Fixed Costs Reforms - State of Play
Posted on 13th September 2023 at 09:49
By Sean Linley, Senior Costs Draftsman
As it stands October's Fixed Costs reforms, introducing fixed recoverable costs to most litigation claims with a value of up to £100,000.00 will go ahead as planned from 1 October 2023.
There are lot of developments going on and with this in mind it's worth taking a pause to reflect on exactly where we are.
For those wanting the short version, assume implementation will be 1 October until there is confirmation otherwise. There are now realistically two mechanisms for a delay in implementation. Either a. the Ministry of Justice (MoJ) delay it which seems unlikely or b. there is an interim injunction made to delay implementation. The latter is looking increasingly realistic but whether it happens remains to be seen.
Fixed Costs Consultation Closes
On 8 September, the MoJ's consultation into the fixed costs reforms closed. Presently the government's response to it is now awaited. There is no timescale on when their response will be published.
The consultation focuses on the following aspects:
- 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.
The kicker is that any changes will not be implemented until April 2024 at the earliest. This means if the reforms are implemented as planned on 1 October then we can expect some significant changes in around six months time. It does create uncertainty for claims in the scheme during the prospective initial six months of implementation.
Ministry of Justice response to the Justice Committee
Solicitor James Perry had sought to raise a number of issues with the Ministry of Justice via the Justice Committee. That response was shared publicly on 12 September.
In short the rules are complex the MoJ may or may not change things, they'll let us know if they do. The response reeks of digging their heels in as opposed to any sort of collaborative pragmatism.
One of the big issues pushed here related to whether or not Part 45 will prevent parties from contracting out of fixed costs. What did the MoJ say to this legitimate concern? Simply that it "is complex". They do state that they are considering the most appropriate way forward "including whether greater clarity in the rules would be of assistance." (spoiler alert the answer is unequivocally yes). But in the meantime what are practitioners to do? Advise clients to wait in the hope it's sorted out in the meantime? Invite a Judge to interpret the rules differently on the basis they can't possibly have intended to prevent parties contracting out of fixed costs? Or just accept reduced recovery? Satellite litigation beckons.
The MoJ also reaffirmed the point that Fast Track Clinical Negligence claims will be temporarily exempt from fixed recoverable costs pending the implementation of a separate Department of Health fixed costs scheme. The problem here, however, is that whilst the MoJ have now publicly stated twice in two separate documents that such claims are exempt, the rules themselves do not include such an exemption. Que more satellite litigation.
There will also be no guidance given for cross-border claims or claims with an international element. So no appetite currently to provide an additional uplift on costs for such claims. Best advice push for Multi-Track allocation in such claims where you conceivably can. MT allocation means no fixed costs.
Judicial Review Proceedings
The Association of Personal Injury Lawyers (APIL) have issued Judicial Review proceedings concerning aspects of the reforms. The present state of play is that the proceedings are stayed until 3 weeks after the government provides its response to July's fixed costs consultation (the one which closed on 8 September). We do not know when this response will be forthcoming and as previous there is no timeline for the response.
In terms of immediate timelines 1 October is the current implementation date for the reforms, a response from the government before this time would be a surprise, though not impossible.
It is open to APIL to apply for an interim injunction which if granted could see the delay of implementation of the Fixed Costs reforms until the Judicial Review proceedings are dealt with. It is logical that this is a step APIL may take but it remains an unknown quantity.
The Judicial Review challenges very specific aspects of the reforms which can be sumarised as follows:
- Application of the reforms to vulnerable parties.
- Recovery of Inquest & Restoration Proceedings costs.
- Application of the reforms to Clinical Negligence and more clarity upon this.
- The issue concerning the apparent inability of parties to contract out of fixed costs.
The MoJ's response to the Justice Committee makes it likely that contracting out of fixed costs limb of the JR will need to go ahead. July's consultation will likely address Clinical Negligence and Inquest & Restoration Proceedings, though there is still a lack of clarity over whether the inclusion of Clinical Negligence claims where there are breach of duty & causation admissions means full or partial admissions (and July's consultation appears to ignore this issue completely). The issue of vulnerable parties is another limb unlikely to go away. The current procedure for vulnerable parties appears to be unsatisfactory. Protection for the most vulnerable users of the justice system is paramount.
And in the real world, barrister Gordon Exall, shared how he was told by a litigator about a personal injury case where the Judge had said they would delay allocation until after October so a claim could be allocated to the Intermediate Track. Not only this is extremely concerning, it's also plain wrong. The transitional provisions for PI claims are tied to the date of the cause of action or date of Letter of Claim for disease claims. Non-PI claims are tied to the issue date. Non-PI claims issued on or after 1 October will fall into fixed costs (assuming implementation goes ahead as planned).
Was the Judge aware of their incorrect interpretation or the implications of what they were seeking to do? It's right to be concerned. These are the same individuals who we are trusting to interpret and enact the October reforms. If they don't understand the basic principles then what hope is there?
Developments continue apace and it will be interesting to see what transpires over the course of the next few weeks.
We are always happy to talk any aspect of costs! Should you have any queries arising from this blog or generally then please get in touch with us either via phone 01482 534567 or e-mail firstname.lastname@example.org. Follow us on LinkedIn to keep up-to-date with developments.
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