MoJ to press ahead with fixed costs changes amid JR threat

Bailey-Vella: FRC for costs assessments need to be more realistic

The Ministry of Justice (MoJ) is pressing ahead with reforms to the fixed recoverable costs (FRC) regime that came into force in October, opening the door to a possible court challenge.

A judicial review issued by the Association of Personal Injury Lawyers (APIL) last August, challenging aspects of the new FRC rules, was stayed pending the outcome of the consultation on the changes.

An APIL spokeswoman said there was no comment while it considered what the MoJ had now decided.

There was no consultation on the announcement that the FRCs would be uprated to take account of inflation, with the response paper revealing that the increase would be 3.2%.

The consultation attracted 74 responses and the response showed the MoJ has largely decided to maintain its position, with the question on clinical negligence generating “by far the most commentary”.

The “most common view” was that clinical negligence claims should be taken out of the extended FRC regime altogether, although some respondents, particularly from the defendant side, backed simpler, less contentious cases being subject to FRC.

Some respondents emphasised that there needed to have been a ‘full’ admission of liability for clinical negligence cases to be suitable for FRC, and that this should be reflected in any new rule.

The response said: “It is the government’s view… that the rules on clinical negligence claims subject to FRC should make explicit that in the circumstances in which a claim for clinical negligence may be allocated to the intermediate track rather than the multi-track, an early admission of liability should be made in the pre-action protocol letter of response.

“The government has also determined that the new rule should only capture such cases where there has been an admission of liability in full, as defined.”

FRC for costs assessments and for part 8 costs-only proceedings will be introduced but – unlike all the other changes, which are being implemented in April – this will not happen until October to give the Civil Procedure Rule Committee time to draft the rules.

The MoJ noted that “some respondents, particularly from claimant perspectives, were not convinced that there was a problem that needed addressing”.

The Association of Costs Lawyers criticised the decision, with vice-chair David Bailey-Vella saying: “We strongly reject the notion that such work, requiring a very high level of experience and expertise, can be correctly served by a condensed assessment procedure and where the proposed costs [£500] are nominal at best.

“We note that the Ministry of Justice announcement does not mention the level of costs and we will be asking the rule committee to set them at a more realistic level.”

He said a survey of ACL members said £500 was “significantly below what would be reasonable for the amount of work that is likely to be required in the average FRC dispute, let alone the significant shortfall that there would be in more complex disputes”.

The ACL argued instead for an escalating and significantly higher cap on costs depending on the value of the claim.

Mr Bailey-Vella added that, while the majority of ACL members agreed with introducing fixed costs for part 8 costs-only proceedings, again the proposed level (£300 for a claimant and £150 for a defendant) was “far too low for the work required”. The ACL will be urging the committee to address this too.

The government will amend the extended FRC regime to provide for the recoverability of fixed trial advocacy fees when cases are settled late or vacated by the court shortly before trial.

At present, 100% of the advocacy fee is recoverable for late settlement on the day of trial in the fast-track; this will change to 100% where a claim is settled or vacated on the day or day before, or 75% where it happens not more than two days before trial.

It will be the same on the intermediate track, except that the 75% can be claimed where the case is settled or vacated not more than five days before trial (rather than the figure of 50% suggested by the Bar Council and Personal Injuries Bar Association).

“The government’s view is that 75% is more appropriate, given the greater complexity of intermediate track cases and work which the advocate might accordingly be required to undertake in that period,” the response said.

However, it rejected the Bar’s call for the additional recovery of 25% of the advocacy fee when a claim is settled or vacated more than five clear days before trial, and for a further inflationary uprating for the fixed trial advocacy fees.

But the MoJ is uprating to the trial advocacy fees in table 12 of PD 45, for complexity bands 1-3, “to take into account the period between 2013 and 2016 and remedy an apparent gap in Jackson’s 2017 report”.

Bar Council chair Sam Townend KC said the increase in fees and widening scope of fee recovery in cases that were vacated or settled shortly before trial was “long overdue and welcome”.

He said the fee increases would “particularly benefit more junior barristers who generally carry out this work”.

The other changes approved are allowing claimants to recover the costs of inquest proceedings, but only to the extent that they would be anyway outside of FRC, and to make the costs of restoring a company to the register recoverable in either the fast-track or the intermediate track.

The response said the government would review the extended FRC regime in October 2026, including consideration of the tables of costs.

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