It was announced on Friday, that the MOJ has opened a consultation which will run to 8 September, with responses invited on a number of key issues which the draft rules either failed to address or were ambiguously drafted in the first instance. Any changes which follow the consultation, are to be introduced in April 2024.
With a little over two months remaining until the planned extension of the fixed costs regime, the further announcement by the MOJ is indicative of the difficult road ahead for litigators and costs practitioners ahead of the implementation on 1 October.
The announcement comes following prior confirmation, that the rules would be amended on the same day that they are brought into effect, via Civil Procedure (Amendment No. 3) Rules 2023. The consultation focuses on the following issues:
- whether costs on assessment should be fixed;
A streamlined cost assessment process, with a cap of £500 was an initial recommendation of Lord Jackson in his 2017 report, but something not addressed in the published draft rules in April of this year.
The MOJ now proposes to implement a regime, whereby the parties would initially attempt to agree costs, failing which, a short form claim form would be filed. This would be followed by replies, and an application for determination by the Court on papers. Costs of the determination would then follow the event, and be capped at £500, inclusive of any Part 36 uplifts.
Satellite costs litigation on the back of the extended regime, is something which is envisaged by most costs practitioners. Disputes regarding the appropriate track / banding when matters settle before allocation, and disputes in relation to disbursements as the regime covers larger cases, are just two of the areas where it is expected that issues will arise post settlement between the parties.
This streamlined regime may be a useful tool in settling disputes without a potentially drawn out process and oral hearings, but the proposals bring into question whether the proposed cap is sufficient to deal with the issues in dispute, especially if it were to be inclusive of a 35% uplift on fees. There appears to be no bite to a sensible Part 36 offer by parties prior to, or early in the process, and therefore no real deterrent for settling costs issues without a streamlined assessment.
If we are to look at the proposed fees for a case which will settle pre-allocation and could be captured in bands 2 or 3, typically a PI claim with liability and quantum in dispute. The difference in base costs between a band 2 case and a band 3 case, is £1,400. A proposed cap of £500 does not seem to be a sufficient deterrent for unjustifiably seeking to restrict a party to the lower fees, or alternatively, seeking the higher fees on borderline cases, and the reward seems to outweigh the risk.
One wonders whether the risks of paying costs on a standard basis would actually better achieve the apparent objective here, which is to deter this satellite costs litigation. The proposed order of steps is also questionable, with the paying party laying out their position first, with no opportunity to respond to the paying party’s submissions or replies. The process envisages a certain level of pre application communication between the parties, whereby the receiving party will already know the paying party’s stance before they serve a short form bill, whereas this will not always necessarily be the case.
- whether there should be fixed costs for Part 8 (costs only) claims;
A capped fee of £300 is proposed for Part 8 costs only claims, which will be required when cases are settling pre-issue. Similar observations as to the effectiveness of the capped fee as a deterrent to satellite litigation are made here, as above.
- the recoverability of, separately, (a) inquest costs and (b) restoration proceedings, and how this should be dealt with in the CPR;
Recoverability of inquest costs is a common dispute for those dealing with cases under Fatal Accidents Act 1976. It was recently decided in the case of Briley & Ors v Leicester Partnership NHS Trust & Ors [2023] EWHC 1470, that fees incurred dealing with pre-inquest reviews are recoverable on an inter partes basis.
The costs of attending such hearings, can be significant and greatly in excess of the fees which are to be recoverable on the new extended fixed costs regime. It is therefore proposed costs of attending inquests should be recovered separately on the fast and intermediate tracks, with costs being subject to assessment in the usual manner.
Currently, the only provisions for fees associated with restoration proceedings in the new regime, are in relation to NIHL claims, and are outlined in CPR 45.56. Solicitors will be able to claim an additional sum of £1,280, plus disbursements for carrying out this work. The consultation proposes that similar provisions are made for other cases in the new intermediate track.
