Ministry of Justice to press ahead with fixed costs expansion

Wolfson: Case for extending FRC is strong

The Ministry of Justice (MoJ) yesterday confirmed that it will implement Sir Rupert Jackson’s blueprint for fixed recoverable costs (FRC) across the fast-track and in most money cases worth up to £100,000.

It will also take forward the Civil Justice Council’s plan for FRC in noise-induced hearing loss cases and introduce costs management in judicial review (JR) cases where a party’s costs exceed £100,000.

The MoJ has finally published the outcome of the consultation that closed in June 2019 on implementing Sir Rupert’s July 2017 report on extending FRC. It received 149 responses.

It does not specify a date for implementation, saying only that it “will work with the Civil Procedure Rule Committee to ensure the smooth delivery of these reforms”.

The MoJ added: “We are keen that, when implemented, FRC should apply to as many cases as reasonably possible, within the cohort of cases covered.

“This will mean those cases where the accident or cause of action arises after the implementation date, or in disease and equivalent cases where no letter of claim has been issued before the implementation date.”

Introducing the consultation outcome, justice minister Lord Wolfson said the lack of certainty about costs in claims for “relatively low” damages made it difficult for either side to take an informed decision on the appropriate way forward.

“The case for extending fixed recoverable costs remains strong: uncertainty of costs hinders access to justice, while certainty of costs set at a proportionate and fair level enhances it,” he wrote.

The MoJ has made no substantial change to the consultation proposals, which in turn only rejected two of the former Court of Appeal judge’s recommendations: rather than introducing his new intermediate track for cases worth £25,000 to £100,000, it proposed assigning these so-called ‘intermediate’ cases to an extended fast-track.

Second, it did not intend to extend the ‘Aarhus’ costs-capping rules across all JR cases.

Mesothelioma/asbestos, complex personal injury and professional negligence, actions against the police, child sexual abuse, and intellectual property will all be excluded from intermediate cases

The MoJ has accepted the different bands of fast-track and intermediate cases, the criteria for the latter and the actual figures proposed by the 2017 Jackson report, subject to uprating them for inflation (see below).

All fast-track cases will be placed into four bands of complexity, band 1 being the least complex and band 4 the most, with the level of FRC depending on the stage the case has reached:

  • Band 1: RTA non-personal injury, defended debt cases;
  • Band 2: RTA personal injury (within protocol), holiday sickness claims;
  • Band 3: RTA personal injury (outside protocol), employers’ liability accident, public liability, tracked possession claims, housing disrepair, other money claims; and
  • Band 4: Employers’ liability disease claims (other than noise-induced hearing loss, which is set to have its own dedicated FRC scheme), any particularly complex tracked possession claims or housing disrepair claims, property disputes, professional negligence claims and other claims at the top end of the fast-track.

In the event of beating a part 36 offer, the MoJ said an uplift of 35%, rather than indemnity costs, should be applied to the FRC.

Unreasonable behaviour during litigation will be penalised by a 50% uplift, while FRC will be increased by 25% for each additional claimant in claims that arise from the same set of facts.

The existing 12.5% London weighting in fast-track FRC regimes will continue to apply.

The MoJ backed Sir Rupert’s view that it was necessary to ring-fence fees for counsel or specialist lawyers only in band 4 and hearing loss cases, “as counsel is rarely instructed in cases outside of band 4”, as well as continued London weighting.

An unsuccessful band challenge will incur a costs liability of £150.

Intermediate cases will be for money claims worth up to £100,000 where the trial should not last longer than three days with no more than two expert witnesses giving oral evidence for each party, and where the case can be justly and proportionately managed under an expedited procedure.

Cases with wider factors, such as reputation or public importance, could make cases inappropriate for allocation as an intermediate case, along with any other exceptional circumstances.

Otherwise, the government does not intend to provide more prescriptive allocation rules, saying it is “the role of judges to exercise their discretion and ensure that intermediate cases are appropriately allocated”.

Cases will be banded like this:

  • Band 1: the simplest claims that are just over the current fast track limit, where there is only one issue and the trial will likely take a day or less, e.g. debt claims.
  • Band 2/3: along with band 3 will be the ‘normal’ band for intermediate cases, with the more complex claims going into band 3.
  • Band 4: the most complex, with claims such as business disputes and employer’s liability disease claims where the trial is likely to last three days and there are serious issues of fact/law to be considered.

Existing multi-track court fees will apply to intermediate cases but the MoJ pledged to keep this under review.

An unsuccessful challenge to allocation will incur a costs liability of £300 but the MoJ said challenging band allocation, or resisting a challenge, without sufficient basis could amount to unreasonable behaviour, incurring further costs penalties.

It decided that there should just be one criterion for defining a ‘heavy’ JR to which costs management scheme would apply: whether the costs of a party are likely to exceed £100,000.

The consultation said that, given this was unlikely to apply to many JRs (less than two dozen per annum), it did not propose to pilot this.

The courts will have the discretion to make a costs management order, either on their own or upon the application of either party involved.

The MoJ acknowledged that this could frontload costs but said “this forces parties to think more carefully about costs from the beginning and ensures that applications will be made based upon objective criteria, rather than variable costs specific to particular parties”.

It also accepted the need to make general provision for higher FRC and additional disbursements where claimants were vulnerable, although this is likely to be for “specific” vulnerabilities, such as having difficulty giving instructions because of a verified mental impairment.

The MoJ will also consider whether the arrangements for settlements for protected parties should be extended to the new FRC regimes.

The response paper said: “Proportionality of costs has been a central theme throughout Sir Rupert’s reforms: it is right, especially in lower value cases, that costs should be proportionate to the issue, which means, in turn, that the legal work to be undertaken should be tailored to those proportionate costs…

“It is the government’s view that the existing PI FRC regimes have also promoted access to justice for defendants, by enabling them to defend a case according to its own merits, rather than settle for fear of high costs.”

FRC grid for fast-track claims

(As laid out in Sir Rupert Jackson’s 2017 report. The MoJ confirmed that the figures will be uprated by inflation before implementation.)



FRC grid for the intermediate claims

(As laid out in Sir Rupert Jackson’s 2017 report. The MoJ confirmed that the figures will be uprated by inflation before implementation.)




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