Litigation Costs and ADR.

As most are now aware, funding arrangements and the costs landscape generally in litigation, shifted significantly on 1 April.

To name but a couple of changes, Success Fees and ATE insurance premiums became irrecoverable from an opponent and costs budgeting was introduced – though subsequently limited in construction disputes to cases with a value less than £2m.

Whilst the irrecoverability of expenses is irritating, it is a problem which can be worked around in consultation with third party funders and your lawyers. As litigation lawyers specialising in construction disputes, we consider the biggest problem with the changes to be costs budgeting.

The idea behind budgeting is sensible; you set a budget from the outset and stick to it or don’t recover your overspend. The problem, particularly with construction disputes, is that litigation rarely runs as anybody expects it to from the start – all too often is that forgotten box of files found whilst a contractor is carrying out disclosure or the expert offers a fresh perspective or any number of other unforeseen things happens.

In these circumstances, one is expected to return to court and plead for an amendment to the budget to be made. More concerning is what happens if you do not apply for amendments to be made to your budget or if you fail to file a budget or even simply file it with the court late.

The recent decision in Andrew Mitchell v News Group Newspapers, where Mr Mitchell was limited to the recovery of his court fees following his failure to file a costs budget on time, illustrates the perils clearly.

What will all of this mean for construction disputes going forward? It will likely mean that our non-contentious colleagues will be sharpening up their arbitration and adjudication clauses and litigation within the construction industry will become yet rarer still.

What will this mean for anybody unlucky enough to find themselves in the midst of a construction dispute? It might mean that you are forced to take the broad brush approach and sacrifice quality for speed with Adjudication or it might mean you are forced to Arbitration where your routes of appeal are limited.

What is clear is that the corridors of the Technology & Construction Court will become even quieter than we have already become accustomed to.

If you have any queries in respect of any construction dispute, You can contact Ben Harrison at Milners on 0113 245 0852.

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