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Government confirms intention to extend fixed recoverable costs

  • Legal Development 8 September 2021 8 September 2021

After much delay, the Government has provided its response to the consultation on Extending Fixed Recoverable Costs in Civil Cases.

Government confirms intention to extend fixed recoverable costs

The expansion of FRC in England and Wales has been on the agenda since Lord Justice Jackson’s 2017 report on this issue, and subsequent 2019 consultation paper on implementing those proposals.

The key outcomes from the response are:

  • The extension of fixed recoverable costs to all cases in the existing fast track up to a value of £25,000
  • The expansion of the fast track to include certain types of ‘intermediate’ civil cases valued between £25,000 to £100,000
  • Cases involving mesothelioma/asbestos, complex PI and professional negligence, actions against the police, child sexual abuse, and intellectual property will be excluded from the ‘intermediate’ classification.

The Government will move forward with the proposals by working with the Civil Procedure Rule Committee but noting there is a “need to engage with the CPRC on the detail of implementation.

Justifying the expansion of fixed recoverable costs, the Government was keen to emphasise that existing FRC arrangements had, in their view, promoted access to justice for both claimant and defendants. Furthermore, analysis of pre- and post-LASPO data had show a reduction in real recovered costs in personal injury claims by just under 8%.

A link to the full consultation response can be found here.

Summary

Extension of the existing fast track

As stated above, FRC will be extended to all civil cases in the fast track up to a value of £25,000 in damages, with claims allocated to one of four bands of complexity.

The bands will remain in line with the 2019 consultation document as follows (in relation to personal injury “PI” claims) with confirmation that credit hire and holiday sickness claims will fall into the following bands:

Band 1: RTA non-PI (bent metal claims) and credit hire

Band 2: RTA PI (within the Pre-Action Protocol) holiday sickness claims

Band 3: RTA PI claim (outside the Pre-Action Protocol) EL / PL accident claims

Band 4: Employers Liability disease (non-NIHL) and the most complex fast track claims

For those wishing to challenge the banding of a claim, a costs liability of £150 will apply if that challenge is unsuccessful. However, this penalty will be kept under review.

The ‘escape clause’ contained within CPR 45.29J “enabling a party to exit FRC in the fast track in exceptional circumstances” will continue to apply.  An uplift of 35% on FRC will apply to Part 36 offers at “the stage during which and those after the relevant period under a Part 36 offer expires”.

Counsel’s fees will be ringfenced in respect of Band 4 and NIHL claims.

For the avoidance of doubt, Noise Induced Hearing Loss (NIHL) claims within the fast track will be subject to a distinct process and FRC. We will be preparing an update on this issue separately.

Intermediate cases

The fast track and FRC will be extended to include ‘intermediate’ cases valued between £25,000 and £100,000 using the proposed criteria; set out within the Fixed Recoverable Costs Consultation Paper at page 30. The Government does “not propose to be more prescriptive in allocation criteria for intermediate cases beyond those proposed by Sir Rupert [Jackson]”, but a proposed additional Practice Direction will be discussed with the CPRC to see whether this could provide further guidance.

Certain case types have been identified as being unsuitable, specifically cases involving mesothelioma/asbestos, complex PI and professional negligence, actions against the police, child sexual abuse, and intellectual property.

Regarding the proposed banding criteria, the four bands proposed by Lord Justice Jackson are to be retained as follows:

Band 1: the simplest claims that are just over the current fast track limit, where there is only one issue and the trial will likely take a day or less, e.g. debt claims

Band 2: will be the ‘normal’ band for intermediate cases, with more complex claims going into Band 3

Band 3: will be the ‘normal’ band for those complex intermediate cases

Band 4: the most complex claims, with claims such as business disputes and ELD claims where the trial is likely to last three days and there are serious issues of fact/law to be considered

Similar to the expanded fast track, an unsuccessful challenge to ‘intermediate’ allocation will incur a costs liability of £300. However, a challenge to band allocation “without sufficient basis could amount to unreasonable behaviour, incurring further costs penalties”.

Inflation

The figures for FRC will be uprated in line with the Services Producer Price Index (SPPI).

Operable dates

The expansion of FRC will apply to “those cases where the accident or cause of action arises after the implementation date, or in disease and equivalent cases where no letter of claim has been issued before the implementation date.”  This will ensure that FRC apply to as “many cases as reasonably possible”.

Consultation responses

The specifics of the consultation responses received by the Government indicated a clear deviation in opinion between claimant and defendant representatives on these proposals.

On the issue of extending fixed costs to fast track cases, the majority of those in support were identified as defendant representatives and insurers. However, of those who disagreed “most were claimant lawyers or other claimant representative groups.”

There were concerns raised about the proposed bandings, and that the vague proposals would generate “unnecessary and satellite litigation.”  Similarly, there was consensus that clear markers would be necessary to identify complex cases.

Regarding the intermediate track as initially proposed by Lord Justice Jackson, the Government stated that it did not “see the need for introducing a new track, given the costs and complexity that this would involve.”  When allocating intermediate cases within the extended fast track to a band, “the band should only be revisited in exceptional circumstances”.

End

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