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Court costs capped at £80,000 under voluntary pilot in England

Court costs will be capped at £80,000 should parties opt into a pilot that gets underway in the business and property courts (BPCs) in England next week, the Ministry of Justice (MoJ) has confirmed.

Practice direction 51W, which gives effect to the two-year pilot, has now been published. The pilot begins on 14 January 2019. It is available to cases valued up to £250,000 in the Leeds and Manchester BPCs and in the London Circuit Commercial Court where the trial will not exceed two days. Cases involving allegations of fraud or dishonesty; which are likely to require extensive disclosure or reliance on extensive witnesses or expert evidence; or which involve numerous issues and numerous parties; are excluded from the pilot.

The practice direction also confirms that the pilot will be completely voluntary, meaning that both parties will be required to opt in, among other outstanding matters. It therefore remains to be seen the extent to which it will be used, according to legal costs expert Keith Levene of Pinsent Masons, the law firm behind Out-Law.com.

"I suspect very few claimants will be keen to limit their recoverable costs by entering into the voluntary pilot scheme, whereas defendants may take the opposite approach," he said. "Once the pilot scheme applies, even the benefits of making a part 36 offer to settle are limited."

"If the court suggests the pilot scheme and then either party objects, so the case has to proceed under the Civil Procedure Rules (CPR), it is likely that in exercising court costs management, the court will set costs budgets by phase and overall with one eye on the very restrictive table for recoverable costs that would have applied if the case was under the pilot scheme," he said.

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. The cap does not apply to or affect the liability of the unsuccessful party for its own legal costs.

The practice direction confirms an overall cost cap of £80,000, plus court fees and VAT if applicable. Further caps apply at each stage as set out in the practice direction. They include £10,000 at pre-action stage; £6,000 at disclosure stage; and £20,000 at the trial and judgment stage.

The pilot is designed to streamline court procedure, lower the costs of litigation, increase certainty about parties' exposure to costs and speed up the resolution of claims, according to the practice direction.

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