Written by Dorothy McMahon
With the support of the Ministry of Justice, the Master of the Rolls Sir Anthony Clarke asked Lord Justice Jackson to review our civil costs procedure. The rules governing the costs of civil litigation were considered and recommendations made in order to promote access to justice at proportionate cost. This review began in January 2009 and the findings were presented in January 2010. The reforms were finally implemented as part of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 in April 2013. New costs management rules were introduced on 1 April 2013 (Civil Procedure Rules 3.12 and 3.18).
There is a new overriding objective (CPR1.1) which requires courts to deal with cases not only justly, but at proportionate cost, bearing in mind the value, complexity and importance of the case. For the first time, the courts of England & Wales will not allow litigation to be pursued at any cost. The general rule that the winner pays the loser’s costs has changed and the loser now pays costs in accordance with what the court deems recoverable. The judge will only agree figures that are proportionate. If parties go above the budget, they do so at their own risk and the excess will not be recoverable.
The new rules apply to multi-track cases but do not currently apply to cases in the Admiralty and Commercial Courts, some Chancery Division cases and some Technology and Construction Court and Mercantile Court cases.
All parties are required to file and serve a costs budget on a “Form H”. If this form is not filed and served, that party will only be able to recover court fees. In the case of Mitchell v Newsgroup Newspapers Ltd  EWHC 2179 (QB), Master McCloud limited the claimant’s costs budget to court fees only as a sanction for failure to exchange and file a budget within the time specified. (This judgment was upheld on appeal on 27 November.)
For claims of £25,000 and under, only the first page of form H is required to be filed and served. It is notable that only 1% of the budgeted costs are allowed for setting the budget. The budget can be seen as a costs certificate without a detailed assessment.
In relation to funding arrangements entered into after 1 April 2013, success fees and ‘after the event’ insurance premiums cannot be recovered from the paying party but must be borne by the client.
Form H and Related Issues
Form H requires parties to set out in detail an accurate costs estimate for each stage of the litigation. In order to be able to complete Form H, solicitors will need to be prepared for trial prior to issuing a claim
- They will need to understand the likely volume of disclosure documents, including those electronically stored. All documents will need to be reviewed in detail prior to issuing a claim.
- The identities and number of witnesses need to be decided as does the scope of their evidence so that costs can be assigned to the drafting of their statements, and the length of time likely to be needed in their cross-examination and re-examination at trial.
- As to expert witnesses, it is often difficult at the initial stage to be sure of the right type of expert, let alone locating the best individual and obtaining an accurate quotation. If it comes to light once proceedings are underway that an additional expert report is needed, it will be necessary to make an application to seek to amend the budget.
- At the first case management conference (at which the budget will be dealt with), it may be that the judge considers each section’s estimate reasonable in isolation but that the overall total is disproportionate to the value of the claim. It is possible in this instance for a percentage reduction to the entire budget to be made.
- If, as the case proceeds, one section is under budget, it will not be possible to transfer the surplus, for example, from disclosure to witness statements.
- If it becomes obvious that the budget is being exceeded, it will be necessary to make an application and get a court date as soon as possible to adjust the budget.
Although at the time of writing, six months have passed since the reforms were introduced, lessons are still being learnt as experience of the new regime beds in.
For more information on the Jackson reforms or costs generally, please contact a member of the Litigation team.
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