Preparing for Fixed Costs reforms: Part 2

In the second part of Clarion’s mini-series aimed at helping litigators prepare for the upcoming fixed costs reforms, we look at some interesting developments since the first part of the mini-series was published in November 2022.

Delay to the implementation of the extension to fixed costs

The biggest development is the announcement by the Ministry of Justice  that the implementation of the new fixed costs regime has been delayed by 6 months until October 2023.

Lord Bellamy announced on 18 November 2022 at the Civil Justice Council’s National Forum on Improving Access to Justice: “Extending FRCs requires an extremely complex set of reforms…”

“I know it hasn’t been an easy task. I know that these reforms have particular implications for housing cases, and I am grateful for the constructive input of housing providers which we continue to consider. 

“Progress has been made, and we hope the rules will be approved in the near future. But we’re also very conscious of how important it is to get this right.  

“That’s why I can today confirm that we’re giving these reforms a little more time… and will implement the extension of FRCs in October 2023, rather than next April as originally planned. We think this will give the sector more time to adjust to the new regime.”

It had previously been announced by Lord Justice Birss (Chairman of the CPRC)  that it was the intention of the committee to have a draft copy of the rules out to the profession  before they were approved. However, difficulties were identified in the minutes of the  committee’s October meeting regarding the drafting of the new rules, which indicated that it was not going to be possible to have the rules drawn in time.

The minutes from the December 2022 CPRC meeting, indicate that there is still an intention to provide the rules to the legal profession in draft form prior to their approval and it may well be the case that there is a copy for us to comment on in the next instalment. 

Further delays to the implementation of fixed costs in housing disrepair cases

Housing disrepair cases were set to become a new area of law covered by the extension. The MOJ announced earlier this month that the implementation of fixed costs in these cases will be subject to a further two-year delay, in addition to the October 2023 extension referenced above.

Resultantly, the earliest these reforms will be in place is October 2025, which takes us beyond the timeline for the next general election and brings into doubt whether the next government  will still have an appetite  to implement the proposals. 

Whilst this is good news for tenants and their Solicitors, the news will ultimately come as a blow to landlords faced with claims in which the legal costs often far exceed the costs of repairs.

Recovery of agency fees under the fixed costs regime

An interesting decision at County Court Level from District Judge Phillips, a Regional Costs Judge, was released in January 2023, which in our opinion has ramifications not only for the current fixed costs regime , but also the extended regime which will come into effect in October 2023. We are grateful to John Meehan of Kenworthy’s chambers for sharing a copy of the judgment with us.

District Judge Phillips, sitting in the County Court at Cardiff, confirmed in Wilkinson-Mulvaney -v- UK Insurance Ltd (19th January 2023), that, as things stand, agency fees are recoverable.

The case arose from a claim for personal injury in a low value RTA. At the costs hearing on 5 January 2023, the Judge dealt with several issues but the key issue in dispute was whether or not medical agency fees  were recoverable in addition to expert fees and any fees incurred obtaining medical records pursuant to CPR 45.19.

The Claimant’s Solicitors had obtained expert evidence via a medical agency and the invoices produced in support did not include a breakdown of the agency fees which were incurred in procuring that evidence. The Defendant argued that the agency fees were not recoverable, and it was only the expert’s fee itself that was recoverable. The Defendants argued that any medical agency cost were subsumed within the fixed costs that were recoverable by the Solicitors.

The Judge distinguished this case from the decision in Aldred v Cham (2019) EWCA Civ 1780, where it was held that Counsel’s advice fees in portal fixed costs cases were subsumed within Solicitor’s fixed costs awards.

The Judge held that the cost of obtaining a medical report, did include the fees of the agency. At paragraph 56 the judge stated: “had the drafters of the Rule and the Rule Committee wanted to limit the fees recoverable to those only paid to the doctor, they could have quite easily made this clear in the Rule, they chose not to do so.”

The Judge also went on to confirm that if he was wrong in determining that the fees were recoverable as a disbursement, then the Court was still able to allow a reasonable sum for medical report fees, taking into account the guidance in CPR 44.3 and CPR 44.4.

Further important comments were made by District Judge Phillips, who indicated that it would be helpful if breakdowns were provided on invoices of the time spent by experts in preparing reports, as well as a breakdown of agency fees.

This latter guidance, in our opinion, could be significant ahead of the extension of the fixed costs regime. As the regime expands to cover cases of greater value, the level of expert fees sought under the fixed costs regime will increase, as will  the number of fixed costs disbursement disputes. This is on the basis that a lot of the cases which will be captured by the regime currently fall under the provisional assessment procedure, in which disbursement disputes are common.

Assuming that no provisions are made within the new rules which preclude the recovery of agency fees, ahead of the extension it is advisable to engage in discussions with agencies to establish whether invoices can be produced which provide a clear breakdown of agency and expert fees, to assist the Court with disputes.

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