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Lord Justice Jackson's Supplemental Report published

  • United Kingdom
  • Personal injury claims litigation - Claims e-briefing

02-08-2017

On 31 July 2017 Lord Justice Jackson’s long awaited review of the Civil Litigation costs system, which has the catchy title “Review of Civil Litigation Costs: Supplemental Report Fixed Recoverable Costs (FRC)” was published.

The purpose of the Review was to make best practice recommendations on how to promote access to justice at a proportionate cost, and to develop proposals to make the costs of going to court more certain, transparent and proportionate.

In reaching his conclusions, Lord Justice Jackson was provided with a large quantity of qualitative and quantitative information from both claimant and defendant law firms across a spectrum of civil law disciplines.

Highlights

1. Proposed changes to the Fast Track

• All Fast Track cases subject to FRC

• Claims will be placed into four bands of complexity

• Fast Track directions are to be modified

2. A new Intermediary Track between the Fast Track and the Multi Track for certain claims up to £100,000 of "modest complexity"

• For claims with a value of no higher than £100,000 where the trial will be less than 4 days

• Higher value claims (more than £100k) with longer trials and more experts can be allocated if there are particular reasons to assign the case to the Intermediary Track

• Claims will be placed into one of four bands of complexity

• Statements of Case shall be no longer than 30 pages

• Limited disclosure in non PI cases - parties to only disclose documents on which it relies and which the court specifically orders

• Personal injury cases will still be subject to the current standard disclosure

• Total length of all witness statements shall not exceed 30 pages

• Oral evidence at trial shall be directed to specific matters and the court will set time limits for oral evidence and submissions

• Mesothelioma or other asbestos related lung disease claims are not included

3. Fixed costs for Noise Induced Hearing Loss claims

Proposed Changes to the Fast Track

Under the proposals, all Fast Track cases and not just personal injury claims would be subject to FRC. Claims will be placed into one of four bands of complexity, band 1 being the least complex and band 4 the most. Costs remain fixed for each stage of the proceedings.

To account for this banding the Fast Track standard directions will need to be modified.

The main advantage of FRC across the entire Fast Track is that the paying party will be better equipped to predict their opponent’s costs outlay and take a more commercial view of the risks of proceeding with litigation.

However, under the new banding system, a claim of over £10,000 which would have incurred moderate fixed costs, may now be allocated to band 4, driving those fixed costs up considerably.

To better understand the impact of this change, let’s compare the costs implications of the court awarding £25,000 in damages for a personal injury claim, after a 1 day trial, with no involvement of counsel in the lead up to trial.

• Current Fast Track Fixed Recoverable Costs

£4,280 (FRC) + £7,500 (30% of damages) = £11,780
+
£1,705 (trial advocacy fee) = £13,485

• New Fast Track Fixed Recoverable Costs where the matter is allocated to ‘Band 4’

£6,800 (FRC) + £10,000 (40% of damages) = £17,800
+
£2,500 (trial advocacy fee) = £20,300

As you can see, the addition of the banding means that the costs which the claimant can recover increase by £6,815 on what is largely the same set of circumstances. The key difference is that in the second scenario the court has used their discretion to allocate the matter to band 4, which does not exist in the Fast Track in its present form.

The Intermediary Track

Lord Justice Jackson has acknowledged that there are a category of cases which fall outside the Fast Track, but lack the complexity for which the Multi Track is appropriate. Therefore a new Intermediary Track has been proposed for these cases, which will be governed by FRC.

For a personal injury matter to be allocated to the Intermediary Track it must fall within at least one of the following categories:

• The value of the claim is no higher than £100,000

• The trial will not last longer than three days

• There will be no more than two expert witnesses giving oral evidence for each party

• There are particular reasons to assign the case to the Intermediary Track

Mesothelioma or other asbestos related lung disease claims are not included within the Intermediary Track

The court can take a matter out of the Intermediary Track if the nature of the case changes fundamentally.

