The costs budgeting regime is set to be extended to Rolls Building cases worth £10m or less, the Gazette can reveal.
The master of the rolls has recommended a new £10m threshold despite strong opposition from Commercial Court judges, who wanted to hold on to the current exemption from budgeting which applies to Commercial Court cases and to cases in the Chancery, Mercantile and Technology and Construction Courts worth more than £2m.
The exemption from costs budgeting rules for cases worth more than £10m will apply across all courts, but a discretion will still exist for judges to order budgeting in cases above the limit if they wish.
For cases below the threshold, costs budgeting will automatically apply unless the court has ordered otherwise in an individual case.
Lord Dyson and Lord Justice Richards, who is chair of the Civil Procedure Rules Committee tasked with introducing any change in the budgeting limit, set out their recommendations to the CPRC in a joint note.
Dyson said it would have been ‘unacceptable’ not to amend the current £2m threshold, which had been introduced as a ‘temporary fix’ and ‘sets too low a threshold for any general exclusion from costs management’.
The judge said that deleting the exemptions completely would have been the option that ‘accords best’ with the Jackson principles, and indeed this had the support of Jackson himself.
But he added: ‘We would have no hesitation in favouring [that option], were it not for the concerns expressed so strongly by so many [lawyers and commercial judges] that a requirement for costs budgeting would risk deflecting high-value cases away from London and the UK.
‘We share the doubts that members of the [CPRC] have voiced about those concerns, but we do not feel in a position to dismiss them out of hand.’
Dyson said this logic had therefore led him, together with Lord Justice Richards, to recommend increasing the current exemption, as a ‘pragmatic’ solution.
‘If the threshold is set sufficiently high, it can reasonably be said that the risk of litigation being conducted at disproportionate cost diminishes to an acceptable level. In our view, however, a threshold of £10m, rather than the figure of £5m suggested by some, is needed for that purpose.
‘The threshold should apply uniformly to all courts, not just to cases in the Rolls Building or the Mercantile Court.’
Dyson and Richards’ recommendations were presented to the CPRC in December, but papers relating to the meeting were not released until today, when they were seen by the Gazette’s sister publication Litigation Funding.
At the December meeting, Mr Justice Coulson, who chairs the subcommittee dealing with the issue, accepted the recommendations, which were also ‘generally’ accepted by the CPRC members.
A number of committee members were in favour of a £15m threshold, but it was agreed that £10m should be the starting point, ‘subject to a review of that figure’.
Earlier this month, CPRC member District Judge Lethem had hinted that the exemption threshold was set to rise, but did not say what the new limit would be.