Insurance & Reinsurance
This content was written by BLM prior to its merger with Clyde & Co.
The idea of FRC in civil litigation was aired nearly 25 years ago in the Woolf reports and was implemented to a limited extent - for fast track mainstream personal injury cases - in 2013, following strong support in Jackson LJ’s first report. His second, in 2017, recommended introducing separate FRCs for the remainder of the fast track and for all claims of less than £100,000 in value. This was well received by government and the Ministry of Justice consulted on the matter in 2019 with a firm view to implementation. Work towards implementation then paused because of the pandemic, but today the MoJ has very clearly spelled out that it intends to extend FRCs next year, broadly along the lines already proposed.
Obviously, it is too early to provide any detailed commentary but experience suggests that there is likely to be litigation around the margins of the FRC schemes, focusing on (i) getting out of them, ie scrutiny of excluded case types and of the ‘escape’ clauses and (ii) maximising costs if within FRCs, ie disputes about case bandings and resolution stages.
Aside from such satellite litigation, experience also suggests that paying parties will be better able to predict the costs of litigation within the FRC schemes and therefore to resolve claims more efficiently. This will be especially relevant to significant repeat players such as insurers, local authorities and corporate defendants.
It is also worth noting some technical aspects which the MoJ’s publication has clarified. In the fast track: (i) banding - credit hire will come within band 1 (lowest complexity, lowest costs) and holiday sickness claims will come within band 2; (ii) behavioural uplifts - unreasonable litigation conduct will trigger a 50% uplift of FRCs and in respect of part 36 offers a 35% uplift will be applied as opposed to reverting to indemnity costs; (iii) case-related uplifts - will include 12.5% by way of London weighting and 25% for additional claimants in the same cause of action.
Although the MoJ’s response document published today states that progress “has been delayed, principally due to the COVID-19 pandemic”, it represents the resumption of work towards extending FRCs very much along the lines proposed in 2017 and 2019. The government will be working with the Civil Procedure Rule Committee on the detail of the rule changes needed and with MoJ officials and others to finalise the SPPI inflation-based increases to the figures proposed before the pandemic.
There is a very significant amount of work involved to bring forward the final package of Civil Procedure Rules (CPR) and costs tables. While implementation by secondary legislation to amend the CPR is a good deal quicker than primary legislation, it seems to us that the necessary activity here is unlikely to be completed in the six or so months before next April. But these reforms are very definitely coming and absent any clear indication otherwise, it may be realistic to plan for implementation in autumn 2022.
Finally, for a reminder of the costs structures, case bandings and procedural modules which underpin the FRC schemes in both the fast track and in intermediate value cases, please refer to our alert about the initial consultation in 2019 which provides all of the detailed elements which will now be taken forward in drafting the new rules and in inflating the individual elements of costs.