Lord Justice Jackson has today put forward his vision for extending fixed recoverable costs (FRC), but said he has not gone as far as originally envisaged because of improvements made in costs management, particularly over the last 18 months.
He proposed “finishing the job” of 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.
“In my view it is now right to extend FRC above the fast track, but we must proceed with caution in order to protect access to justice,” he said.
In what he described as a “supplement” to his original 2009 report, Sir Rupert said the “holy grail” pursued by every civil justice reformer was a system in which the actual costs of each party “are a modest fraction of the sum in issue, and the winner recovers those modest costs from the loser”. Germany came closer to the ideal than England and Wales, he said, because it has a civil justice system “fundamentally different from our own”, with little disclosure and oral evidence.
“In the context of a common law jurisdiction, however, there are limits on what can be achieved. Adversarial litigation is an inherently expensive process.”
Nonetheless, the judge – who retires next year – said: “I have sought to balance the many competing interests in terms of access to justice and proportionality of costs. I have made my recommendations and set out what I believe to be reasonable costs and proposals.
“It will now fall to the government to consider this report, and no doubt subject their own proposals for reform to public consultation.”
Jackson LJ said he was “bound to accept that improvements in costs management (especially in the last one-and-a-half years) have eliminated any need to develop FRC on the scale canvassed in my lecture of January 2016” – when he talked about FRCs for all cases worth up to £250,000.
“Nevertheless, the possibility remains of substantially extending FRC in the future, if the costs management process either fails to deliver effective control over costs or becomes unduly expensive.”
Arguing that his earlier reforms have “substantially reduced litigation costs”, he described FRC as “the principal piece of unfinished business”.
He put forward a grid of FRC for all fast-track cases (see end of story), much of which was based on data from Peterborough law firm Taylor Rose TTKW, a defendant practice.
Under the proposals, all fast-track cases would be placed into four bands of complexity, band 1 being the least complex and band 4 the most:
- 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), employers’ liability accident, public liability, tracked possession claims, housing disrepair, other money claims; and
- Band 4: Employers’ liability disease claims (other than noise-induced hearing loss, which is set to have its own dedicated FRC scheme), 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.
He said FRCs should be uprated every three years by reference to the services producer price index.
For cases above the fast-track limit of £25,000, he said the case was made out for FRCs 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 FRCs 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 FRC grid is set out at the end of the story. 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 – such as where “a householder of modest means is suing their builder” – but in other instances, costs management would be preferable.
Jackson LJ said that “capped stage costs are the best variant of FRC for this class of litigation”, although recognised that if recoverable costs were capped in that way, “the work to be done must also be controlled… That requires a streamlined procedure and robust case management”.
So, as we reported in April, 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.
“That bespoke process should have a grid of FRC attached. This scheme will capture most clinical negligence claims. Previous experience (for example, with noise induced hearing loss claims) shows that it is possible for the ‘industry’ to come together and develop such schemes.
“There is sufficient good will on both sides to achieve that in the field of clinical negligence. I remain willing to arbitrate informally on any points of disagreement.”
Finally, he put forward measures to limit recoverable costs in judicial review claims, by extending the protective costs rules currently used in environmental cases. “Citizens must be able to challenge the executive without facing crushing costs liabilities if they lose,” he said.
FRC grid for fast-track claims
FRC grid for the intermediate track