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Time to finish unfinished business?

Read our update on Lord Justice Jackson’s ‘Review of Civil Litigation Costs: Supplemental Report Fixed Recoverable Costs’.

In 2009, Lord Justice Jackson delivered his First Review of Civil Litigation Costs. Many of the recommendations in the report were implemented in April 2013 when the Legal Aid, Sentencing and Punishment of Offenders Act 2012 came into force. Since then, Lord Justice Jackson has written and lectured on the ‘unfinished’ aspects of his original review. These largely centre around the horizontal extension of fixed recoverable costs (‘FRC’) to other types of claim or personal injury types, and a vertical extension above £25,000. In November 2016, the Lord Chief Justice and the Master of the Rolls commissioned Lord Justice Jackson to carry out a review to further consider the issue of FRC and the outcome of this has now been published.

The previous Lord Chancellor had indicated that Lord Justice Jackson’s proposals would be subject to further consultation, which means that the implementation of any of the reform may be a little down the line (perhaps one to two years). The key recommendations are:

FRC to be extended to all fast track claims

  • Band 1: RTA non-personal injury, defended debt cases.
  • Band 2: RTA personal injury (within Protocol), holiday sickness claims.
  • Band 3: RTA personal injury (outside Protocol), EL, PL, tracked possession claims, housing disrepair, other money claims.
  • Band 4: ELD claims (other than NIHL), any particularly complex tracked possession claims or housing disrepair claims, property disputes, professional negligence claims and other claims at the top end of the fast track.

There would be a discretion to move claims between the bands having regard to the specifics of a case, although this should be used infrequently. The costs of any preliminary issues trials to be recovered in addition. Interim application costs would remain fixed, slightly modified for category four cases. An escape clause would continue to exist for applications to secure costs in excess of FRC if there were exceptional circumstances.                  

The trigger points for the cost stages mirror the current FRC stages for RTA, EL and PL claims. The FRC will be calculated as an element of fixed costs and a percentage of damages. There would be little ring fencing for counsel’s fee, save in category four claims or noise induced hearing loss claims (‘NIHL’). Following a Civil Justice Council Working Group, a mediated agreement has been reached and if accepted, NIHL fast track claims will not be within the scope of the FRC proposals.

The level of the fixed aspect of FRC will be reviewed every three years. It is envisaged that the percentage of damages will remain static as this already inflates over time.

Amendment of the Broadhurst point

Following the Court of Appeal decision in Broadhurst v Tan, a claimant who obtains a judgment for equal or more than their own Part 36 is awarded costs on the indemnity basis following the expiry of the relevant period. This occurs even if the case is otherwise subject to FRC so that costs are payable on both a FRC and hourly rate basis.

Lord Justice Jackson proposes removing the entitlement to indemnity costs. Instead in such a scenario, a claimant would be awarded a percentage up lift on the FRC costs, mooted at 30% or 40%.

Introduction of a new ‘intermediate track’ for money claims £25,000 - £100,000 with a FRC regime (excluding mesothelioma or other asbestos related lung disease) 

The procedure for cases on this track will be streamlined. The track will be subject to FRC and will cover claims of ‘modest’ complexity that have previously been considered as low value multi track claims. Generally, cases where the trial would be less than three days, with no more than two experts for each party giving oral evidence and with no wider factors such as reputational issues, will be considered appropriate for the new track.

Cases will be assigned to one of four bands:

General rules for bands in personal injury cases

  • Band 1: Straightforward cases, where only one issue (such as quantum) is in dispute.
  • Band 2 and 3: Cases where both liability and quantum are in dispute will generally go into Band 2 or Band 3.
  • Band 4: Cases where there are serious issues on breach, causation and quantum (but which still fall within the intermediate track).

General rules for bands in non-personal injury cases

  • Band 1: Straightforward cases, where only one issue is in dispute (e.g. proving a debt).
  • Band 2 and 3: Most intermediate track cases.
  • Band 4: Complex cases falling within the intermediate track.

A new practice direction will include specific guidance on assignment to bands. There will be some ring fencing of fees for counsel. The level of FRC will be reviewed every three years.

A working party to consider FRC and a bespoke process for clinical negligence cases up to £25,000 

Clinical negligence claims are usually multi track claims and as such are not caught by Lord Justice Jackson’s proposals. Lord Justice Jackson recommends that the Civil Justice Council in conjunction with the Department of Health create a working party to develop a scheme for FRC and a specific process for clinical negligence cases up to £25,000.

Pilot of capped recoverable costs for business and property cases with a value up to £250,000 

This type of claim (including business, property, financial and probate disputes and professional negligence claims) is currently not covered by qualified one way cost shifting, but all parties have an interest in controlling costs in the ‘lower value’ claims under £250,000. A voluntary costs capping pilot will run for two years in order to assess if there is demand for such a regime. Draft rules have already been written.

Costs budgeting introduced, at the discretion of the judge in ‘heavy’ judicial review claims

The costs in judicial review claims are considered by Lord Justice Jackson to be too variable to be the subject of FRC. A simpler form of Precedent H will be developed for cost budgeting in ‘heavy’ judicial review claims, at the discretion of the Court.

Further amendments should be considered once the new reform has bedded in

Once the new reforms have bedded in, further consideration should be given to the extension of the intermediate track in terms of class of claim (non-monetary relief) or with a financial limit in excess of £100,000. Consideration should also be given to a scheme of FRC for incurred costs in different categories of cases, alongside a pre action procedure for seeking leave to secure costs in excess of the fixed figure.

Can we help?

There are a myriad of civil reform proposals on the horizon including the Briggs online court, the increase to the Small Claims Track personal injury limit, a tariff for whiplash, moves to simplify disclosure and possible changes to the mechanism for calculating the discount rate, to name but a few.

As Lord Justice Jackson rightly states, ‘joined up law reform requires that the different civil justice initiatives should dovetail together’ and it is vital that compensators start to consider their business models and consider them in light of all the potential interlocking reforms, looking at risks, opportunities, market impact and unintended consequences.

This is at a time where technology is never far from the legal headlines, and defendants and compensators look at innovative ways of dealing with some of the reform ahead. Lord Justice Jackson notes that ‘to the extent that technological advances reduce legal costs at a faster rate than those of other services, the triennial review may wish to adjust the uprating accordingly’.

We will be holding client workshops and forums in the early autumn at which Iain Stark (one of Lord Justice Jackson’s assessors and a member of the Fast Track Working Group) will be in attendance. Should you wish to discuss how we can help you, or to schedule an individual session as you consider your strategies and solutions to the jigsaw of reform, please do not hesitate to get in touch.

To discuss the issues further, please contact: