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Capped court costs pilot scheme to begin in January

Out-Law News | 19 Dec 2018 | 2:57 pm | 2 min. read

A pilot scheme capping parties' recoverable costs in the Business and Property Courts (BPCs) has been proposed to commence   in January, the Civil Procedure Rule Committee has indicated.

The two-year pilot, which will be subject to relevant approval and a practice direction, will apply to cases valued up to £250,000 and participation will be voluntary meaning both parties will have to agree to opt in. The awaited practice direction may include a provision to allow the court to bring the case within the capped costs scheme, if requested by a party. It will operate in the BPCs in Leeds and Manchester, and in the London Circuit Commercial Court.

The Civil Procedure Rules Committee told the Law Society Gazette to expect a new practice direction update incorporating the pilot, which will come into force on 14 January 2019. However, costs expert Keith Levene of Pinsent Masons, the law firm behind Out-Law.com, said that the announcement was "somewhat surprising" and, in the absence of a public pronouncement from the committee, raised a query in respect of the reported timetable.

"Little has been heard about this pilot during the course of 2018," he said. "For example, at a recent Association of Costs Lawyers conference, at which eminent costs counsel and other speakers presented, the pilot was not on the agenda. It is therefore somewhat surprising that it is still proposed to introduce it as soon as next month. Indeed, it remains to be seen whether this will definitely be included in the awaited practice direction and will go ahead, or will be further delayed until possibly later in 2019."

"The devil will be in the detail: for example, will the court, at a case management conference, be able to order that a claim be within the pilot scheme if not agreed by all the parties? In 2017, Lord Justice Jackson used the term 'fixed recoverable costs', whereas the term now appears to be 'capped' costs: does this mean that the very low recoverable costs per phase will be fixed, or up to capped figures?" he said.

The idea behind the pilot dates back to a report by former Court of Appeal judge Sir Rupert Jackson, the architect of the 2013 civil court costs reforms, published in mid-2017. In this report, Jackson recommended "finishing the job" of extending fixed recoverable costs to all cases on the 'fast track', rather than just to low value personal injury cases and certain other specified claims. 'Fast track' cases are those that are administratively simple, and which can be heard in a single day.

The cases to which fixed costs currently apply are set out in tables in the Civil Procedure Rules (CPRs). Where fixed costs are applicable, the unsuccessful party will only be liable for a specific, fixed amount of the successful party's costs, regardless of the actual costs incurred.

Jackson's report also contained details of, and draft possible rules for, the BPC capped costs pilot, which also incorporated streamlined procedures. He suggested that, should the pilot be successful, judges could then be permitted to order capped costs at their discretion on any suitable case in the BPC, or on the business and property lists of the county court.

Costs expert Keith Levene said that, should the pilot go ahead, it "will remain to be seen how much take-up by consent there will be by commercial parties".

"Some defendants may be more keen than claimants, as it may enable them to better control their costs risk," he said.

"The pilot is an attempt to limit 'recoverable' costs from an opponent and thereby enable parties to budget for any potential costs liability in claims to £250,000, but will not place any limitation on the costs liability to its own lawyers," he said.