Mercantile courts to trial fixed costs from later this year

A draft of the scheme, which is being proposed for cases up to £250,000 in value, will be put to the CPRC in time for its June meeting, according to recently-published minutes from the April meeting. The pilot, which is expected to last for two years, will take place in the mercantile division of the High Court in London and Manchester and in the other two specialist costs in Manchester.

The mercantile court is the High Court division responsible for commercial and business disputes.

Fixed costs currently apply to personal injury claims below £25,000, along with certain other claims. Where fixed costs apply, the unsuccessful party will only be liable for a specific amount of costs which are fixed, regardless of the actual costs incurred by the successful party. Fixed costs are set out in tables in the Civil Procedure Rules (CPRs).

Lord Justice Jackson, the architect of the civil court reforms which came into force on 1 April 2013, is currently reviewing the use of fixed recoverable costs in civil proceedings. His final report, which is due by the end of July 2017, is expected to contain proposals for extending the existing civil fixed recoverable costs framework to more types and values of litigation.

In previous speeches, Jackson has called for fixed costs to be applied to all claims up to the value of £250,000. However, some in the legal profession including trade bodies the Law Society and the Bar Association have warned that applying fixed costs to more complex claims below this threshold could restrict access to justice.

In a recent interview as part of a New Law Journal webinar, Jackson said that the pilot was likely to be modelled on the system used in the Intellectual Property Enterprise Court. Costs in these cases are capped on a sliding scale rather than by reference to a fixed sum, while an overall cap on fixed recoverable costs applies on top.

The proposed scheme would be entirely voluntary, he said.

"If claimants wish to issue in this fixed costs or capped costs list they can do so," he said. "If defendants object, the case will come out. If defendants are content then, with the agreement of all parties, the litigation will proceed under this regime which will restrict recoverable costs and which will contain an expedited procedure to reduce the burden of work on the lawyers for each party."

The pilot would give the legal profession "a sense of how much the market wants this and useful feedback about how the pilot rules are working", he said.

Legal costs expert Keith Levene of Pinsent Masons, the law firm behind Out-Law.com, said that the comments "evidence the certainty that fixed 'recoverable' costs will be extended to commercial claims, potentially with a claim value of up to £250,000."

"This is part of the ongoing process of trying to facilitate access to justice for individuals and SMEs, and make costs proportionate to the value of a claim in relatively low value commercial disputes," he said.

"There is, I believe, little doubt that the proposed pilot scheme will be implemented in late 2017 or 2018, and that as will most court pilot schemes will then be embodied in the CPRs," he said.