Sub-£2m cases “will be subject to costs management” amid criticism of big-case exemption

Rolls Building: all affected courts will not be costs managing big cases here

Cases before the Chancery Division, Technology and Construction Court (TCC), and Mercantile Courts that are worth less than £2m will be subject to costs management, it was confirmed yesterday.

However, the late decision to remove higher-value cases from automatic costs management has been strongly criticised by practitioners.

As reported on Litigation Futures yesterday, the changes being introduced to the CPR from 1 April will be amended so as to provide that costs management will not apply to such cases from those courts as the Chancellor of the High Court and President of the Queen’s Bench Division may direct.

This will be supported by a direction that costs management will not apply to cases where the sums in dispute exceed £2m, excluding interest and costs, except where the court so orders.

A judiciary spokesman confirmed to Litigation Futures that all cases worth less than £2m will be subject to costs management.

Though the given reason was to bring parity with Admiralty Court and Commercial Court cases, which were always going to be exempt, there appears to be no similar threshold for cases going through those courts.

There have been strong rumours of arguments at the top of the judiciary about the application of costs management, and this decision is being seen as watering it down – especially as it was piloted in the TCC and Mercantile Courts.

Rani Mina, a partner at City firm Mayer Brown, said: “It is extraordinary that the judiciary has waited until this late stage to announce a major shift in policy on costs management.  Many law firms will have spent much time and effort getting ready for implementation of the new rules on 1 April. Whilst that effort will not be wasted, the work that has been done is tailored to the new rules and may well have been approached somewhat differently.

“Many will now be wondering whether the judiciary remains committed to full implementation of the other significant reforms due to take effect from 1 April.”

There were many complaints on Twitter yesterday as the news came out. Leading e-disclosure expert Chris Dale said he saw the move as judges wriggling out of their duties, while Gerard McDermott QC said it was difficult to see the rationale for it.

Mr McDermott also questioned the implication that personal injury (PI) claimants were less important – a £6m PI claim will be “cost capped” in the Queen’s Bench Division, but not a £2.5m claim for property damage in the TCC – and voiced concern that “another effect of no controls in commercial cases may be to incline many talented lawyers away from PI”.

Leading costs expert Kerry Underwood was highly critical, asking: “In what other walk of life would you project manage only smaller plans? Rich exempt again.”