In April 2017 we blogged about the apparent inevitability of fixed recoverable costs (“FRC”). Yesterday, Lord Justice Jackson’s much-anticipated report on the issue was published. Over the next few days we will be looking at the FRC recommendations made in respect of different areas of litigation. Today, we start with the proposals in relation to the fast track.
Lord Justice Jackson has long supported the extension of fixed costs to all fast track matters. This proposal formed a cornerstone of his 2010 report. It is, therefore, unsurprising that this largely remains his view.
Jackson proposes that FRC should be rolled-out to almost all fast track matters. The level of the FRC payable will depend on the relative complexity of the matter, with most fast track cases being allocated to one of four ‘bands’. The level of FRC should be reviewed regularly.
The nature of the case will determine the FRC payable
Jackson has identified that a ‘one size fits all’ approach to FRC would be unworkable. His proposal is that fast track cases should be subdivided into four different ‘Bands’. The Band into which a case will fall is largely determined by its complexity. The following examples are given:
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), ELA, 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.
Noise-induced hearing loss (“NIHL”) claims are not caught by any of the bands. Instead, a working party consisting of representatives of claimant and defendant groups has formulated a bespoke procedure for NIHL claims and FRC which would apply within that procedure.
It is suggested that the pre-action protocols should be amended to required the parties to endeavour to agree pre-action the appropriate track and, in respect of fast track cases, the appropriate band. The claimant should be required to suggest a track and a band within its letter of claim; and the defendant should do likewise within its letter of response.
If there is a dispute regarding tracking and banding, a District Judge or Master will determine the issue at an allocation hearing. It is suggested that the unsuccessful party at such a hearing should pay a costs penalty of £150.
If a case settles before allocation, the questions of tracking and banding can be determined by the costs judge.
The level of FRC
The proposed FRC are as follows:
Insofar as the trial advocacy fee is concerned, the amount payable depends on the value of the claim. Fee a. is where the claim value is up to £3,000; b. is £3,001 to £10,000; c. is £10,001 to £15,000; and d. is £15,001 to £25,000.
The FRC which were agreed by the NIHL working party – which have been endorsed by Jackson – are as follows:
The NIHL working party was unable to agree on an appropriate trial fee. Jackson has suggested that the trial advocacy fee should be in accordance with Band 4 which, given the usual low-value of NIHL claims, will normally mean £1,380.
The cost of any actions properly made should be payable in addition to the FRC. Within Band 1, 2 and 3 cases it is recommended that the current “one half of the applicable Type A and Type B costs” should be maintained; and within Band 4 and NIHL claims this should be amended to “two thirds of the applicable Type A and Type B costs”. The fixed recoverable fee for an interim injunction application should be £750.
Preliminary issue trials
The cost of preliminary issue trials should be paid separately, although Jackson strongly discourages preliminary issue trials on the fast track. No indication is given as to whether the level of the trial fee should be different for a preliminary issue trial.
The current 12.5% ‘uplift’ on FRC payable to London firms should continue.
Inflation and other increases
FRC should be uprated periodically by reference to the Services Producer Price Index; and should be reviewed every three years.
The existing ‘escape clause’ at CPR 45.29J should be extended throughout the fast track.
Data used to calculate the FRC
The data used to calculate Band 1 and Band 4 FRC was provided by Taylor Rose TTKW. Taylor Rose’s position in the market as a firm which actively seeks to reduce the level of costs payable to claimant solicitors means this data is likely to be treated with suspicion in some quarters.
FRC where counsel is instructed
Jackson considers that the input of a specialist lawyer – who will often be a barrister but may also be a solicitor or legal executive with the appropriate experience – is appropriate in complex cases.
It is therefore proposed that there should be an additional allowance in Band 4 and NIHL cases for the following work:
• Settling particulars of claim - £500
• Post-issue advice or conference - £1,000
• Settling defence or defence and counterclaim - £500
Special types of fast track litigation
Jackson considers that clinical negligence claims are different to other types of personal injury litigation and require more complex pre-issue investigation. He therefore proposes that clinical negligence cases should fall within the fast track FRC scheme only if (a) breach and causation are admitted in the pre-action protocol letter of response and (b) the value is less than £25,000.
A separate procedure and FRC for clinical negligence claims which we will blog about later this week is suggested.
Intellectual property litigation
IP cases will not be subject to fast track FRC on the basis that the IPEC provides a forum in which modest-value IP disputes can be resolved within a regime of capped stage costs.
It is suggested that most housing claims will fit into Band 3 or Band 4 in terms of complexity.
Military NIHL claims are excluded from the NIHL agreement. Jackson suggests that most military claims will be allocated to the multi track but for those which are allocated to the fast track they go into Band 4.
Holiday sickness claims
It is suggested that holiday sickness claims are of a similar complexity to RTA claims and should therefore be included within Band 2.
Jackson recommends a rule change to reverse the decision in Broadhurst v Tan. Instead of awarding the claimant costs on the indemnity basis where the claimant achieves a result at trial which is at least as advantageous as its own Part 36 offer, the claimant’s fixed costs would be enhanced by 30% or 40%.
Where there has been unreasonable conduct, the Court should be empowered to award costs to the innocent party on the indemnity basis or to award a percentage uplift on the fixed costs.
Assessment of costs
Most costs should be capable of agreement or summary assessment. If it does become appropriate for costs to be subject to a detailed assessment, a truncated procedure with a cap of £500 should be introduced.
Written by Alex Bagnall - Advocate
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