Jackson backs cost capping for Mercantile Court pilot

Jackson: problems of costs budgeting have greatly diminished

Lord Justice Jackson has chosen cost capping, rather than fixed costs, as the way forward for a voluntary pilot he hopes to introduce in the Mercantile Court, as the judge continues to investigate the possible extension of fixed recoverable costs.

He said the pilot, for commercial cases worth up to £250,000, would follow the model used in the Intellectual Property Enterprise Court (IPEC). Jackson LJ said there would be a cap, “rather than a fixed sum”, on recoverable costs for each stage of the case and an overall cap on the total.

In a webinar for the New Law Journal, Jackson LJ said the pilot which he was promoting would run at the Mercantile Court in London and Manchester.

“If claimants wish to issue in this fixed or capped cost list, they can choose to do. If defendants object, the case will come out.

“The regime will restrict recoverable costs and contain an expedited procedure to reduce the burden of work on the lawyers for each party.”

Jackson LJ said the pilot would be limited to cases worth up to £250,000. “If a case is above that, even if both parties want to go into the pilot, they won’t be able to.

“I hope we will get a sense of how much the market wants this and useful feedback about how the pilot rules are working.”

Costs rules at the IPEC set out a maximum amount of costs which the court will award for each stage of a claim. Subject to limited exceptions, the court will not order a party to pay total costs of more than £50,000 on the final determination of a claim in relation to liability and no more than £25,000 on an inquiry as to damages or account of profits.

Jackson LJ emphasised that his pilot depended on approval from the Civil Procedure Rule Committee.

The judge said he was “extremely pleased” that the problems of costs budgeting had “greatly diminished”.

“Some practitioners and judges say that because it is working well, that will reduce the need for fixed costs. That is the argument being put to me.”

However, Jackson LJ said costs budgeting did not deal with the problem of costs already incurred or “historic” costs. “That is not an argument against costs management, but something does need to be done about incurred costs in these cases.”

He said he would consider this issue in the run-up to publication of his final report in July, along with the question of whether costs management could be “modified in some way” and the extent to which it reduced the need for fixed costs.

“I still believe that in appropriate cases we need fixed costs. Certainly there must be some fixed costs outside and above the fast track, but I will look very carefully at which cases are suited to fixed costs and which are not.”

Jackson LJ added that while with business cases there was for “some variant of fixed costs or capped costs” going a “reasonable way” up the scale in terms of size, personal injury and medical negligence had to be looked at “through a different lens”.

He first mentioned the idea of a voluntary pilot in a speech early last month.


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