Who will bid more than £10 million?

By | 5th March 2014

Some time way back last year, there was dissatisfaction expressed in certain quarters that a two-tier system was evolving in relation to the cases which were to be the subject of the cost budgeting rules introduced as part of the Jackson Big Bang reforms.

Put simply, while the “smaller” cases were to be subject to the rules requiring the parties to submit a properly costed budget for each case on pain of sanctions in accordance with Civil Procedure Rules 3.12-3.18, cases which involved more than £2m were to be exempt.

It was rather as if a builder was required to submit a fully costed schedule of works for constructing something apparently straightforward like a conservatory extension but the same builder was exempt from submitting any detailed costings for the construction of a mansion at a cost in excess of £2m.

It did not seem to make sense and there was a certain amount of grumbling that cases in the Commercial Court and Admiralty Court were to be exempt from the rules affecting ordinary mortals in other courts such as the Chancery Division and the TCC.

The Civil Procedure Rules Committee (CPRC) has conducted a review and has now proposed that the £2m limit below which costs budgets are not required be raised to £10m. Originally it had been proposed that the limit should be £15m but Lord Dyson MR and Lord Justice Richards have decided that £10m represents a good starting point subject to review.

The argument rolls on with some saying that the cost budgeting rules should apply to all cases because the central driver for the Jackson reforms was to counter the ever increasing rise in the cost of litigation. Others have argued that any monetary limit would be arbitrary and that people will be put off litigating in the UK if the Jackson regime is to apply to all cases.

Recent cases have highlighted the problem with Andrew Mitchell MP being restricted to costs of £2000 on account of the failure of his solicitors to file a budget on time and a really huge bill for indemnity costs being awarded against Sebastian Holdings in a case against Deutsche Bank.

Resolution is not yet in sight but I feel an amendment to existing rules may be imminent. You can read more about this in The Lawyer at http://bit.ly/Nx18Je