Jackson Reform – changes to costs management

24 April 2014

The majority of The Jackson Reforms in relation to litigation costs in England are set to be implemented on 1st April 2013.

Under The Jackson Reforms there will be some crucial changes to the elements of costs management.  From April, parties in multi track cases will have to prepare a detailed cost budget clearly indentifying the anticipated costs for the proceedings before the first Case Management Conference.  If any party wishes to depart from their budget they will require the leave of the Court. 

At the end of the proceedings the costs which are recoverable by the winning party will be assessed in accordance with the budget approved by the Court.

On 21st February 2013, the president of the Queens Bench Division and the Chancellor of the High Court amended the legislation to confirm that the budgeting rules would not apply to cases where the sums in dispute exceed £2,000,000 excluding interest and costs.

However, on 28th January 2013, the Court of Appeal ruled in the case of Henry v. NGN that the successful party could recover the sum of £300,000 being the amount by which the approved budget of the Court had overrun.  The Court of Appeal held that there was good reason to depart from the budget and allowed the successful party to recover the sum.  Many commentators have argued that this undermines The Jackson Reforms and gives litigants the go ahead to simply ignore the new rules.

Whilst we will have to wait and see what impact The Jackson Reforms will have on the area of cost management in commercial litigation, it is evident that litigants and clients will have to carefully consider costs at an early stage or risk a shortfall in recovery at the end of the litigation.

The above article is not legal advice, it is intended to provide information of general interest only.  Should you require any information in relation to the issues raised in this article please contact Christopher Ahearne on 01245 228130 or email ahearnec@gepp.co.uk