We continue today with our review of the proposals now put forward by Lord Justice Jackson in response to the debate about fixed recoverable costs (“FRC”) above the fast track.
The threat to extend the remit of fixed costs has been overshadowing the profession for many years and is opposed by many legal professionals. This is perhaps the most anticipated area of review – how far would the fixed costs regime and upper limit be extended.
Lord Justice Jackson acknowledges the 2 main arguments:
1. Multi-track cases are so varied in character that they do not lend themselves to any rigid costs matrix
2. Costs management is now working well in the multi-track. Therefore, there is no need for fixed costs.
Indeed, he accepts that ‘recent improvements’ in costs management ‘reduce the need’ for fixed costs. However, he concludes that ‘after considering the extensive written submissions and the debates at the seminars’ there is scope for fixing the recoverable costs of some categories of cases above the fast track.
Again, the focus is upon proportionality of costs to the value of a case and extending the regime in order to reduce the overall costs of litigation both in terms of the work that is required to be done by the Solicitor and the process costs of budgeting or assessing costs on an individual basis.
LJ Jackson also addresses the transparency that such a costs structure produces for the profession and the public and how this will assist parties in deciding whether to pursue or defend a claim at the outset.
This remains to be seen bearing in mind the level of satellite litigation that has arisen to date on fixed costs issues.
Lord Justice Jackson does acknowledge that caution must be applied when extending the FRC above the current fast track limit in order to protect access to justice. Again, this remains to be seen.
Clearly, he has taken on board elements of the strong representations from the profession as he now proposes a reduced upper limit of £100,000.00 and that only ‘cases of modest complexity’ should fall within the new FRC regime.
Types of Cases
In respect of the type of cases that should enter the new FRC regime the proposed position is as follows:
• Claims which are principally for monetary relief, such as damages or debt
• It will include cases where declarations are sought largely to support claims for monetary relief. It will not be possible to evade the regime by including incidental claims for declaratory relief
• Claims for non-monetary relief may be assigned to the new FRC regime in ‘exceptional circumstances’ where that is necessary to promote access to justice
The Structure of the New Regime
Lord Justice Jackson favours the creation of a new track ‘sitting between the fast track and the multi-track’ as this provides a framework that is familiar to practitioners and to allow for the fact that the cases will usually be more complex and ‘may require more elaborate evidence and take longer to try.’ This also dovetails with the planned £25,000.00 upper limit of the Online Solutions Court which is due to replace the fast track as the normal court for many categories of claim.
Allocation of Cases to the Intermediate Track
The proposed criteria are as follows:
(i)The case is not suitable for the small claims track or the fast track
(ii)The claim is for debt, damages or other monetary relief, no higher than £100,000.00
(iii)If the case is managed proportionately, the trial will not last longer than three days
(iv)There will be no more than two expert witnesses giving oral evidence for each party
(v)The case can be justly and proportionately managed under the expedited procedure described in section 4 below.
(vi)There are no wider factors, such as reputation or public importance, which make the case inappropriate for the intermediate track
(vii)The claim is not for mesothelioma or other asbestos related lung diseases
(viii)Alternatively, even if none of criteria (i)-(vii) are met, there are particular reasons to assign the case to the intermediate track, of the kind described in paragraphs 3.7-3.8 below.
Mesothelioma and Other Asbestos Related Lung Diseases
In relation to criteria (vii) Lord Justice Jackson clarifies that as these claims are managed in accordance with the procedure in the Mesothelioma Practice Direction and managed in specific courts in specialist lists by experienced judges and given the variable values, specific statutes and case law they should be excluded.
Complex Personal Injury and Professional Negligence Claims
Cases which the Personal Injuries Bar Association and the Professional Negligence Bar Association maintain are unsuitable for FRC.
Claims above £25,000.00 will ‘seldom be suitable’ for the intermediate track, unless breach of duty and causation have been admitted at an early stage. The multi-track will be the normal track for clinical negligence claims above £25,000.00.
The proposed bespoke process for clinical negligence claims will be addressed in the next part of our analysis of the new Jackson report.
- Some multi-party cases
- Actions against the police
- Child Sexual Abuse Claims
- Intellectual Property Cases
The Court should have residual discretion to allocate any case that doesn’t satisfy the above criteria including any claim for non-monetary relief where it is necessary to promote access to justice.
Equally it is proposed that the court must have a residual power to remove cases from the track as it may be necessary to do so ‘if the nature of the case changes fundamentally.’ However, it is proposed that the court should only be allowed to remove cases after the fist CMC and ‘in exceptional circumstances.’
Cases where for other reasons recoverable costs should be limited
Lord Justice Jackson gives the example of disputes about family business or boundary disputes where ‘emotions are at to run high’ and ‘parties may need to be protected from their own enthusiasm for the fray’ and to ‘save them from ruinous litigation.’
The Bands – 4 Proposed
Band 1 – for the least complex cases. A simple claim over the fast track limit where there is only one issue and the trial will take a day or less
Bands 2 & 3 – will be the ‘normal’ bands for intermediate track cases. Band 2 for the more straightforward cases and Band 3 for the more complex cases
Band 4 – for the most complex cases for example a business dispute or an employers’ liability disease claim where there are serious issues of fact/law and the trial is likely to last three days
Amendment to be made to the protocols to require the parties to ‘endeavour’ to agree the appropriate track and band in the case of this track. These proposals should be stated by the Claimant in their Letter of Claim and by the Defendant in their Letter of Response.
