Capped costs – the threat of which has hung over litigators for years – are getting closer to becoming reality in higher-value cases. Earlier this month, a two-year pilot began of a voluntary scheme limiting costs for cases up to £250,000 in selected business and property courts, with recoverable costs capped at £80,000. 

Now the High Court has flexed its muscles in restricting an appellant’s costs in a case heading to the Supreme Court. It is unlikely to be the last intervention of this kind. 

Mr Justice Arnold said the claimant, the trustee of a British Airways pension scheme in dispute with the airline over discretionary benefits, should pare around £200,000 from its costs estimate of £1.24m. The resulting figure would bring costs into line with those of the defendant, the judge seeing ‘no good reason’ why both parties should not be subject to the same constraints.

The court should ‘seize the nettle now so that everyone knows where they stand’, said the judge. ‘It is deeply alarming that the trustee should be proposing to spend some £1.24m on an appeal raising a single point of law with a hearing lasting only 1½ days,’ he added. ‘It is necessary for the court to intervene to ensure that the trustee’s costs are kept within some semblance of reasonableness.’ 

The judge had allowed the claimant to claim costs from the assets of the pension scheme for the appeal, but this was not ‘carte blanche’ to spend whatever it pleased. The £1.24m estimate, of which £444,000 had already been incurred, took into account the instruction of two QCs and a junior. 

The onset of capped costs may be interpreted as an admission that costs budgeting rules have failed.

In a survey of members of the Association of Costs Lawyers published last week, 23% said solicitors always went over budget and 53% reported that this sometimes happened.