The work on extending fixed recoverable costs (FRC) is going to start with a pilot to test capping costs at £80,000 for claims up to £250,000 in a limited number of courts, it has emerged.
The voluntary pilot – which will see caps set for stages as well as the overall cap – will run for two years in the London Mercantile Court or the Mercantile, Chancery or Technology and Construction courts in Manchester and Leeds (excluding personal injury cases).
We reported in April that Jackson LJ was to start with costs capping, rather than fixing, and the pilot was approved in principle at the May meeting of the Civil Procedure Rule Committee (CPRC), papers from which have been published this week. It was to start soon after but was delayed because of the general election.
A paper before the committee said the working group that proposed the scheme opted for capped rather than fixed costs because “it maintains some part of the indemnity principle, since one can never recover costs which were not incurred, and it is the same as the successful system in Intellectual Property Enterprise Court”.
To encourage take-up, claimants will be able to issue in the scheme but the case will exit if defendants do not agree to it.
There will be a streamlined procedural code based closely on that for the shorter trial scheme. There will be a list of issues reviewed at the case management conference (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.
The cap for each stage will be: pre-action (£10,000), particulars of claim (£7,000), defence and counterclaim (£7,000), reply and defence to counterclaim (£6,000), CMC (£6,000), disclosure (£6,000), witness statements (£8,000), experts’ reports (£10,000), trial and judgment (£20,000), settlement/negotiations/mediation (£10,000), making or responding to an application (£3,000), work done post-issue which is not otherwise covered by any of the stages (£5,000).
To deal with claimant part 36 offers, the scheme will provide that costs will be assessed in the same way (i.e. indemnity basis) but subject to a higher cap – provisionally put at 25% – of what the cap(s) would have been.
“That allows the aims of part 36 to be achieved but preserves the certainty of a fixed costs system.”
The pilot will be exempt from the effect of changing the county court/High Court threshold, and will be monitored by academics.
Lord Justice Jackson is scheduled to deliver his final report at the end of next month.