A Pilot’s guide to fixed costs capping

With documents now published, following the Civil Procedure Rules Committee meeting on 5 May 2017, a firmer indication of fixed cost proposals has now been revealed.

The pilot is to be open to new cases in certain specialist civil courts in London, Manchester and Leeds; namely the London Mercantile Court and three courts in each of the Manchester District Registry and Leeds District Registry. The three courts being the Mercantile, TCC and Chancery Court.

Furthermore, the proposal is that the pilot will run for a period of two years, will be voluntary and will be monitored by university based academics.

Importantly, both parties must agree to take part in the pilot. This will not prevent a Claimant from issuing within the scheme, however, the case will not stay there in the event that the Defendant does not agree. In addition, it is proposed that this voluntary aspect should not entitle a party to an unfettered right to leave the scheme once entered. Consequently, one can expect to see some measures setting out certain circumstances when a party will be able to leave the pilot scheme.

In terms of qualifying criteria, the scheme is to be for cases in the High Court up to £250,000.00 in value. The real effect of the £250,000.00 limit of LJ Jackson’s mandate being slightly softened by the practical application that cases below £100,000.00 should initially proceed in the County Court. However, the water is somewhat muddied by proposed increases to the value threshold for County Court cases. This is an issue currently under consideration with an early indication from the working group that the pilot scheme may be made an exception to a threshold increase.

Notably, the proposed pilot scheme procedure sets out criteria which must be met within the scheme. Such as stipulating that it is intended for any cases in which the trial length does not go beyond two days (excluding reading time and judgment) and that the general rule is that expert evidence will not be permitted; although the procedure does provide that exceptions can be made from the general rule regarding expert evidence.

The proposal also puts forward its own streamlined procedural code which bears some striking similarities to the IPEC shorter trial scheme including a timeframe for a response at key stages of the litigation and a limitation on the length of statements of case.

In place of fixing a sum for costs, a proposed maximum for each part of the litigation has been put forward by the Civil Procedure Rule Committee as follows:

Pre-action – £10,000.00

Particulars of Claim – £7,000.00

Defence and counterclaim – £7,000.00

Reply and Defence to counterclaim – £6,000.00

Case Management Conference – £6,000.00

Disclosure – £6,000.00

Witness statements – £8,000.00

Expert witnesses – £10,000.00

Trial and judgment – £20,000.00

Settlement/negotiations/mediation – £10,000.00

 

Making or responding to an application – £3,000.00

Work done post-issue which is not otherwise covered by any of the stages above – £5,000.00

 

Whilst the figures provided are the proposed maximum amount of costs that will be awarded for each stage of the litigation, the proposals also extend to state that, except insofar as otherwise provided, the Court will not order a party to pay total costs of more than £80,000.00.

For clarity, the proposals state that the proposed caps exclude Court fees, costs relating to the enforcement of any order, wasted costs and VAT.

If these figures remain at the currently proposed level then we can expect to see concerns raised regarding their adequacy.

As stated by Jackson LJ, the intention of the pilot scheme is to promote certainty and access to justice. Consequently, with a greater degree of certainty to the maximum level of costs recoverable, it is not surprising that the proposals state that cost management in the form of budgeting will not apply to cases that proceed under the pilot scheme. In addition, the proposals provide for a summary assessment of costs at conclusion in place of detailed assessment.

Finally, consideration was also given regarding how to deal with Part 36 offers within the proposed capped regime in order to strike a balance between preserving the certainty of a capped regime whilst at the same time ensuring that a parties’ ability to open itself up to benefits under CPR 36 are not fettered. The resulting solution proposing that costs under CPR 36.17 (4) will be subject to an increase cap of 25% of what the original cap(s) would have been.

As to the shape that these proposals eventually take. Watch this space…

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