Amendments to the CPR which became effective on 22 April 2014 have made changes to Part 8 claims in respect of the much talked about cost management rules which have come about as part of the Jackson reforms.

This Legacy Lookout aims to provide a summary and review of the changes which are relevant to practitioners who deal with Part 8 claims.

What is Part 8 ?

Part 8 is an alternative procedure to the usual method of bringing a legal claim (Part 7) and is aimed at disputes where a claimant is seeking the court’s decision on a question which is unlikely to involve a substantial dispute of fact.  For example, it can be used where the claimant wishes to seek guidance directions from the court on the appropriateness of actions that trustees propose to take; or it can be used to seek a declaration from the court as to the correct interpretation of a trust deed.

Part 8 also must be followed where a rule in the CPR specifies that it should be used, for instance Inheritance (Provision for Family & Dependants) Act 1975 claims, and claims seeking the removal of Executors or Trustees.

Part 8 procedure differs from Part 7 in that the witness evidence upon which the Claimant wishes to rely, must be served with the claim form and particulars.  The Defendants do not have to file a Defence.  However, they must file their witness evidence with their acknowledgement of service.  Failure to file witness statements on time means that the non-serving party will not be permitted to make representations at any hearing unless the Court provides permission.

Costs Management

From 1 April 2013[i], the post Jackson cost management rules in CPR3 came into effect and were to “apply to all multi-track cases,” and hence would affect many Part 8 claims.  Under the new cost management rules, the parties are required to exchange and serve at Court very detailed cost budgets.  These must be served no later than one week before the first Case Management Conference (CMC).  Failure to satisfy this rule because of late service has brought about onerous cost sanctions, as first seen in the much reported case of Mitchell v News Group Newspapers Limited [2013].

The necessity to prepare cost budgets in Part 8 claims creates an added expense which parties would wish to avoid, as ultimately the costs of this process will deplete the funds in the estate or trust which is the subject of the Part 8 Claim.  Also, commonly, these claims are concluded by way of negotiation so the procedures that are the subject of the cost budget, might in reality never actually be carried out.

2014 Amendments

However, some relief has been provided by way of the amendments which came into effect on 22 April 2014.[ii] The phrase “apply to all multi-track cases” has been replaced by the phrase “apply to all Part 7 multi-track cases.  So, a Part 8 claim issued after 22 April 2014 will not automatically be subject to the new costs management rules, unless of course the court orders that it should do.

What about cases issued before 22 April 2014 ?

If a part 8 claim has been issued after 1 April 2013 and before 22 April 2014, it will still fall into the rules effected in 2013, and hence a Part 8 Claim which has been allocated to the multi-track will require cost budgets to be submitted one week before the first CMC.

However, it is not always certain whether a Part 8 claim has automatically been allocated to the multi-track as demonstrated in the recent case of Kershaw v Roberts [2014] EWHC 1037 (Ch), April 10, 2014.

The case involved an Inheritance Act 1975 claim in the County Court.  A directions hearing was ordered.  The claimant faxed his costs budget one week before the hearing. The defendant sent his by post only two days before the hearing.

The claimant submitted that the defendant had failed to serve his costs budget on time and should therefore only be permitted to recover court fees.

The matter was referred to a “costs case management hearing” at which a circuit judge ruled that the directions hearing that had been ordered was not a CMC and therefore there was no need to file cost budgets.  The claimant appealed this decision.

Hickinbottom J in the High Court upheld the decision of the County Court Judge on the basis that the first hearing was not a CMC so the defendant’s cost budget had not been filed late.  He pointed out that Part 8 claims are not automatically allocated to the multi-track.  They are instead to “be treated as allocated to the multi-track”, and the Court can allocate them as it thinks fit.

Part 8 makes no reference to CMCs.  Only when a Part 8 claim is actually allocated to multi-track and a CMC is subsequently ordered, will the costs budget requirements become applicable.

Conclusion

Hickinbottom J made clear that this decision will soon be of historic interest only given that the April 2014 amendments expressly state that the costs management provisions in Section 2 of CPR3 and PD3E will not automatically apply to Part 8 claims.  However, for Part 8 claims issued after 22 April 2014, parties must be alert to the possibility of the court ordering that cost budgeting does apply.  If you are dealing with a Part 8 claim issued between 1 April 2013 and 22 April 2014, proceed with caution to ensure you obtain clarity as to whether the first hearing will indeed be deemed a CMC and hence a cost budget is required.