Lord Justice Jackson has this week released his supplemental report on fixed recoverable costs. The report, commissioned by the Judicial Office in November 2016 contained wide terms of reference and included developing proposals for extending the present civil fixed recoverable costs (FRC) regime in England and Wales so as to make the costs of going to court more certain, transparent and proportionate for litigants, and considering the types and areas of litigation in which such costs should be extended, and the value of claims to which such a regime should apply. The resulting report is 135 pages long and includes detailed recommendations covering many areas of civil litigation. Paul Edwards reviews the headline recommendations and some of the more detailed proposals likely to be of interest to our clients.
Headline recommendations include:
- All fast track costs to be fixed;
- A new intermediate track with fixed costs for claims between £25,000 and £100,000 which are of modest complexity and can be tried within three days or less; and
- Future consideration be given to fixing incurred costs in budgeted cases.
Fast track cases
- Lord Justice Jackson notes that he does not consider it appropriate to ‘tinker’ with existing fast track FRC rules as he considers these to be working well. Any issues fall to the Civil Procedure Rules Committee (CPRC) to consider. However he does note that steps need to be taken to deal with the effect of Broadhurst-v-Tan, in which the Court of Appeal held that claimants who beat their own CPR36 offer are entitled to more than just fixed costs. Lord Justice Jackson recommends that:
- The indemnity costs award be replaced with a fixed percentage uplift of 30-40%;
- Unreasonable litigation conduct, such as non-compliance with the relevant pre-action protocol be punished via an indemnity award or percentage uplift; and
- That the CPR makes clear that the indemnity principle does not apply to the FRC regime.
He also proposes that the amount of FRC be subject to inflationary increase every three years.
- For all other types of fast track claim, Lord Justice Jackson proposes a matrix based on complexity of claim, segregated into four bands. Parties will be encouraged to agree an appropriate band for a claim at pre-action stage, with the court to decide if agreement cannot be reached (and penalties to apply where allocation is disputed). Bands relate to:
- Band 1 - RTA non-personal injury claims and defended debt claims;
- Band 2 – RTA personal injury (within Protocol), holiday sickness claims;
- Band 3 – RTA personal injury (outside Protocol), employers’ liability accidents; public liability, tracked possession claims, housing disrepair, other money claims;
- Band 4 – employers’ liability disease 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.
- The middle two bands (bands 2 and 3) copy across current FRC figures, plus four% to account for inflation.
- Band 1 includes FRCs from £500 through to £3,250, plus an advocacy fee.
- Band 4 includes FRCs from £2,250 plus 15% of damages, plus £440 for each additional defendant, through to £6,800 plus 40% of damages, plus £660 for each additional defendant.
There are specific proposals in relation to particular types of claim:
- NIHL claims – the report notes that the Civil Justice Council (CJC) working group has reached a mediated agreement to fix costs in these cases and follow a specific process in dealing with them. The agreement is currently with the Civil Justice Council for approval. Lord Justice Jackson recommends adopting the agreed costs grid which includes staged payments from £4,000 (pre-issue) to £9,187 (post-listing). There are additional amounts payable for additional defendants, a trial advocacy fee, and a fee for restoring a company to the register.
- Clinical negligence claims are to be subject to separate review with an initial recommendation that costs are fixed for claims up to £25,000.
Cases above the fast track
For cases valued above the fast track limit, the report proposes:
- FRCs for cases of modest complexity only, valued at up to £100,000.
- FRCs to apply to cases ‘principally for monetary relief, such as damages or debt’.
There is a proposed detailed set of criteria for deciding whether cases are suitable for allocation to the intermediate track:
(i) case not suitable for small claims or fast track;
(ii) claim for debt, damages or other monetary relief and less than £100,000;
(iii) three day trial, if case managed proportionately;
(iv) no more than two oral expert witnesses for each party;
(v) capable of being ‘justly and proportionately’ managed under a special expedited procedure;
(vi) no wider factors (reputation, public importance) which make the case inappropriate for intermediate track;
(vii) claim not for mesothelioma or other asbestos-related lung disease; and
(viii) any other particular reason to deal within the intermediate track.
The report emphasises that these criteria will generally mean that professional negligence and complex personal injury cases will be excluded from the intermediate track. Clinical negligence claims above £25,000 will also be excluded. Other types of claim singled out as seldom being suitable for the intermediate track include:
- Child sexual abuse claims
- Some multi-party cases
- Actions against the police
- Intellectual property cases
The report recommends details of a new procedure for dealing with claims within the intermediate track. Once again, four bands of FRCs are proposed but with a more complex arrangement of 15 stages. It is recommended that Part 8 claims should not be included in the intermediate track for the time being.
If the proposals for an intermediate track are accepted Lord Justice Jackson suggests that they should be reviewed in four years’ time to see how they are working. At that point consideration should also be given to extending the intermediate track to include money claims above £100,000 and claims for non-monetary relief.
Other proposals include:
- The CJC, in conjunction with the Department of Health should set up a working party to develop a bespoke process and corresponding grid of FRC for clinical negligence claims up to £25,000;
- A pilot of capped recoverable costs for business and property cases with a value up to £250,000; and
- Costs management to be introduced at the discretion of the judge to ‘heavy’ judicial review claims.
Lord Justice Jackson makes clear in the report that costs management is essential to controlling the costs of civil litigation, and improvements in costs management over the last 18 months has tempered his previous suggestion that fixed costs should be applied to all claims up to the value of £250,000. However, this may not be the end. Lord Justice Jackson suggests that any proposed reforms be afforded time to bed in before considering whether further extension is necessary.
For the time being, this report contains recommendations only and it is therefore now over to the Lord Chief Justice, Master of the Rolls, and government to consult on its terms before any new provisions are brought in.