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Fixed Recoverable Costs - A review of Lord Justice Jacksons proposed reforms

The much anticipated report of Lord Justice Jackson was finally released 31 July 2017, inevitably reigniting the longstanding debates amongst Civil Practitioners. The underlying objectives of the Jackson Report are to introduce more certainty, transparency and proportionality into Civil Litigation, in turn leading to fairer access to justice. The essential features of the proposals are:

1. All recoverable costs in the Fast Track to be fixed.
2. A new track to be created, known as the "Intermediate Track".
3. Do away with indemnity costs and introduce an uplift on FRC, where Claimant's make effective Part 36 offers.

Each of these points will be explored in turn.

FRC - Fast Track

The Fast Track is limited to relatively low value claims where the trial is unlikely to last more than one day and expert evidence is limited to one expert per party in any field. FRC already apply to many Fast Track cases and appears to be working adequately. Lord Justice Jackson refrains from "tinkering" with the existing Fast Track FRC regime as he does not wish to disrupt the balance where it is working well. Instead he is of the opinion that "the time has come to finish the task" by extending the FRC regime across the whole of the Fast Track.

Lord Justice Jackson proposes to introduce bands of complexity, ranging from RTA defended debt cases to EL Disease claims and any particularly complex top end Fast Track claims, to filter and allocate cases into the FRC regime. The proposed matrix is as follows:

	Complexity Band
Stage	1	2	3	4
Pre-issue £1,001 - £5000		£104 + 20% damages	£988 + 17.5% damages	£2,250 + 15 % damages + £440 per extra defendant
Pre-issue £5,001 - £10,000		£1,144 + 15 % damages over £5,000	£1,929 + 12.5% damages over £5,000
Pre-issue £10,001 - 25,000	£500	£2,007 + 10% damages over £10,000	£2,600 + 10% damages over £10,000
Post-issue, pre-allocation	£1,850	£1,206 + 20% damages	£2,735 + 20% damages	£2,575 + 40% damages + £660 per extra defendant
Post - allocation, pre-listing	£2,200	£1,955 + 20% damages	£3,484 + 25% damages	£5,525 + 40% damages + £660 per extra defendant
Post-listing, pre-trial	£3,250	£2,761 + 20% damages	£4,451 + 30% damages	£6,800 + 40% damages + £660 per extra defendant

FRC - "Intermediate Track"

Arguably the most significant reform proposed in the Jackson Report is the creation of an entirely new track known as the "Intermediate Track". The new track is to be created to catch those cases which fall foul of the existing FRC regime, but ought to be caught. The criterion for assigning cases to the proposed new track include, but are not limited to the following:

• The value of the claim being no higher than £100,000
• The trial must be limited to three days
• No more than two expert witnesses giving oral evidence per party
• There are no wider factors, such as reputation or public importance deeming the case inappropriate
• The claim is not for mesothelioma or other asbestos related lung diseases

  Again, Lord Justice Jackson proposes to implement a band system from 1 to 4, based on the complexity of the claim. Generally a simple debt claim or quantum only personal injury claim would fall into Band 1, where there are disputes over both liability and quantum the case will generally fall within Band 2 or 3 depending on complexity and where there are serious issues on breach, causation and quantum the matter would be best allocated to Band 4.

  The core principle behind the creation of a new track is to streamline the process, incentivise early settlement and have the ability to control the costs incurred during litigation. The certainty of costs encouraged by the Jackson Report creates a double edged sword. On the one hand this will enable the Defendant to more accurately balance the risk of taking a matter to trial and incurring the costs with settling the matter as soon as practicable. On the other hand, this may encourage more claims as Claimant's have more certainty over the costs involved with litigation and this may encourage more exaggerated and frivolous claims where the amounts to be gained that outweigh the risk of costs incurred.

  Lord Justice Jackson has set out at page 106 of his report Table 7.1, the proposed figures for the FRC which range from £19,150 for claims up to £30,000 and £68,450 for claims up to £100,000. Although the figures do not include disbursements, the Jackson Report considers that once the regime is in place, work should commence on developing fixed costs for experts as well.

Failure to accept a Part 36 offer

Lord Justice Jackson has proposed to replace indemnity costs under Broadhurst v Tan, to reward parties for an effective Part 36 offer with a percentage uplift on fixed costs. However he accepted that this was a clear issue of policy and that it needed to be addressed in the further consultation process.

Forbes Comment

Overall, the shock waves that were expected by Civil Practitioners have been somewhat suppressed by the "Wait and See" approach taken by Lord Justice Jackson in his proposals. It was originally suspected that Lord Justice Jackson was to suggest that FRC should apply to cases up to £250,000 however, he appears to have scaled back on this proposal by suggesting a pilot of capped recoverable costs, in conjunction with streamlined procedures for business and property cases up to £250,000.

Whilst Lord Justice Jackson proposes to expand the FRC regime, he appears to have accepted that you cannot have a 'one size fits all' regime and to impose FRC beyond the Fast Track will mean changing the procedures as a result. The Jackson report now lies with the Government to consider the proposals and introduce any changes into Civil Litigation. The introduction of the new track will need to be implemented gradually and it is anticipated that there may be some difficulties in the beginning allocating cases to the particular Bands as proposed by Lord Justice Jackson. In any event these changes will refresh the procedures of Civil Litigation, however far they are implemented into the legal system.

For more information contact Elizabeth Bower in our Insurance department via email or phone on 01254 222411. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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