- the issue of providing for the recoverability of advocates’ preparation in the CPR, in cases which (a) are settled late or (b) are vacated; and
- whether the fixed trial advocacy fees now in Practice Direction (PD) 45 of the CPR should be further uprated for inflation, and by how much;
The Bar Council has suggested that in cases settled or removed from the list on the day of trial, the full trial advocacy fee should be recoverable; and in cases settled or removed from the list within two working days of the date fixed for trial, 75% of the full trial advocacy fee should be recoverable. These proposals were not covered in Lord Jacksons 2017 report, but the MOJ considers these proposals have merit and invites stakeholder comment.
With regards to inflationary uplifts, The Bar Council and PIBA argue that there has been no uprating of the fixed trial advocacy fees since July 2013, and that the fixed trial advocacy fees in complexity bands 1-3 of the fast track (Table 12, CPR 45.44) should be uprated from then using the SPPI index.
It is also proposed that the trial advocacy fees in complexity band 4 of the fast track should be uprated by around 20%. The same uplift is suggested in intermediate track cases. The MOJ does not see the merit in the proposed 20% uplift, but do propose that trial advocacy fees on the fast track, for complexity bands 1-3, will be increased via the SPPI to take into account inflationary increases between 2013 and 2016 (by 4%); and to inflate further for the 9 months between January and October 2023 all of the FRC figures covered by Lord Jackson, which would include the uprated fixed trial advocacy fee figures.
(vi) whether to make explicit in CPR 26.9(10)(b) in respect of clinical negligence claims, that an early admission of liability must be made in the pre-action protocol letter of response.
This issue is one which in our view, required early address by way of satellite litigation once the new rules were in place, and its proposed review is one which should be welcomed.
Within Lord Jackson’s 2017 report, it was initially proposed that clinical negligence cases would only be captured by the fixed costs regime, where admissions of breach of duty and causation were made within the letter of response. With the Department of Health and Social Care’s 2022 consultation on fixed recoverable costs in clinical negligence matters, the inclusion of fixed costs in any clinical negligence matters was one which took a lot of people by surprise when the draft rules were published in April.
The absence that any admission should be made within the letter of response, was one which opened the door for significant work being incurred by Claimant’s Solicitors prior to allocation, in the belief the matter would be allocated to the Multi Track, which would not necessarily be remunerated if an admission were to be made prior to the allocation date.
It also brought into question, whether applications for re-allocation / assignment, would be made by Defendant’s if an admission was made after allocation. Under the proposed new rules, the effect of this reallocation would mean only the costs of the final allocated track would be recoverable for the entirety of the claim, leaving the Claimant with an even greater potential significant shortfall in recoverable costs.
It is proposed that there is now the added requirement for an early admission to be made in cases where the cause of action is 1 October or afterwards before a case can be allocated to the intermediate track. The MOJ point out that it is unlikely that any new clinical negligence claims, where the cause of action accrues on or after 1 October, will be subject to early admission and allocation to track in advance of 1 April 2024.
However, the fact that it remains a possibility, albeit a slim one, raises the question as to why the rule is not amended prior to 1 October. Further Points: Inflation The MOJ has further announced that, whilst inflation remains high they will provide further exceptional uprating to the fixed costs regimes, with figures to be uplifted further to cover inflation since January 2023. Whilst this is a welcomed announcement, it raises the question as top why the same measures cannot also be applied for existing fixed costs figures in portal matters, which are also outlined in PD 45, and have not been reviewed since 2013, when they were decreased from existing figures.
Final Comments
Overall, the consultation must be welcomed as it will address some crucial flaws in the draft rules. However, some of the proposals still require further revisions, otherwise they will not meet the goals they set out to achieve.
With this being the second acknowledgment that the rules are by no means fit for purpose in their current draft, following from the amendments announced by the Civil Procedure (Amendment No. 3) Rules 2023, it also raises the question as to why their implementation cannot be pushed back further, in order to iron out at least a few more of the apparent wrinkles. Readers are strongly urged to respond to the consultation and can do so by sending responses to FRCconsultation@justice.gov.uk by 8 September.
The consultations will be discussed at our free fixed costs seminar on 6 September. The seminar will focus key issues in relation to the new rules, including practical guidance on the new banding and allocation rules. Click here for more information and to register to attend.
For further information on the consultation, please contact Clarion’s Costs and Litigation Funding Department who can be contacted on any fixed costs issues, at our new dedicated fixed costs email address at FRC@clarionsolicitors.com.
