The weeks leading up to the implementation of the Jackson reforms saw a frenzy of activity as lawyers, courts and ATE insurers prepared for the radical changes now in place. To avoid the new regime, many lawyers arranged for claims to be issued at court and to sign their clients up to CFAs, prior to the deadline on 1 April 2013.
There are many changes but the ones that stand out (from a personal injury perspective) are as follows:
Overriding objective is that all cases are to be 'at proportionate cost'
Generally, costs will now be managed much more closely by the courts. For higher value multi track claims, this will include cost management hearings to determine court-imposed costs budgets for various stages of the proceedings.
Under the new rules it will no longer matter if various steps were necessary or appropriate - the primary question is instead whether the costs were proportionate to the overall award.
ATE insurance premiums and success fees
ATE insurance premiums and success fees are no longer recoverable from the unsuccessful party unless they were entered into prior to 1 April 2013. These will instead have to be deducted from the claimant’s damages at the conclusion of the case.
Qualified one-way costs shifting
While a successful claimant continues to recover their costs from the defendant, a successful defendant will not ordinarily be able to recover his costs from the claimant. This is intended to offset the non-recoverability of ATE premiums but does not apply to cases issued prior to 1 April 2013.
It should be noted that certain costs orders (for failure to beat Part 36 offers and other specific interim hearings) can still be made against claimants but the amount awarded cannot exceed the damages and interest awarded.
In exceptional cases such as where a claim has been struck out or if the claim and/or the claimant’s conduct is considered to be 'fundamentally dishonest', costs can be awarded against them.
Changes to Part 36
If a claimant beats a Part 36 offer, he or she still recovers costs on an indemnity basis along with interest on costs and damages but will now receive a further award calculated as 10% of the amount awarded up to £500,000, and five percent of any amount awarded over that sum (subject to a £75,000 maximum uplift).
As with any changes to the rules, satellite litigation is bound to follow while parties seek to interpret the changes to their advantage and to test the court’s interpretation of how the new regime should work in practice.