Fixed Costs Consultation Opens
Posted on 21st July 2023 at 15:39
By Sean Linley, Senior Costs Draftsman
There have been significant developments and movement on the Fixed Recoverable Costs extension with a consultation which opened today and will close on 8 September 2023. There will be question marks around the practicalities given implementation is intended to be 1 October. Clearly a consultation closing on 8 September will not give much time for either the CPRC to attend to any changes/clarification and for stakeholders to prepare for the changes. It is a reasonable question to ask whether implementation needs to be delayed in light of this consultation.
The consultation itself suggests that any outcomes will not be implemented until an SI update in April 2024. Given the questions raised, is it right that there is a lack of certainty in the first 6-months of prospective implementation? a
The consultation can be viewed here. Responses should be sent to FRCconsultation@justice.gov.uk by Friday 8 September 2023. We would strongly urge practitioners to respond.
What does the consultation say? - Speed Read
In short the consultation will focus on:
- The recoverability of (a) inquest costs and (b) Restoration proceedings separately to the fixed recoverable costs applicable.
- Whether to make it explicit in CPR 26.9(10)(b) that for a Clinical Negligence claim to be subject to fixed recoverable costs admissions of breach of duty and causation must be made in the Letter of Response.
- Whether there should be fixed costs for Part 8 (costs only) claims
- The issue of abated advocacy fees where cases are either settled late or where hearings are vacated.
- Whether the fixed trial advocacy fees should be further uprated for inflation, and if so by how much.
- Whether costs on assessment should be fixed or capped.
In addition, some notable announcements:
- Fixed Recoverable costs in Clinical Negligence will only apply to intermediate track claims where both breach of duty and causation is admitted. To be clear this means fast track Clinical Negligence claims are NOT subject to fixed recoverable costs.
- The FRC sums proposed will be uprated to cover inflation since January of this year, given inflation remains high. The new figures will be in place for April 2024.
- There will be a future review of the FRC reforms to take place in 3 years' time.
It has been confirmed by the Ministry of Justice that, whilst inflation remains high, they will provide further exceptional uprating to the FRC figures. The figures currently presented in the draft Practice Direction will be updated to cover inflation since January of this year.
The MoJ state these figures will be in place for April 2024 meaning practitioners will lose out for any cases which come under the FRC scheme which will settle before the uprated figures are put in place. The uprating is to be welcomed but the delay in implementation is clearly a disappointment.
The other element of inflation is to look at the uprating of the fixed trial advocacy fees which it is suggested should also be uprated further for both Fast Track and Intermediate Track. The Bar Council and PIBA are requesting the fees be uprated by around 20%. The MoJ have suggested an uprating of 4% for Fast Track Complexity Bands 1-3, they do not believe there is a case for 20%.
In relation to FT complexity band 4 and the Intermediate Track, the MoJ do not believe there is a case for a further uprating but accept this should be looked at a post-implementation review, though this looks like it will be at least 3 years away.
Views are sought on inflation/uprating with respect to advocacy fees across the Fast and Intermediate Tracks and all complexity bands.
Clinical Negligence - When should fixed costs apply? and NO fixed costs yet on Fast-Track
One concern which has arisen routinely is the question of how fixed recoverable costs will apply in clinical negligence cases. The rules provide that such claims will be exempt unless there are admissions of breach of duty and causation. One key concern is that if admissions can be made up to allocation/assignment then it would not give parties any certainty over the costs regime which the prospective claim would be proceeding on.
The MoJ propose to include this amendment in the SI update in April next year. They state that:
"Subject to views on this, we propose that this amendment should be included in the CPR SI for implementation in April 2024. Although the current rules will apply to cases from 1 October, it is unlikely that any new clinical negligence claims, where the cause of action accrues on or after 1 October, will be subject to early admission and allocation to track in advance of 1 April 2024."
As a result the MoJ are now looking at whether the exception should be qualified so that clinical negligence claims with breach of duty & causation admissions should only enter the fixed recoverable costs regime where admissions are made in the Letter of Response i.e. if admissions were made later the claim would fall outside FRC.
Clearly the intention is that this amendment should capture all prospective clinical negligence Intermediate Track cases.
There is still uncertainty as to where admissions on breach of duty & causation need to be full admissions or whether partial admissions would see an applicable clinical negligence claim with a value of up to £100,000.00 fall under the Intermediate Track and consequently fixed costs.
