Lord Justice Jackson says the Exemption of his Reforms to Insolvency Proceedings is not Justified

Oct 1, 2015

Delivering the 2015 Mustill lecture earlier this month Lord Justice Jackson gave the address on why Insolvency Practitioners should not be exempt from his reforms to litigation costs, the so called “Jackson Reforms”. A link to the transcript of the lecture can be found here.

Background

Prior to April 2013 all After the Event Insurance and Conditional fee agreement uplift costs incurred by the claimant in litigation were recoverable as costs in addition to any payment for damages in a court case. Following a report by Lord Justice Jackson the regime was changed so that these additional costs were no to be paid in addition to the damages and normal court costs.

Insolvency litigation was exempted from this change.

The Lecture

Lord Justice Jackson was of the opinion that the recoverability exemption for Insolvency Practitioners should not continue and gave the following four reasons:
The recoverability regime was principally designed to assist individual claimants of modest means, in particular those who ceased to qualify for legal aid in April 2000. The advantages gained for insolvency litigation were a windfall.

Recoverability is an instrument of oppression, which is liable to crush defendants who have a good defence.

Recoverability drives up the overall costs of litigation.

It is perfectly possible to bring insolvency litigation without the benefit of recoverability.

The Government kicked the exemption into the long grass following lobbying by R3 and other insolvency bodies it remains to be seen how the government will react to both this and the comments of the Supreme Court in the case of Coventry v Lawrence ([2015] UKSC 50) ([2015] UKSC 50) as well as the continuing efforts of the insolvency world to keep the exemption.

R3 have issued their response to the lecture with some interesting comments.
https://www.r3.org.uk/index.cfm?page=1949&element=25145&refpage=1865

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