Where a case is settled pre issue or allocation without any party agreement then the decision will fall to the judge assessing the costs.
Allocation to one of the Bands
Either by agreement between the parties or the judge will allocate with reference to the direction questionnaires.
The value ascribed by the claimant may assist the judge in this task.
The assigned band can be challenged by either party at the subsequent Case Management Conference (“CMC”).
Note - the proposal goes further and states that where the CMC is held only to address a dispute about assignment then the unsuccessful party should incur a costs liability of £300.00 payable to the successful party. It is assume that this is a VAT inclusive figure.
Statements of Case
These are to be limited to 10 pages and shall be served with any ‘core’ documents which are not in the possession of other parties. This means documents relied upon by the party and documents which are obviously necessary for other parties to understand the case they have to meet.
The court will attend to the following:
• Review and approve a list of issues
• Resolve any disputed document requests
• Consider alternative dispute resolution
• Give directions and fix a date for the trial and if needed the pre-trial review
• Identify the specific matters to which any oral evidence should be directed and limit the number of factual witnesses in the exercise of its powers under CPR rule 32.2(3):
(a) identifying or limiting the issues to which factual evidence may be directed;
(b) identifying the witnesses who may be called or whose evidence may be read; or
(c) limiting the length or format of witness statements
Steps should be taken by the court and the parties to produce directions that keep the trial as short as possible and ideally no longer than one day.
Non-Personal Injury cases
CPR rules 31.5(3) to (8) will not apply.
Instead, each party shall disclose:
(i) The documents upon which it relies, in so far as not previously disclosed;
(ii) Any documents or classes of documents which the court specifically orders at the CMC. The parties will exchange document requests seven days before the CMC.
Personal Injury cases
On the basis that disclosure is not generally a ‘driver of high costs’ CPR rule 31.5 (2) exempts personal injury litigation from the new disclosure rules introduced in April 2013. For essentially the same reasons, personal injury litigation would be exempt from the proposed disclosure rules in the intermediate track. Standard disclosure will be the normal order in these types of cases.
Written witness statements shall stand as evidence-in-chief.
Note – the total length of ALL the witness statements of a party shall not exceed 30 pages.
Oral expert evidence shall be limited to one or ‘if reasonably required and proportionate,’ two expert witnesses for each party.
Each report shall be no more than 20 pages bar any necessary photographs, plans and academic or technical articles attached to the report.
Oral evidence at trial shall be directed to the specific matters identified by the court at the CMC or subsequently. The court will set time limits for oral evidence and submissions (so far as it is necessary to do so), in order to complete the trial within its allotted span.
All applications should be made at the CMC where possible.
Rules for any applications made AFTER the CMC:
(i) All applications and documents filed in support must be concise.
(ii) The respondent must answer in writing within 7 days of service of the application notice. The response must be concise.
(iii) Any reply from the applicant must be provided within two business days of service of the response and be concise.
(iv) The court will deal with an application without a hearing unless the court considers it necessary to hold a hearing. In appropriate cases that may be a hearing by telephone.
(v) The court will decide who shall pay the costs of any interim application and summarily assess them. Any such costs order will be additional to FRC.
The figures have been derived from analysis of data received from the following sources:
• An analysis of data on personal injury cases provided by Taylor Rose TTKW as addressed in yesterdays blog
• Discussions with the assessors
• Consideration of the budget exercise
• Submissions and data received
• The view of Lord Justice Jackson as to how CPR rule 44.3(5) which defines proportionality should be applied to cases in this track
Lord Justice Jackson confirms that all the costs for stages S2, S7 and S9-S15 are additional to the costs derived from the data and therefore more generous and the Band 4 figures are above the data figures and fit with his own understanding and the assessors understanding of what are ‘reasonable’ costs for the most complex types of cases likely to go into this track.
The table does NOT include disbursements.
The principal disbursements will be:
• Court Fees
• Expert Fees
• Mediator’s Fee
• In some cases – translators and/or interpreters
Defendant’s Failure to Beat Claimant’s Part 36 Offer
It is ‘tentatively’ proposed that there should be a 30% or 40% uplift on costs rather than indemnity costs.
Unreasonable Litigation Conduct
The court should have the power either to award a percentage uplift on costs or to make an order for indemnity costs with regard to the seriousness of the conduct.
The example given is substantial non-compliance with the relevant pre-action protocol.
Recommendation that a similar rule as provided for in the fast track be implemented – 12.5% uplift.
Uprating for Inflation
The FRC should be adjusted for inflation every three years.
Not to be included at this stage.
In relation to approval of settlement for children and protected parties the above table includes the FRC. Pre-issue settlement requires approval under CPR Part 8 and if the proceedings are on foot then approval is sought under CPR Part 23. The FRC should be the same regardless of the route to approval.
Costs Only Proceedings
These are brought under CPR Part 8.
The receiving party files short particulars of claim referring to the settlement agreement, the defendant files an acknowledgement of service and the court makes an order for assessment of costs.
It is recommended that the FRC for a claimant in such proceedings should be £300.00 and for a defendant in such proceedings £150.00.
The above figures are exclusive of VAT and Court fees.
As already commented upon, this is perhaps the most anticipated proposal to the costs world and also perhaps the area that will cause further areas for dispute between the parties and extensive protracted satellite litigation.
Written by Charlotte Knight - Associate and Solicitor
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