26 February 2014Print This Post

Rule committee set to introduce blanket £10m costs management exemption

Dyson: doing nothing is not an option

The Civil Procedure Rule Committee (CPRC) looks set to introduce an exemption from costs management for all civil cases that are worth in excess of £10m – even though Sir Rupert Jackson himself is opposed to any exceptions.

Newly released papers from the 6 December meeting of the CPRC reveal that it fell into line with the joint recommendation of the Master of the Rolls, Lord Dyson, and the deputy head of civil justice, Lord Justice Richards.

In a note put to the committee, the pair said the current £2m threshold was a temporary fix. “Although it has helped to reduce the problem of forum shopping, it does not provide a uniform regime and in our view it sets too low a threshold for any general exclusion to costs management”.

The options of doing nothing – “notwithstanding the support for it among consultees” – or allowing the parties to opt out, were “unacceptable”, they said.

Allowing no exception accorded best with Jackson principles “and it now has the support of Sir Rupert Jackson himself”, the judges said. “We would have no hesitation in favouring it, were it not for the concerns expressed so strongly by so many consultees that a requirement for costs budgeting would risk deflecting high-value cases away from London and the UK.

“We share the doubts that members of the committee have voiced about these concerns, but we do not feel in a position to dismiss them out of hand.”

That left the “pragmatic” fall-back position of applying costs management to all cases across all courts, except those where the amount in dispute exceeds £10m, unless the court ordered otherwise. There would be a discretion to apply costs management to cases above that level and there may be a ‘certification of value’ that would cover the likes of intellectual property claims where there may be no monetary claim but the amount at stake may be very large.

The existing exception for proceedings subject to fixed or scale costs would continue, while part 8 claims would also be excluded.

“If the threshold is set sufficiently high, it can reasonably be said that the risk of litigation being conducted at disproportionate cost diminishes to an acceptable level,” the note said. “In our view, however, a threshold of £10m, rather than the figure of £5m suggested by some, is needed for that purpose.”

The position was supported by Mr Justice Coulson, who chairs the CPRC sub-committee charged with looking at the exemption. The minutes of the December meeting said he thought it important to note that judges in the Rolls Building responsible for costs budgeting would welcome this option, particularly in light of judicial resources available.

The minutes said solicitor member Qasim Nawaz maintained that budgeting “should be applied across all jurisdictions, that lack of resources was not a compelling argument for limiting it, and that any monetary value set would be of an artificial nature.

Nonetheless, the committee was largely in favour of Lord Dyson and Lord Justice Richards’ solution – although a number of members were in favour of a £15m threshold. “It was agreed that £10m should be the starting point, subject to review of that figure.”

Issues then discussed by the CPRC centred on how the threshold should be expressed to ensure that it was clear to the profession how the limit would be applied, without the necessity of coming to court for direction; framing the rules to deter forum shopping; setting out explicitly the case management power of the court to order costs budgeting on a discretionary basis by way of a practice direction; identifying types of claims, such as intellectual property cases which may require particular rules; clarification of the trigger points for filing a costs budget; and bringing more flexibility to Precedent H to deal with under- and over-spend in separate categories.

The sub-committee was charged with drafting rules and a practice direction to guide the exercise of discretion and to accommodate concerns expressed about those cases that fall into the £10m-£15m range.

Mr Justice Ramsey, the judge in charge of Jackson implementation, was added to the sub-committee for this task, and a first draft was due to be presented at this month’s CPRC meeting.

By Neil Rose

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