7 February 2014Print This Post

Rule committee member predicts big increase in level of costs management exemption

Rolls Building: commercial litigation exemption

A member of the Civil Procedure Rule Committee (CPRC) today gave the strongest hint yet that the £2m costs management exemption is to go up substantially.

District Judge Chris Lethem – who was responsible for training the judiciary on costs management – said that, if he were a betting man, he would put money on the £2m figure being replaced by a “considerably higher” one.

He was speaking at a conference in London organised by the Association of Costs Lawyers, in association with 4 New Square.

The Jackson report recommended that mandatory costs management should not apply to the Commercial and Admiralty Courts. Shortly before this came into force on 1 April 2013, it was controversially extended to cases in the Technology and Construction Court, Chancery Division and Mercantile Courts worth more than £2m so as to reduce the risk of forum shopping.

A review of this by a sub-committee of the CPRC was launched last June in response to arguments that these were the cases that needed costs management the most.

Last week Mr Justice Ramsey – the judge in charge of Jackson implementation – confirmed that rules are now being drafted, and told Litigation Futures that they would be included in the April update. But he would not indicate in which direction they would go.

In a speech on costs management, DJ Lethem said that ‘double counting’ is probably the most common error he has seen in the preparation of budgets.

Giving the example of £40,000 spent on the preparation of witness statements prior to the issue of the case, he said it should be recorded in the ‘Witness statements (incurred costs)’ column of Precedent H, and not in the pre-action costs phase or – as often happens – in both columns.

“This is important because the court needs to know what costs have been incurred in connection with each phase… If all the pre-action costs are lumped together, the judge cannot decide whether a particular phase is proportionate because we do not know what the phase includes.”

By Neil Rose

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One Response to “Rule committee member predicts big increase in level of costs management exemption”

  1. As well as the “double counting” issue there is concern about the considerable costs being incurred before the cost budgeting hearing i.e. frontloading. Ideally there would be a change to the pre-action protocol to limit the amount of costs allowed before the cost budget stage. The proposed new UTBMS code set will make it easier to categorise such pre-action costs

  2. Bryan King on February 8th, 2014 at 10:59 am

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