The £10m increased threshold for costs budgeting is set to come into force from next month.

New civil procedure rules, which include raising the threshold value for cases exempted from costs budgeting, will apply from 22 April.

CPR 3.12 will change to remove the existing £2m exemption for what is described as a ‘much more workable’ limit.

The £10m threshold will apply unless the parties agree to a higher limit or the court orders otherwise. The new rules still require approval of the lord chancellor and parliament.

CPR 3.14, which deals with sanctions for failing to file a costs budget, is likely to remain unchanged.

The statement of truth will also be updated from 22 April to say: ‘This budget is a fair and accurate statement of incurred and estimated costs which it would be reasonable and proportionate for my client to incur in this litigation.’

Lord Dyson (pictured) and Lord Justice Richards, chair of the Civil Procedure Rules Committee tasked with introducing any change in the budgeting limit, set out their recommendations last month 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.

Sue Nash, founder of Litigation Costs Services, said: ‘The new exemption might just hit the spot for now. Clients will also welcome this. For litigators bemoaning their fate, the silver lining in the increasing predictability of potential costs recovery is that it will considerably aid business planning in terms of finance and resourcing.

‘The previous exemptions have, in my opinion, never sat with the principle of costs control espoused by the judiciary and adopted by the government. The anomaly whereby high-value clinical negligence and group litigation cases (where the costs can easily and considerably exceed £2m) are subject to mandatory costs budgeting whereas a commercial case with a value of £2.5m is not is inexplicable.

‘To say that costs budgeting in high-value commercial litigation is inimical to the interests of commercial clients has always seemed to me to be missing the intention behind this central plank of the Jackson reforms.' 

The Association of Costs Lawyers welcomed the move.

Chairman Murray Heining said: ‘We see a host of advantages. Knowing in advance, with a reasonable degree of certainty, as to final recoverable costs will allow clients to make an informed decision as to whether to proceed with the litigation. It should also assist the business and financial planning of their solicitors.

‘This in turn is likely to mean that more cases will settle without being fully litigated, and even when they do not, the settlement of the costs issues following the litigation is likely to be considerably shortened and, indeed, could be almost instantaneous (as happened in Slick Seatings Systems & Anor v Adams & Ors [2013] EWHC B8 (Mercantile)).'