MoJ increasing new fixed costs to reflect high rate of inflation

MoJ: Cap on costs of assessments

The Ministry of Justice (MoJ) is to increase the new fixed recoverable costs (FRCs) coming into force on 1 October to take account of the high rate of inflation.

It is also consulting on further changes to the regime, including a £500 cap on the costs of any costs assessments, and gave a strong indication that the separate FRC regime for clinical negligence cases worth up to £25,000 is still going ahead.

The consultation responds to issues raised following publication of the FRC rules.

The FRC figures in practice direction 45 are based on those put forward by Sir Rupert Jackson in his 2017 report and then inflated using the services producer price index (SPPI) at January 2023.

The MoJ said that, “while inflation remains high, we will provide a further exceptional uprating to the FRC figures”. It is to increase them to cover inflation between January and October, with the adjustment taking effect from April 2024.

The FRC figures will be reviewed generally every three years.

The consultation said that, although FRC would make costs assessments unnecessary in many circumstances, “there may be areas of discretion and ‘reasonableness’ within the new regime”.

It continued: “Disputes may be likely to arise over points of detail in the rules, for example, in which stage a claim has settled, or over the exact figure for damages…

“MoJ consider that, if no further changes on detailed assessment are made, the costs and effort for the detailed assessment could become unreasonable and disproportionate for what was in dispute. There is a risk that unnecessary detailed assessments are commenced to augment FRC revenue.”

Sir Rupert’s recommendation was that, in cases which did not go to trial, there should be a shortened form of detailed assessment with a provisional assessment fee cap “of – say – £500”.

The MoJ backed this, saying the £500 would include any additional costs awarded following a part 36 offer. A challenge to the assessment would be by oral hearing and the party making it would pay the costs of the hearing unless they increase the award by at least 20% or the court otherwise orders.

In another change, the consultation described part 8 costs-only claims as “a gap that needs addressing within the FRC regime”.

Without it, there would be “an intermediate stage of work between conclusion of the damages claim and assessment of any residual costs disputes which would still be subject to hourly rates, with the potential for this to be exploited”.

Fixing part 8 costs so as to discourage commencement of proceedings “would relieve some administrative pressure on the courts and save judicial time”, it added.

The MoJ put forward either Sir Rupert’s recommendation – £300 for a claimant and £150 for a defendant – or the interim application costs in table 1 of PD 45, and also invited alternative propositions.

Claimant lawyers have expressed concern that the FRC regime captures more clinical negligence claims than intended.

The MoJ said it only covered intermediate track claims where the cause of action was on or after 1 October 2023 and both breach of duty and causation were admitted.

But it proposed tightening the rules “to make explicit that the early admission of liability must be made in the pre-action protocol letter of response”.

Though this would not take effect until April 2024, “it is unlikely that any new clinical negligence claims, where the cause of action accrues on or after 1 October, will be subject to early admission and allocation to track in advance of 1 April 2024”.

The MoJ added that the overall position on clinical negligence would be reviewed when the Department of Health and Social Care’s FRC scheme for cases worth up to £25,000 happened, “and to ensure that that scheme aligns seamlessly with the extended FRC regime”.

The department consulted on the scheme in January 2022 and has still not announced the next steps.

Other issues covered by the consultation are:

  • The costs of an inquest should be separately recoverable (and subject to assessment) to the FRC;
  • Costs should be recoverable when applying to restore a company to the register within the new intermediate track;
  • Whether the rules should provide for the recoverability of advocacy fees when cases settle in the two working days prior to the day of trial and when a trial is vacated by the court shortly before trial, with the MoJ’s provisional view that they should be, but only in relation to the intermediate track of cases worth £25,000 to £100,000; and
  • Increasing trial advocacy fees in bands 1-3 of the fast-track by 4%, but not agreeing the 20% increases sought by the Bar Council and Personal Injuries Bar Association for band 4, the intermediate track or noise-induced hearing claims.

The consultation closes on 8 September.

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