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Higher value commercial court cases will not be brought into costs regime retrospectively, says rule committee

Out-Law News | 17 Apr 2014 | 8:02 am | 2 min. read

Higher value cases raised in the commercial court will not be brought into the civil court costs regime retrospectively when the regime is extended to catch claims worth up to £10 million next week, the Civil Procedure Rules Committee (CPRC) has said.

In a statement, the CPRC said that industry concerns that the new rules could apply retrospectively in some circumstances were unfounded. "Transitional provisions" would ensure that the current version of the Civil Procedure Rules (CPR) would govern proceedings commenced before 22 April 2014, it said.

"The argument advanced is that the transitional provisions will preserve the current regime only in respect of proceedings to which the current version of [the rule] applied; but the current version of the rule does not apply to cases in the Admiralty and Commercial Courts, etc.; such cases will therefore be governed by the amended version of the rules; but if they were commenced before 22 April 2014 they will not benefit from the exceptions in that rule because the exceptions are expressed to apply only to proceedings commenced on or after 22 April 2014," the CPRC said in its statement.

"The current version of [the rule], on its proper construction, applies to all proceedings. It lays down a prima facie code that certain proceedings are to be subject to the costs budgeting regime whilst other proceedings are not, but it gives the court the power to bring within the regime a case that is prima facie excluded and to take out of the regime a case that is prima facie included. Thus, the fact that the rule provides that [the costs regime does not] apply to certain proceedings unless the court otherwise orders does not mean that the rule itself does not apply to those proceedings: it is because the rule applies to them that the court has the power to order that they should be subject to costs budgeting," it said.

Cases where more than £2 million is at stake and those heard in certain specialist courts were originally excluded from the new costs management regime, which came into force in April 2013. However, from 22 April 2014, the rules will apply to all Part 7 multi-track claims unless that claim is valued at £10m or more. In other types of case, courts will have the discretion to implement costs management and parties will be able to apply for costs management if it is deemed appropriate under the circumstances of the individual case.

The costs management regime requires parties in applicable civil court cases to prepare and exchange costs budgets for agreement by the court. Parties that do not file a budget, or do not do so in time, have been heavily penalised by judges. Amendments can be submitted to an approved budget at any time but will only be approved at the discretion of the court; and costs recoverable by the winning party will be linked to the approved costs budget.

Legal costs expert Keith Levene of Pinsent Masons, the law firm behind Out-Law.com, said that the CPRC's statement "clarified a point" for those high value disputes likely to be affected. However, he said that questions remained over how consistent commercial court judges, who have not to date been subject to costs management rules, would be when implementing the new regime.

"The commercial court was not part of the original costs management pilot scheme, and has been exempted ever since the changes to the CPR took effect," he said. "The court should engage under the new rules once they take effect next week, but it remains to be seen how proactive it will be given that it has not been involved in the costs management regime to date."

"However the commercial court decides to engage with the new regime, it is to be hoped that it judges adopt a consistent policy to provide certainty to those involved in higher value commercial cases," he said.