The other significant announcement is that there are no fixed costs rules in place for fast track Clinical Negligence cases as such cases will form part of the separate and on-going Department of Health consultation. This is significant. As far as we know there is no timeline on when the DoH consultation will be implemented. It had previously been suggested that these were not near ready. Questions have been raised to Lord Bellamy in a capacity of his ministerial role about this so an update may soon be forthcoming.
This will mean a brief reprieve for Fast-Track Clinical Negligence cases and an odd system whereby a party on Fast Track will for the moment be entitled to time basis costs whereas an applicable Intermediate Track would be subject to fixed recoverable costs. Consequently, it potentially could be more advantageous from a costs perspective for a receiving party to be on the Fast Track.
We will monitor developments carefully and share any further updates as we get them.
Inquest Costs and Restoration Proceedings
This is an important and significant consideration which brings the October reforms in lockstep with the Department of Health consultation on fixed recoverable costs in Clinical Negligence claims with a value of up to £25,000.00.
The MoJ are following the DoH lead and are considering allowing the claiming of Inquest costs separately and in addition to FRC on a time basis to be subject to assessment. They accept that if this is not done then costs of any Inquest may make the costs of pursuing a claim for compensation uneconomic or the bereaved would have to fund most (if not all) the costs involved in any inquest. This is a very welcome move.
On restoration proceedings, it looks like such costs will be fixed as they will be for NIHL cases under the new rules. Though at least bringing in separate fixed costs for such proceedings will mean such time is not lost and wrapped up in the existing FRC amounts.
On both these points the MoJ are inviting stakeholder views.
Abated Fees / Advocacy Fees
Abated fees arising either from late settlement or the vacation of hearings is something we have been raising questions about. The MoJ have reflected views of the Bar Council and PIBA that a fixed sum should be allowed.
For example, where the cases settles within 2 working days of the date fixed for trial or if the trial is disposed of or is removed from the list on the day of trial then it is proposed that the full trial advocacy fee should be 75%.
In terms of late settlement, the MoJ are invited evidence to be provided with the possibility of looking at where the trial advocate fees (non-Counsel) should have similar recoverability.
Concerning vacated hearings, any recoverable fees, it is suggested will be limited to the Intermediate Track and not apply to the Fast Track.
In short the MoJ want to know if parties agree with the Bar Council and PIBA's proposals, evidence around late settlement and vacation (and specifically the impact on costs) and whether there should be any exceptions (i.e. the same advocate undertaking advocacy at a later date) and what behavioural changes this could result in.
Part 8 Costs Only claims
The MoJ are looking at the issue of Part 8 costs only claims and the need to adopt a procedure for the same within FRC. The MoJ state there is merit in fixing the costs of Part 8 costs only claims and are considering amending the rules that such claims should be subject to FRC or as interim application costs. They do, however, invite alternative views on the issue.
Costs of Assessment
The consultation invites view on fixed costs for costs of the assessment in FRC cases. The MoJ accept that there will be disputes over fixed recoverable costs.
The MoJ's favoured procedure where there is dispute is as follows:
- Parties should first attempt to agree costs informally.
- If not agreed a new 'short form claim for FRC and disbursements in a proposed new FRC bill precedent, including a brief summary of the claim, a statement of what is in dispute and the receiving party's succinct submissions."
- The paying party would have 21-days to serve a reply. Note replies must be short and to the point.
- An application would then be made to the court for determination on paper (either by N244 or Part 8)
- The court would serve its decision on the parties.
- Costs of the Assessment would be capped at £500.00 plus VAT plus court fees. Notably this cap will include any additional costs awarded under Part 36 which is extremely disappointing.
- Parties can request an oral review and the party requesting will pay the costs of the same unless there is an adjustment in that parties' favour of 20% or more or unless the court orders otherwise.
Clearly a procedure such as this is to be welcomed as currently any application is subject to fixed costs and requires in-person advocacy. There are questions as to whether the cap is satisfactory, particularly bearing in mind the court can allow less and having the cap inclusive of any Part 36 benefit blunts the impact of such offers.
It would be interesting to see what any FRC bill precedent would look like but broadly these appear to be positive intimations.
It is extremely pleasing to see the MoJ taking on board key concerns from stakeholders.
The worry is that with implementation in October, the earliest any changes will likely be crystalised will be April next year which may cause uncertainty for parties in the meantime. Hopefully, where decisions have to be made credence will be given to the consultation documents and statements and decisions will be made (where necessary) with these in mind.
We would urge all stakeholders to respond to this hugely important consultation.
Should you have any queries arising from this article or upon costs generally then please do not hesitate to get in touch with our friendly team either via phone 01482 534567 or e-mail email@example.com.
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