Fixed Recoverable Costs: is Jackson “finished”?

This article is part of issue #3 of our ATE newsletter, EvaluATE.

Nick McDonnell

Director

Kain Knight

The minutes from the October 2023 Civil Procedure Rule Committee (CPRC) were made available on 9 November 2023. So, what can we learn from them about the Fixed Recoverable Costs (FRC) reforms both present and future?

Lord Birss, the deputy head of civil justice and member of the CPRC, spoke prior to this at the Law Society’s Dispute Resolution Conference on 14 September 2023. Speaking optimistically about the newly implemented fixed recoverable costs regimes, he remarked that “It also means that one can say probably from now, ‘Jackson, we are finished’. That is something, actually, when you think of the amount of work that went into the Jackson report. It is done now.”

But that’s not entirely correct, is it? In fact, it’s far from correct. Upon consideration of the latest CPRC minutes it is apparent that this statement cannot be accurate for two reasons.

The first is that the October 2023 FRC reforms are likely to be subject to revisions, amendments, corrections and additions in the April 2024 update of the Civil Procedure Rules. The second is the proposed introduction of yet a further, new FRC regime for clinical negligence claims with a value of £25,000 or less.

Fixed Recoverable Costs (FRC) in Low Value Clinical Negligence

The Government gave its response to the fixed recoverable costs in lower value clinical negligence claims consultation (which ran from January to April 2022) in September 2022, and indicated separately that it wanted draft rules for a sub-£25k clinical negligence FRC scheme by December 2023, ready for implementation in April 2024.

The CPRC’s foreshadowed their belief that this implementation expectation was unrealistic by noting that:

“A serious risk exists to achieving the desired timescale for approval (at the December meeting for inclusion in the next mainstream CPR Update as part of the April 2024 common-commencement cycle): officials were urged to consider the timetable in the light of the comments made and the context of possible further consultation being necessary, liaison with HM Courts and Tribunals Service on the operational implications and the benefit of early notice to users, conscious that draft amendments are not currently in a suitable state for publication…”

And:

“a mini-consultation is currently running (until 27th October) in regards to disbursements. DHSC will report back on that in due course…”

So, it seems it is extremely unlikely any FRC regime concerning sub-£25k clinical negligence claims will be implemented by April 2024. The question then becomes ‘If not then, when?’ With a general election likely to be called in Summer or Autumn 2024, it may not be any time soon.

Extending Fixed Recoverable Costs (FRC): update

The minutes also addressed the current FRC regime implemented in October 2023. The minutes recorded that: “It is always possible with reforms of such scale that tweaks and further changes are required. However, the principle is sound.”

So, what are these ‘tweaks and further changes’ on the horizon?

First, the minutes highlighted that the Costs Sub-Committee is considering drafting amendments covering the issues raised in the July 2023 Consultation which ended in September 2023. Namely:

Fixing costs on assessment

Despite FRC supposedly bringing in certainty and removing the need for costs disputes, the CPRC are looking to not only implement a discrete procedure to resolve these supposedly non-existent FRC disputes, but to also allow the successful parties in those disputes to recover fixed sums – fixed costs for resolving fixed costs disputes. You couldn’t make it up…but they did!

Fixing costs in Part 8 claims

How does a party seek a judicial resolution to an FRC dispute in a claim where no proceedings are issued? You issue Part 8 proceedings of course…and the CPRC are looking at also allowing parties to recover fixed costs for the work needed to prepare and issue those Part 8 proceedings…

Inquests costs / restoration proceedings

There are occasions in claims caught by the October 2023 FRC reforms where it is necessary for legal practitioners to incur costs associated with attending inquests or issuing proceedings to restore a company to the Register so litigation can commence.

You may ask…and? Well, CPR.r.45.1(3)(b) states that: “the court may only award costs in an amount that is neither more nor less than the fixed costs allowed by the applicable Section and set out in the relevant table in Practice Direction 45.”

But there are no fixed recoverable costs that reflect either inquest or restoration proceedings work. On the one hand legal practitioners must do work for parties, and necessarily incur these costs in respect of it, but on the other, there is no provision currently where those parties can recover those necessarily incurred costs. The CPRC are considering coming up with additional ‘bolt on’ fixed costs for this work.

The recoverability of advocacy fees in cases that are (a) settled late and (b) vacated

Currently, advocacy fees are payable where the trial takes place and are not where it doesn’t. Understandably, the Bar Council says ‘that’s unfair’! Accordingly, the CPRC are looking to implement revisions to provide for some form of recovery where trials are settled late or are vacated.

The timing for the admission of clinical negligence claims to be allocated to the intermediate track (at 26.9(10)(b))

Unexpectedly, clinical negligence claims with a value between £25,000 and £100,000 are caught by the October 2023 FRC reforms where there is a full admission of breach of duty and causation by the Defendant before allocation. But there is no guidance as to ‘when’ a Defendant should make such admissions.

The Rules, as they stand, lead to the theoretical position that a Defendant could deny breach and causation all the way up to allocation and admit just before; the claim must then be allocated to the Intermediate Track and the FRC regime will apply. However, a Claimant in that scenario may have incurred significant costs on defending those liability and causation issues where those costs are not accounted for in the Intermediate Track FRC regime.

So, the MOJ have proposed in the Consultation that the rules should be “tightened to make explicit that the early admission of liability must be made in the pre-action protocol letter of response.” Presumably, if not, it should be allocated to the Multi-Track and no fixed recoverable costs will apply?

Other issues

The sub-committee is also considering some other issues that have been raised outside of the consultation, including the wording around contractual entitlement to costs at CPR 45.1(3). APIL, in their proceedings against the Lord Chancellor for a Judicial Review of FRC Rules, challenged the apparent inability of parties to contract out of FRC. The current CPR.r.45.1(3) states:

“(3) Where—

(a)a claim is one to which Section IV, Section VI, Section VII or Section VIII of this Part applies; and

(b)the parties agree or the court orders that a party is entitled to costs,

subject to the application of any rule in those Sections or this Section by which costs are to be allowed, disallowed, increased or reduced, the court may only award costs in an amount that is neither more nor less than the fixed costs allowed by the applicable Section and set out in the relevant table in Practice Direction 45”

There is often a term in contracts between, for example, a landlord and a tenant or a mortgagor and mortgagee, that states that where there is a need to enforce the terms of that contract, the costs of and incidental to that enforcement are agreed to be paid in full and on the indemnity basis. CPR.r.45.1(3) seems to conflict with that.

Accordingly, the CPRC are looking to clarify the effect of CPR.r.45.1(3) on such contracts. It is expected that the rules will set out that the rules are not intended to interfere with the lawful terms of a contract entered into between parties. But, until that clarification is made, there remains uncertainty.

So, given the further revisions and additions to the October 2023 fixed recoverable costs reforms and the eventual implementation of a new FRC regime for sub-£25k clinical negligence claims, is Lord Birss correct to say of FRC “…we are finished. It’s done now”? It certainly doesn’t seem so.

This article was written for the DAS ATE newsletter, EvaluATE. The newsletter is our regular platform for providing insights to those in the PI and CN industries; you can read the rest of issue 3 at the link below. Don't forget to join our webinar on Wednesday 13th December to hear more from our contributors about the topics raised in this issue.

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