Lawyers say a High Court ruling has cast doubt on the government's plans to introduce fixed fees.
In Merrix v Heart of England NHS Trust, the appealing claimant successfully argued that the current system of costs budgeting would be sufficient to gather fair fees.
Mrs Justice Carr agreed the claimant’s assertion that a budget fixed the amount of recoverable costs, which should be reduced only if there is good reason.
The appellant’s cost budget had been approved in the total sum of £128,256, of which £74,780 related to future costs. The bill ultimately served by Merrix was less than the approved total budget after the case was ended before trial but after lay and expert evidence had been exchanged.
Carr concluded: ‘Where a costs management order has been made, when assessing costs on the standard basis, the costs judge will not depart from the receiving party’s last approved or agreed budget unless satisfied that there is good reason to do so.
‘This applies as much where the receiving party claims a sum equal to or less than the sums budgeted as where the receiving party seeks to recover more than the sums budgeted.’
But Carr admitted her decision on first appeal will ‘not end the debate’, adding: ‘I respectfully make the perhaps obvious point that the issue would appear to be ripe for early consideration by the Court of Appeal raising, as it does, an important point of principle or practice.’
The claimant was represented by John Foy QC of 9, Gough Square and Daniel Frieze of St John’s Buildings, instructed by Irwin Mitchell.
Frieze said the result calls into question the government’s proposed changes to introduce a number of fixed costs measures.
‘This ruling clearly shows the government that continued wholesale changes to solicitors’ costs may be an unwelcome distraction. In particular, the time, effort, judicial and lawyer training should not be thrown out to pursue an agenda which many consider riddled with self-interest and short-term political gains,’ he said.
‘Cases like this also emphasise that the present cost regime is working, and will hopefully force those in positions of power to rethink their approach.
‘The current system is underpinned by the notion of fairness, and the focus should be placed firmly on tweaking the current system to prevent misuse, rather than attempting wholesale change.’
Lord Justice Jackson, who created the rules on costs budgeting, is currently leading a review of fixed recoverable costs, with the government's support.
The terms of reference state that proposals will ensure the costs of going to court are ‘more certain, transparent and proportionate for litigants’. It will consider the types and areas of litigation in which such costs should be extended, and the value of claims to which such a regime should apply.