Voluntary pilot of capped costs scheme for claims up to £250,000

A two-year pilot is to be introduced to test the use of a capped costs scheme in High Court claims valued at up to £250,000 which are proceeding in the London Mercantile Court or the Mercantile, Chancery or Technology and Construction (TCC) courts in Manchester and Leeds (excluding personal injury cases). The pilot was approved in principle at the May meeting of the Civil Procedure Rule Committee (CPRC), subject to a number of drafting points to be addressed in relation to the pilot rules. No start date has been announced.

The pilot arises out of Lord Justice Jackson’s ongoing review of fixed recoverable costs, which is due to report by the end of July. However, it was decided to pilot a scheme based on summary assessment with costs capping, rather than fixed amounts the successful party could recover, including because this maintains some part of the indemnity principle – ie the successful party cannot recover more than the costs actually incurred. The draft pilot procedure sets out a table of capped amounts for each stage of the action, as well as a proposed overall cap of £80,000 (plus VAT, court fees, enforcement costs, wasted costs, and costs awarded in respect of interim applications where a party has behaved unreasonably).

Entry into the pilot is to be voluntary in the sense that both sides have to agree in order for the case to be entered into the scheme. However, under the draft pilot procedure, parties can leave the scheme by agreement only prior to the case management conference (CMC). The pilot will involve a streamlined procedural code, based closely on the procedure that applies to the Shorter Trials Scheme. There will be a list of issues reviewed at the CMC, streamlined disclosure, limits on fact and expert evidence and a trial no more than two days in length (excluding reading). The trial will be fixed within eight months of the CMC, and the court will endeavour to hand down judgment within six weeks of trial.

The draft pilot procedure proposes special rules for Part 36 offers to settle, so that where a party has failed to beat an opponent's offer costs will remain subject to the capped amounts but (in respect of claimants' offers) subject to an uplift of 25%. In other words, in the draft procedure, the overall costs cap will be £100,000 where a claimant has made an effective Part 36 offer. The working group's note states that this allows the aims of Part 36 to be achieved but preserves the certainty of a fixed costs system.

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