Key Features

• As with the new Fast Track proposals, claims will be placed into one of four bands of complexity. Band 1 will be for the least complex cases, Band 4 will be for the most complex cases where there are serious issues on breach, causation and quantum. Bands 2 and 3 will be the ‘normal’ bands for intermediate track cases, with the more straightforward cases going into Band 2 and the more complex cases going into Band 3

• If the defendant fails to beat an effective claimant offer under CPR Part 36 it is proposed that there should be a 30% or 40% uplift on costs rather than indemnity costs

• In cases of unreasonable litigation conduct, the court should have the power either to award a percentage uplift on costs or to make an order for indemnity costs. The court will exercise that power, having regard to the seriousness of the conduct in question

• A streamlined procedure will be required. Below are some of the proposals:

o The Pre-action Protocols should be amended

o Statements of Case shall be no longer than 10 pages

o In non-personal injury cases parties shall disclose documents on which it relies and which the court specifically orders. Documents are to be exchanged 7 days before CMC.

o Personal injury cases will still be subject to the current standard disclosure.

o Written evidence shall stand as evidence in chief. Total length of all witness statements shall not exceed 30 pages

o Oral evidence of experts shall be limited to one expert or two if reasonably required and proportionate

o Oral evidence at trial shall be directed to specific matters and the court will set time limits for oral evidence and submissions

The impact on the costs of taking a claim to trial

With the new Intermediary Track, claims at the lower end of the Multi Track and of ‘modest complexity’ can be dealt with in a more expeditious and cost effective way.

Under the present Multi Track process where the claim is pleaded at over £25,000, the parties are required to exchange and negotiate detailed costs budgets, which account for their incurred costs and future costs. The preparation of this is time consuming. These budgets are then assessed at a Case Management Conference in advance of a trial date. The entire costs budgeting process serves to invariably increase the costs of the claim, but also its length.

As part of his Review Lord Justice Jackson considered many claimant and defendant costs budgets for claims of 25-50k, 50-100k, 100-250k and 250k+ to ascertain the average cost of bringing such a claim to trial.

The average costs of bringing a claim to trial for damages of 25k-50k was £82,000, whereas 100-250k was £150,000 (any indemnity costs added for failing to beat a part 36 or for poor conduct are not accounted for in these figures).

A proportion of these claims will now fall within the Intermediary Claims Track and will be subject to FRC, which should reduce the size of the claimant’s costs. However, the defendant will also be subject to the same fixed costs if the claimant fails to beat a Part 36 offer at trial.

So, let’s see what this might look like in practice.

The Court awarded £100,000 after a 3 day trial in a band 4 personal injury claim with no involvement from counsel in the lead up to the trial.

Claimant’s cost payable by the defendant:

£24,700 (FRC) + £22,000 (22% of damages) = £46,700
+
£10,000 (trial advocacy fees) = £56,700
+
£500 (Hand down of judgment and consequential matters) = £57,200
+
£22,880 (uplift of 40% on base costs) = £80,080

What does all this mean?

The main implications of the Review at this early stage are:

• An end to the costs budgeting circus for claims under £100,000 which are of ‘modest complexity’. Costs budgets have proven to be expensive, time consuming and serve only to increase cost

• Certainty in determining the likely sum of your opponents costs, which is important in the face of QOCS

• The overall costs of running a claim to trial are likely to be lower

• Claimant firms are likely to carry out less work on higher value claims to ensure that they do not eat too far into their profit margin. This will result in a lack of engagement with defendant firms, a trend which we have seen develop since Lord Justice Jackson’s last Review in the case of Fast Track claims already

At the moment Lord Justice Jackson’s proposals are still nothing more than that; proposals. There is no date set, but it is rumored that they will come into effect on 1 October 2018. If the last few years have taught us anything it is that Lord Justice Jackson’s proposals quickly become reality and have a fundamental effect upon the way in which all Civil Litigation is run. The proposals will not have any impact upon claims which you currently have on your books, but it can be said with some certainty that they will impact on all future claims once they become incorporated into the Civil Procedure Rules.

Watch this space!

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