assessment of a party’s costs.
PD 51ZG1 represents a positive and pragmatic evolution in costs management within the B&PCs. It seeks to strike a balance between the need for judicial oversight and the practical realities of managing complex and often well-resourced disputes.
The key advantages of the new regime is a reduced administrative burden in certain cases where full costs management is now not considered necessary; and it provides greater flexibility for parties to manage their own costs (unless otherwise stipulated by PD 51ZG1), with judicial intervention limited to situations where the court believes it to be necessary and/or the parties request judicial cost management.
PD 51ZG1 and the wider pilot scheme is part of a broader trend in civil justice, moving away from rigid structures and towards a more adaptable and proportionate approach. Only time will tell if the pilot scheme meets its aims of simplify the costs management process and providing an adaptable framework to suit the specific demands of different claims.
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