Lord Justice Jackson’s report on fixed recoverable costs has been published today. The key recommendation is to introduce a new intermediate track for claims between £25,000 and £100,000, which are of no more than modest complexity and could be tried in three days or less. The new track would have streamlined procedures and be subject to a grid of fixed recoverable costs (“FRC”). How this would operate is summarized below, but in broad terms the costs recoverable under the scheme would range from around £19,000 for a straightforward £30,000 claim to around £68,000 for a £100,000 claim at the upper end of the scale of complexity.
The report also recommends extending the current FRC regime to all fast track cases (not just personal injury, as currently) and introducing a voluntary pilot of a capped costs scheme in High Court claims valued at up to £250,000 (as previously announced – see outline here).
As Lord Justice Jackson notes, the next step will be for the government to consider the report and, no doubt, subject any proposals for reform to public consultation.
Why introduce FRC in the “intermediate track”?
In his report, Lord Justice Jackson expresses the view that recent improvements in costs management have reduced the need for FRC. However, he has concluded that there is still scope for introducing FRC for lower value cases in the multi-track (ie above £25,000) where, he says, there is evidence that costs remain disproportionate. The anticipated benefits of such a scheme are to:
- reduce overall costs, by encouraging efficient working, together with streamlining and limiting the amount of work that needs to be done;
- eliminate the costs of budgeting or assessing the costs of such cases on an individual basis; and
- create a clear, transparent and predictable costs structure, so that parties can take an informed decision at the outset as to whether a proposed claim is worth pursuing or defending.
Which cases would the new track include?
The proposal is that only cases of modest complexity up to £100,000 should fall within the new FRC regime. It would apply to claims which are principally for monetary relief, such as damages or debt, but would also include cases where declarations are sought largely to support claims for monetary relief – i.e. claimants will not be able to evade the regime by including incidental claims for declaratory relief.
In exceptional cases, claims for non-monetary relief could be assigned to the regime, where that was necessary to promote justice. Examples given include individual householders claiming an injunction to restrain private nuisance and individuals of modest means bringing defamation claims because of material on the internet.
Cases would not be assigned to the intermediate track if there were wider factors, such as reputation or public importance, which made the case inappropriate for that track, or if the case could not be justly and proportionately managed under the streamlined procedure described below.
The report recognises that if recoverable costs are to be fixed, then the work to be done by the parties or their lawyers must also be controlled. To this end, the report proposes a streamlined procedure which would apply unless the court ordered otherwise. Key features include:
- Statements of case no longer than 10 pages which would be served together with any core documents not in the possession of other parties
- Trials as short as possible and ideally no more than one day, though up to three would be possible
- Disclosure (in non-personal injury cases) of the documents on which each party relies and any documents or classes of documents specifically ordered at the CMC
- Witness statements limited to a total of 30 pages for each party
- Expert reports of no more than 20 pages each and oral expert evidence limited to one or, if reasonably required and proportionate, two experts for each party
- So far as possible, all applications made at the CMC
How would FRC be structured?
The report sets out a proposed grid for intermediate track cases, under which cases would be grouped into four bands depending on complexity, with Band 1 the most straightforward and Band 4 the most complex.
For each band, the grid sets out the costs that would be recoverable depending on the stage reached (eg for a Band 4 case which progressed beyond the pre-trial review / 14 days before trial it would be £24,700 plus 22% of the damages) plus additional costs for particular items that may be carried out (eg counsel/specialist lawyer drafting statements of case and/or advising, mediation, attendance at trial, etc).
The total costs that would be recoverable under the scheme range from £19,150 for a £30,000 claim in Band 1 to £68,450 for a £100,000 claim in Band 4 (based on certain assumptions such as a one day trial for Band 1 and a three day trial for Band 4, no counterclaim and unsuccessful ADR).