News | General

Capped/fixed Costs Pilot Scheme

05 January 2018

Proposals have been put forward for a capped costs and fixed costs pilot scheme for claims up to a value of £250,000. Details of the scheme are contained in the recently published CPRC minutes.

The scheme is also intending to consider which of costs capping, costs budgeting or fixed costs is the best method for controlling costs overall. 

Entry to the pilot will be voluntary and both sides will need to agree to participation. It is intended to be similar to the Shorter Trial scheme supported by a costs capping regime. Caps are set for the various stages and there will be a maximum cap. 

Clause 2.28 states that ‘the general rule is that no disclosure will be ordered and the parties will be able to rely only on the documents contained in the bundles of core documents’. Disclosure was something highlighted by Jackson, LJ in his final report as a driver of high costs and so this is hardly surprising. 

At the meeting, questions were raised of Jackson, LJ who attended as to how this non-disclosure would operate in clinical negligence. Jackson LJ responded by advising that the intention was to promote certainty and access to justice, however, the application of this scheme to clinical negligence would promote neither of those and it was not therefore intended that it should apply to such claims.  It can only be hoped that the intended working party will deal with such issues as part of the setting up of an independent scheme for these claims.  It was noted that such non-disclosure would be less of an issue in other types of claims. 

The capped costs pilot is intended to run in the London Mercantile Court, the Mercantile Court at Leeds and Manchester, the TCC at Leeds and Manchester and the Chancery Division in the District Registries at Leeds and Manchester. A set of PD for the pilot and the way it will operate have been published. 

In terms of costs, budgeting will not apply to any case in the costs capping scheme. There will be a summary assessment of the costs of the party in whose favour any order for costs is made and CPR r 44.2(8), 44.7(1)(b) and Part 47 will not apply. 

The caps are set out in a table as follows: 

Work done in respect of:

Maximum amount of costs: 



Particulars of Claim


Defence and Counterclaim


Reply and Defence to Counterclaim


Case management conference




Witness Statements


Experts’ reports


Trial and judgment


Settlement negotiations/mediation


Making or responding to an application


Work done post-issue which is not otherwise covered above


Whilst these together add up to £98,000, the maximum that any party would be able to recover will be £80,000. Court fees, enforcement costs and wasted costs may be recovered in addition to this overall cap, however and VAT will also be added on to the overall sum allowed, if applicable. 

If a party acts unreasonably in relation to an application, then the court may summarily assess at the hearing. In those circumstances, any amount awarded will be in addition to the overall cap. 

Although Part 36 will apply to costs in the capped scheme, this is with certain qualifications. Where an offer is made but not accepted, costs will be allowed up to the date of the offer then unless it is unjust to do so, the claimant will receive the capped costs up to the date of the expiry of the relevant period and the defendant will get their costs on a capped basis from the expiry to the date of judgment. 

If an order is made in accordance with CPR r 36.17(4) (judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant’s Part 36 offer), the claimant will get: 

  • interest at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;
  • costs on the capped basis up to the expiry of the relevant period; costs on the indemnity basis following the expiry of the relevant period save that the maximum allowed under each cap shall be increased by 20% and the total shall not exceed £100,000;
  • an additional 10% of their damages or, if there is no monetary award, 10% of the amount awarded in costs.

Although, as we have observed, future fixed and capped costs regimes will deal with what happens when a Part 36 offer is beaten, the current rules provide no such clarity.

This lack of clarity has led to a number of inconsistent and conflicting decisions (see for examples: Solomon v Cromwell [2012] 1 WLR 1048, Ontulmus v Collett [2014] EWHC 4117, Broadhurst v Tan [2016] EWCA Civ 94, Sutherland v Khan (2016) (unreported), Ali v Sabre Insurance Company Ltd (2016) (unreported), and Hislop v Perde (2017) (unreported)).

Adding to the confusion, DJ Besford, who previously determined in Sutherland v Khan (one of the most relied on of these cases) that fixed costs should apply up to the date of the expiry of a Part 36 offer and indemnity costs should apply thereafter has now said in Whalley v Advantage Insurance (2017) (unreported) that Sutherland was ‘not supported from a detailed analysis of the rules and case law’ and could no longer stand.  It is quite extraordinary for a judge to admit that his previous decision was wrong, but as neither decision is binding, it is difficult to see how other courts will interpret this volta-face. 

It could be however, that as Jackson, LJ criticised Sutherland in his recent supplemental report that the appetite amongst judges to follow this decision may decline. However, since the current rules are silent as to what the position should be, it ought to be a matter for higher courts to determine what the position should be, even if this is not the same as future fixed costs regimes. 

Notwithstanding this, at the current time there is no High Court or Court of Appeal authority on the issue, leaving it very much in the air and to the discretion of the relevant judge on the relevant day. 

In a similar vein, the case of Lewin v Portsmouth, which dealt with whether the fixed fee in assessment could be exceeded where a Part 36 offer is beaten has, according to Professor Regan been appealed to the Court of Appeal. Whether this will provide any wider guidance on fixed costs regimes and fixed costs will have to be seen, but it can only be hoped that clarity will follow.