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MOJ publishes fixed cost proposals

19 November 2012

Since Jackson’s report on civil costs, the Government has made it clear that it wishes to introduce fixed fast track costs to complement the regime of cost budgeting which will apply in all multi track cases from April 2013. More recently, it was confirmed these would be part of the package of civil costs reforms due in April 2013, though information on the level at which costs would be set has been scant.

Alongside this project, the Government announced earlier this year that it would extend the pre action protocol scheme for low value RTA claims to encompass claims up to £25,000 and EL and PL cases.

The burning question in relation to both has been the level at which costs would be set. Helen Grant, the Under-Secretary of State now charged with implementation of Jackson, has today put forward proposals for comment by 4 January 2013.

The low value RTA, EL and PL scheme

The scheme will apply to the majority of EL , PL and RTA injury claims where the value of damages is less than £25,000. Rules for the extension of the scheme are currently the subject of consultation by the Civil Procedure Rules Committee, but essentially mirror the existing scheme applicable to sub-£10,000 RTA injury claims.

The process has three stages, with stage 1 running to an admission of liability, stage 2 allowing for negotiated settlement of quantum and stage 3 providing for referral to the Court where quantum cannot be agreed. Time limits are short and strict, at as little as 15 working days for an RTA , or 30 and 40 days for EL and PL claims respectively.

The proposed costs levels are:

 

 

RTA claims

RTA claims

EL/PL claims

EL/PL claims

 

£1k-£10k £10k-£25k  £1k-£10k £10k-£25k

Stage 1

£200 £200 £300 £300

Stage 2

£300 £600 £600 £1,300

Stage 3

Paper hearing £250 £250 £250 £250

 

Oral hearing £500 £500 £500 £500

Compared to the existing scheme for sub £10,000 RTA claims, these costs are 50% of the current levels for stage 1 and 38% for stage 2. The figures fall towards the lower end of proposals received by the MOJ when it consulted on the topic in February 2012, where claimants suggested figures between £800 and £1,300 while defendants suggested £400 on average.

The stage 3 costs are unchanged from the existing scheme. However, success fees (which are 100% following a stage 3 hearing) will no longer be recoverable when these measures come into force. There will therefore be a substantial saving in costs for defendants.

The fast track

When advising on the reform of civil costs, Lord Justice Jackson made it clear that a key measure was the introduction of fixed fast track costs. It is particularly important to reduce the risk of creating an excessively strong incentive either to force claims out of the fixed costs schemes above or to litigate.

The published fixed costs are available to download on the right. This is based on work undertaken by Professor Fenn for Lord Justice Jackson’s report and has been subjected to upward adjustment for inflation and downward adjustment to reflect the savings the Government anticipates from a ban on referral fees. Overall, the figures calculated for Jackson typically seem to have been discounted by between £600 and £700.

To get an idea of costs payable in practice, the following would apply to a claim where damages were £5,000:

  RTA  EL  PL
Pre issue £1,100 £1,825 £1,825
Issued, pre allocation £2,160 £3,630 £3,325
Post allocation, pre listing £2,880 £4,600 £4,190
Post listing, pre trial  £3,665 £5,780 £5,165
Trial (including solicitor costs + advocacy fee) £4,355 £6,470 £5,855

For the most part, there is no existing fixed fee scheme to compare the new scheme to. For RTA claims settled pre issue, costs will be about 61% of their current level. In other claims, costs are often substantially lower than those that are currently claimed or recovered.

It is not clear what restrictions will be in place in relation to recovery of additional disbursements, such as counsel’s fees, which could make a significant difference in relation to how favourable or otherwise the fees are.

Consultation

The Ministry of Justice has invited views on the proposals, with a response date of 4 January 2013. It is likely views will be polarised, with the proposals gaining more support from defendants than claimants (though some defendants may say they do not go far enough).

In any event, it seems the Government will succeed in introducing fixed costs by April 2013 and, given the detailed work that has already been undertaken by Fenn and others, it seems likely that the format and levels of those fixed costs will at least be very similar to those published today.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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