The reforms announced by the government to extend the fast track and fixed recoverable costs to all civil claims valued up to £100,000, subject to certain limited exceptions, are of seismic proportions for the civil justice system and the last of the interlocking reforms proposed by Lord Jackson.
The new regime will include noise induced hearing loss claims valued at below £25,000 in damages, but with a new process and separate grid of fixed recoverable costs to be introduced for such claims.
The new system, when introduced during 2022, will provide greater certainty and clarity for defendants and their solicitors.
For qualifying cases in the new fast track damages bracket, it will ensure proportionality of costs and the costs of litigation will be known from the outset. This will make reserving more straightforward and accurate for defendants and enable them to assess better their financial exposure on claims when they are deciding whether to defend them. Defendants will be able to plan for litigation and formulate strategies with full knowledge of the costs at stake and potential pitfalls.
There remain grey areas, however.
The qualifying fast track claims will be allocated to one of four bands based on complexity and/or value. Band one will provide the lowest fixed recoverable costs for the simplest lowest value claims and band four the greatest for the more complex and high value cases. There is scope for dispute between claimants and defendants as to which band is appropriate for their case. The appropriate allocation to band will be at judicial discretion on a case-by-case basis. It is anticipated that a new practice direction, similar to CPR 26.8, will be introduced to (i) give guidance on allocation, and (ii) indicate the information the court needs in order to make an appropriate band allocation. We are likely to see a body of case law on this once the new regime enters into force.
It is proposed that there will be an escape clause from fixed recoverable costs, likely adopting the present 'exceptional circumstances' provision to be found at CPR 45.29J. Again, a potential battle ground.
Uplifts and penalties are built into the new system to promote adherence, good behaviours and settlement, for example where a Part 36 offer is beaten, an uplift of 35% of fixed recoverable costs will apply to the stage during which and those after the relevant period expires and in the case of unreasonable behaviour it is proposed that an uplift of 50% will be imposed. An unsuccessful challenge to allocation is proposed to incur a costs liability of £300 and to band £150. Challenging band allocation (or resisting a challenge) without sufficient basis could amount to unreasonable behaviour, incurring further costs penalties as above.
As with any new recipe, the proof of the pudding will be in the eating but, overall, these reforms will be welcomed by defendants and their solicitors.
Jonathon Tetley is a partner with defendant firm Plexus Law