Bellamy declines opportunity to back fixed costs uprating

Bellamy: Current focus on implementing FRCs extension

Justice minister Lord Bellamy has refused to commit to regularly uprating the new or existing fixed recoverable costs (FRC) by inflation.

However, he made it clear that the twice-delayed extension of FRC to most money cases worth up to £100,000 would be going ahead in October.

Responding to a letter from Matthew Maxwell Scott, executive chair of the Association of Consumer Support Organisations (ACSO), Lord Bellamy wrote: “The extension of FRC will be implemented in October 2023. Work on the draft rules which will implement the FRC extension continues at pace with the Civil Procedure Rule Committee (CPRC).

“We will make the new rules available as soon as we can, to give stakeholders sufficient time to adapt to the reforms.”

ACSO pointed out in a report last year that many FRC for personal injury cases have not been increased since 2013 and, without a review taking into account inflation, law firms might have to increase the costs they deducted from clients’ damages by 40-50%.

The £800 FRC for a road traffic portal case settling at more than £10,000 should have increased by now to nearly £1,020 based on the retail prices index (RPI).

Lord Bellamy reiterated that the new FRC, which were initially set out in Sir Rupert Jackson’s 2017 report, would be uprated for inflation using the services produce price index (SPPI) before implementation – this is lower than the RPI.

The CPRC has said the FRC would not be automatically uprated on a periodic basis, which Mr Maxwell Scott described as “disappointing, though the commitment to review the extended FRC regime fees 18 months after implementation is welcome”.

He told Lord Bellamy: “Clarity on whether this review will be regular thereafter, and if there is any intention to ensure this through law, rule or policy would be gratefully received.

“It would also seem perverse if existing FRC were not uprated and an equivalent mechanism for their ongoing review introduced.

“To create a sustainable civil justice system for consumers, the government should make proposals for how all FRC and other civil justice standards such as court fees, claims track limits, discount rates, the whiplash tariff and guidelines for damages can in future be independently reviewed and uprated as required.”

But Lord Bellamy’s response did not offer much hope. “In response to some of the issues you mention in your letter: we keep the HMCTS court fee regime under regular review; the guidelines for the assessment of general damages in personal injury cases are considered and updated regularly by the judiciary; and the whiplash tariff is subject to a three year statutory review.

“I do not think it would be appropriate to introduce more regulation in terms of how such matters are kept under review.”

He stressed that the ministry’s current focus was on implementing the FRC extension, “but I can assure you that if any further reviews of FRCs are to be undertaken we will inform stakeholders at the appropriate time”.

Mr Maxwell Scott commented: “After various delays, the government’s clearer language [on implementation] is welcome.

“But what practitioners need is certainty on the detail, not just on the date. Proper notice needs to be given if the major changes to the FRC regime aren’t to result in avoidable confusion in the short term and, more worryingly, lasting consumer detriment.”

Separately, ACSO has written to the CPRC to express concern about a lack of clarity on cases that would be excluded from FRC, as well as the approach to exceptionality and banding.

“Without further guidance on these points from the date of implementation, parties will be left not knowing if a case will/should be excluded/exceptional or what band it should be allocated to,” Mr Maxwell Scott said, risking “significant dysfunction within the new regime”.

The letter, to CJC chair Sir Geoffrey Vos, the Master of the Rolls, also highlighted the need to regularly uprate FRC.

Meanwhile, the Ministry of Justice has agreed to remove cases of neglect and physical abuse against children from the extension of FRC.

It confirmed the decision to David Greenwood, a director at Yorkshire firm Switalskis who has led the work of the Association of Child Abuse Lawyers on the issue.

Child sex abuse claims were excluded from the first draft of the new FRC rules but neglect and physical abuse cases remained.

Mr Greenwood wrote: “Much child abuse is not sexual but neglect and physical abuse can be just as psychologically damaging. So, I persisted and have been able to secure the exclusion of neglect and physical abuse cases from the second draft of the proposals.

“This success will have significant implications for the recoverability of reasonable costs in our cases for the foreseeable future.” The exclusion also covers vulnerable adults.

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