The Ministry of Justice yesterday (6 September) published its long-awaited response to the consultation on the extension of fixed recoverable costs (FRC) in civil law cases in England and Wales.
The response confirmed the extension of FRC to all cases in the fast track (generally cases with a value up to £25,000) and the implementation of a new "expanded" fast track for "intermediate" cases, which it described as “simpler” cases valued between £25,000 and £100,000.
Yesterday’s announcement ended four years of uncertainty. The MoJ said its response to the 2019 consultation paper, which was based on recommendations made in Sir Rupert Jackson’s 2017 report on FRC, had been delayed, “principally” due to the pandemic. The new reforms will be implemented over the coming year, in conjunction with the Civil Procedure Rule Committee.
The MoJ believes parties involved in civil claims, especially lower value claims, currently suffer too much uncertainty with regards to costs the losing side may be required to pay. It said: “Without being able to predict what the costs may be, it is difficult for either side to take an informed decision on the best way forward. We want cases to be resolved as early as possible, including those that proceed to litigation, with costs that are certain, proportionate, and fair to both sides”.
The MoJ sees FRC as a way of controlling costs in advance by prescribing the amount of money that can be recovered by the winning party at set stages of litigation. It also believes they “reduce overall costs, keep them proportionate, and enhance access to justice”.
However, some in the profession have expressed concern over the new regime. The Law Society urged the MoJ to "re-think" its plans.
Law Society president, I. Stephanie Boyce, said: “The vulnerable and the less well-off would too often be unable to seek redress if fixed recoverable costs were extended to cover cases valued up to £100,000.
“If the government caps the amount of reasonable costs a claimant can recover then – without safeguards – a deep-pocketed and unscrupulous party could force their opponent to run up legal bills they’ll never recover. This could seriously damage the justice system leaving claimants unable to obtain effective remedy or vindicated defendants out of pocket through no fault of their own".
She also said the Law Society could not support the proposals as there are not enough data supporting them. She added: "the proposed regime is very sketchy about how it would be applied. The data that has been used are both out of date and drawn from too narrow a pool of cases, given changes would apply across almost the entire spectrum of civil litigation.
“Since the 2017 report and a 2019 consultation that informed these proposals the justice system has been reshaped by the pandemic, the court reform programme and a raft of changes in other areas of civil justice".
Boyce said the profession would need "greater clarity" on how the regime would be applied and that a "long lead-time" would be required to "enable solicitors to adapt to what looks to be significant change".
Neil McKinley, president of the Association of Personal Injury Lawyers (APIL), commented: “The government has decided to go ahead with plans to force ‘simpler’ cases valued between £25,000 and £100,000 into a fixed costs regime, because doing so would avoid the complexity and implementation costs of a more tailored approach.
“This misses the point that most personal injury cases really are complex and cannot simply be shoe-horned into a simpler system with which they are just not compatible. Employers’ liability disease claims, for example, can be incredibly complex, as can product liability claims, yet both categories of claim are to be included in this new system.
“The Ministry of Justice has also provided little detail about how this will work, leaving it to ‘the parties and judges’ to work that out. That will take time and, until we get clarity on these matters, injured people will be subjected to a great deal of uncertainty at a time when they are very vulnerable”.
Association of Costs Lawyers (ACL) chair, Claire Green, commented: “The question of fixed costs ultimately comes down to the figures. Do they provide genuine access to justice and allow a party to conduct litigation effectively, or do they only work for the privileged few who can afford to pay for litigation irrespective of what they recover from an opponent?
“The proposed figures for the fixed costs adopted by the Ministry of Justice were based on just one law firm’s sample of cases, where it acted for the defendants. The government needs a much more rigorous statistical base if it is to widen the use of fixed costs, and also needs to commit to regularly reviewing and updating them. Aside from uprating them to start with, this is absent from the response, and indeed history shows that it does not happen, to the detriment of clients, their lawyers and access to justice.”...