The Future of Costs and Case Management?

Our Commercial Litigation experts provide a summary of the key points of the capped costs pilot scheme and whether it will work for you.

The capped costs pilot scheme was introduced on 14 January 2019 in the Leeds and Manchester Business and Property Courts and the London Circuit Commercial Court and will run for two years. The aim of the scheme is to streamline the procedures of the pilot courts, lower the costs of litigation, increase the certainty of costs exposure, and speed up the resolution of claims.

The pilot scheme only applies to cases with a monetary value of less than £250,000, require a trial of 1 or 2 days, do not include allegations of fraud or dishonesty and do not require extensive disclosure, witness evidence or numerous issues or parties. The scheme is completely voluntary but both sides need to opt in to it.

For those parties that opt in their recoverable costs for each stage of a court case are capped. The scheme is set out in Practice Direction 51W which provides a capped costs table setting out the maximum amount of costs for each stage. For example, pre-action costs are capped at £10,000, Particulars of Claim or Defence and counterclaim at £7,000, and Trial and Judgment at £20,000. The court will not order a party to pay total costs of more than £80,000.

There are limited exceptions to the £80,000 cap. Court fees, costs relating to the enforcement of any court order and wasted costs may be recoverable in addition to the total costs. The costs of an application may also be recoverable in addition to the total costs where the court deems the paying party has behaved unreasonably.

The focus of the capped costs pilot scheme has been on its ability to offer certainty in respect of a party’s costs exposure but it also comes with clear case management requirements. This is very much a less is more approach. Particulars of claim and defences with counterclaim are limited to 20 pages and must be accompanied by a bundle of core documents relevant to the pleaded issues. A CMC must be agreed and listed within 10 days of service of the claim form to be held within approximately 3 months of the claim being served.

At the CMC the court will consider whether to order disclosure, witness statements or expert evidence. Parties should not expect orders in favour of disclosure, expert evidence or even witness statements. The general rule in respect of disclosure and expert evidence is that no disclosure will be ordered (parties are expected to rely on the bundles of core documents) and expert evidence will not be permitted. The court can order that the statements of case stand as the evidence of a witness. If witness statements are ordere, parties may rely on only 2 witnesses and their witness statements cannot be more than 15 pages in length.

For its part the court will list the trial within eight months of the CMC and will endeavour to hand down judgment within 6 weeks of the conclusion of the trial.

In theory parties could have a resolution to their dispute approximately 12 months from the date of service of the claim.

Conclusion

If your claim or defence is relatively straightforward and you would appreciate a no fills approach to the litigation and certainty as to your potential costs exposure then this might be the pilot scheme for you.

If however, the success of your claim or defence depends on obtaining documents held by the other side, witness evidence or expert evidence then stay away.