Exception to Jackson reforms for claims by insolvent companies

The government has clarified which claims will benefit from the continued recoverability of CFA success fees and ATE insurance premiums, following its announcement in May last year that there would be a two-year delay to implementation of this aspect of the Jackson reforms for "insolvency proceedings" (see post). 

Until recently it was not clear whether the delay would apply only to proceedings brought by liquidators, administrators or trustees in bankruptcy under the provisions of the Insolvency Act 1986 (for example to set aside a transaction at an undervalue or a preference), or whether it would apply more broadly to claims brought by companies that have entered into liquidation or administration under the Act. The answer is that all of these categories of claim will benefit from the delay, as confirmed in the relevant statutory instrument made on 18 January.

The somewhat arbitrary result is that a defendant will be liable for these additional costs where a claim is brought against it by a company that happens to be in liquidation or administration - even if the liquidation or administration has nothing to do with the cause of action against the defendant - but not where the identical claim is brought by a solvent company. There is also the obvious question of what will happen when a claimant enters into liquidation or administration partway through the proceedings.

As previously announced by the government, there will also be exceptions for publication and privacy proceedings, pending implementation of Lord Justice Leveson's recommendation that costs protection should be extended to such claims, and claims for damages in respect of diffuse mesothelioma.