January 2019 looks like being a big month in the evolution of commercial litigation. Not only does it see the inception of the new pilot scheme for disclosure in the Business and Property Courts (BPCs) but, somewhat lower on the radar but perhaps potentially with even greater ramifications, January sees the introduction of a capped costs pilot scheme in certain of the BPCs.
The scheme has taken a while to come into being. It derives from Sir Rupert Jackson’s costs review, published in 2017, which recommended the roll-out of fixed costs for civil cases. During the writing of his report, Jackson LJ formed a working party to consider writing the rules for a capped costs scheme. Here I declare an interest (of sorts), as I was one of the three solicitor members of that working party. The draft rules received the immediate approval of the Civil Procedure Rule Committee but has since stalled…until now.
The capped costs pilot scheme will apply to cases valued up to £250,000 proceeding in the BPCs in Leeds and Manchester and in the London Circuit Commercial Court. Significantly, the scheme will be voluntary, requiring the agreement of both parties before it applies.
Assuming that the Practice Direction introducing the scheme follows the draft rules (as seems highly likely), those cases proceeding within the pilot scheme will follow streamlined procedures, involving limited disclosure and witness statements and, perhaps most attractively to those who might be tempted to utilise the scheme, avoiding costs management; instead, recoverable costs will be capped, most likely at a figure at around £80,000.
Jackson LJ recommended that if the pilot is successful then such a regime should be made available at the judge’s discretion for any suitable case in the BPCs. Jackson LJ has long been a proponent of a fixed costs regime, believing that it would provide greater access to justice to small and medium-sized businesses. His belief is informed by his view that the biggest fear for such businesses is the adverse costs for which they would be liable if unsuccessful.
Whether the take-up of the scheme reflects Jackson LJ’s view remains to be seen. If the scheme is popular, this may well pave the way for a permanent, more widespread fixed costs or capped costs regime. If it isn’t popular, then this may suggest that concerns as to the level of adverse costs is not at the forefront of litigants’ minds.