A “sea change” in attitudes towards costs management, especially in the last 18 months, has “eliminated any need” to develop fixed recoverable costs (FRC) for all cases worth up to £250,000, Lord Justice Jackson (pictured) said this week as he published his much-anticipated report.
He did, however, recommend introducing FRC for all fast-track cases, as well as a new fixed-cost ‘intermediate’ track for certain claims up to £100,000, and a voluntary pilot of a ‘capped costs’ regime for business and property cases up to £250,000, with streamlined procedures and capped recoverable costs up to £80,000.
ACL chairman Iain Stark was one of the judge’s 14 assessors, while some unnamed Costs Lawyers provided data for the review to consider.
The association issued a cautiously positive reaction to the report. Council member David Cooper said: “Lord Justice Jackson has, as he promised, looked to complete the unfinished business of his original report.
“Costs Lawyers have put a lot of work into making the costs management regime work over the past four years and, while we all recognise that there are still improvements to be made, he is right to recognise that it now largely works to the benefit of parties and access to justice alike.
“It has long seemed inevitable that the fast-track would be covered by a comprehensive fixed recoverable costs regime, but Sir Rupert is right to recommend that any extension beyond that be done in a careful and measured way.
“It is tricky to strike the balance between ensuring that litigation is not prohibitively expensive while also making it economic for lawyers, and Jackson LJ appears to have had that at the forefront of his mind in putting forward a balanced package of reform.”
Jackson LJ said in the report that opposition to costs management has “slowly been diminishing”; indeed, in the last 18 months “the process of accepting and embracing costs management has accelerated”.
This was, he said, for several reasons, including high-quality judicial training delivered by the Judicial College, which has improved the level of consistency between different courts; increasing familiarity with the process on the part of both practitioners and judges; increased willingness by the profession to discuss and agree budgets or parts of budgets before the first case and costs management conference; general acceptance that, one way or another, costs must be controlled in advance combined with a preference by the profession for costs management over FRC; and refinement and improvement of the costs management rules by the Civil Procedure Rule Committee.
Under the proposals, all fast-track cases would be placed into four bands of complexity – the proposed fee levels are set out in the report – with the figures uprated every three years.
The only issue he raised with the current regime flowed from the Court of Appeal’s ruling last year in Broadhurst v Tan that a party who beats a part 36 offer in a case where fixed fees apply is eligible for indemnity costs. “This decision, unless its effect is modified by rule change, will impact upon fixed costs generally,” Jackson LJ said.
He said his assessors were split on the issue, but he agreed with the nine who said that in the context of a fixed-costs regime, it would be better for there to be a percentage uplift on the fixed costs rather than an order for indemnity costs. “This will avoid the need for a detailed assessment of costs. Also, it will provide certainty for litigants.”
He favoured a percentage uplift of “30% or perhaps 40%”, but said it was “a clear issue of policy, which will need to be addressed in the consultation exercise following this report”.
For multi-track cases, he said the case was made out for FRC for several reasons, including that many cases which are currently in the lower reaches of the multi-track were sufficiently straightforward to be accommodated within such a regime.
Further, in lower-value cases, there was a greater risk that the budgeting process costs themselves were disproportionate, and in any case FRC brought “a greater level of certainty than costs management can achieve”.
The criteria for the new intermediate track, again broken into four complexity bands, would be:
- The case is not suitable for the small claims track or the fast-track;
- The claim is for debt, damages or other monetary relief, no higher than £100,000;
- If the case is managed proportionately, the trial will not last longer than three days;
- There will be no more than two expert witnesses giving oral evidence for each party;
- The case can be justly and proportionately managed under a new expedited procedure;
- There are no wider factors, such as reputation or public importance, which make the case inappropriate for the intermediate track;
- The claim is not for mesothelioma or other asbestos-related lung diseases;
- Alternatively, there are particular reasons to assign the case to the intermediate track.
The figures can again be found in the report. He also recommended FRC for applications to approve settlements for children and protected parties and costs-only proceedings, in respect of intermediate track cases.
Jackson LJ recommended that the new track be reviewed after four years and that, if it was working satisfactorily, it could be extended to cover monetary claims above £100,000 and claims for non-monetary relief.
In relation to business and property litigation, he said FRC would promote access to justice in some cases but, in other instances, costs management would be preferable. He described capped stage costs as “the best variant of FRC for this class of litigation”, together with a streamlined procedure.
He has put forward a voluntary pilot to run for two years in a small number of the Business and Property Courts. There would be no automatic disclosure, witness statements or expert evidence, the trial would take place no more than eight months after the case management conference and last no longer than two days, while the case would be fully docketed.
If the pilot proved a success, Jackson LJ said the regime should become available for any suitable case in the Business and Property Courts or the business and property lists of the county court up to a value of £250,000.
“It may well become appropriate to extend the regime to cases up to £500,000, but that must be for future consideration.”
Specifically on clinical negligence, Sir Rupert recommended that the Department of Health and the Civil Justice Council set up a working party with both claimant and defendant representatives to develop a bespoke process for handling claims up to £25,000 with FRC. He also called for the extension of the protective costs rules currently used in environmental cases to judicial review.
David Lidington, the Lord Chancellor, said: “I am very grateful to Sir Rupert Jackson for the wisdom, industry and efficiency he has demonstrated in compiling this report, which makes the case for extending fixed recoverable costs in order to control the costs of civil litigation.
“Sir Rupert has proposed a range of measures which the government will now consider carefully. As we have said previously, we will consult before any recommendations are implemented.”