Specialist court exemptions from mandatory costs management may be on way out already

Dyson: ordered rapid reconsideration of exception

The exemption for mandatory costs management for the specialist civil courts could be shortlived under proposals being considered by the Civil Procedure Rule Committee (CPRC), it has emerged.

The CPRC has set up a sub-committee which is also considering whether to disapply mandatory costs management for part 8 claims and judicial review.

It is chaired by Mr Justice Coulson, who has already handed down two significant costs management rulings – in Elvanite and Murray.

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, 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 consultation paper just issued by the sub-committee said “there was no doubt that this was something of an emergency solution”. It continued that the Master of the Rolls, Lord Dyson, and deputy head of civil justice, Lord Justice Richards, were “anxious” for the whole issue to be reconsidered as soon as possible, leading to the creation of the sub-committee.

The other members are Mr Justice Sales, District Judge Lethem, barrister Edward Pepperall QC and solicitor Qasim Nawaz, while Mr Justice Hamblen has been co-opted to represent the Commercial and Mercantile Courts.

“The preliminary view of the majority of the sub-committee is that the Admiralty and Commercial Courts’ blanket exception… may be unnecessary and inappropriate,” the consultation said.

“The costs management regime is an important new tool in the attempts to keep the costs of civil litigation within reasonable bounds. The obligation to produce costs budgets (subject to the court’s discretion to direct otherwise) is an important part of that regime and there is no obvious reason why it should not apply to all specialist civil courts.”

The paper said it would still be open to the court to exempt a specific case if there were good reason. “That may be a further reason why the blanket exception is inappropriate.”

However, stressing that these are preliminary views only, the committee said it wanted to hear any reasons to justify maintaining the exception. “Of particular interest would be the effect on the willingness of commercial organisations in international transactions to agree upon the jurisdiction of the courts of England and Wales.”

Depending on the outcome of this decision, the sub-committee will also consider whether a qualified exception is the appropriate way to keep a level playing field between courts. And if one is to remain for the specialist courts, the consultation asks whether framing it by reference to financial value, as now, is the best approach, given the problems this can cause in some cases, such as where injunctive rather than financial remedies are sought.

Some part 8 claims may not attract the obligation to produce costs budgets because there is no case management conference, but the sub-committee said it considers “this rather indirect and non-transparent way of regulating the applicability or otherwise of the obligation to produce a costs budget to be unsatisfactory”. It may also fail to cover all cases which ought to be exempt.

The sub-committee’s preliminary view is that costs management is of “much less relevance to the short-form procedure envisaged in part 8 and in judicial review. Accordingly it may be appropriate for the mandatory costs management regime to be dis-applied in relation to all part 8 claims (including judicial review)”.

The consultation – which also invites submissions on any other areas of unforeseen difficulties arising out of costs management – closes on 20 July, ahead of which the sub-committee is holding two consultation meetings at the Rolls Building in London. The sub-committee expects to report to the CPRC in October.