Over the last fortnight I have seen and spoken to more Senior Judges and Civil Servants than in the preceding year. The appetite for further reform is insatiable. Drastically reduced traffic injury damages are a done deal due next year.
What is really important is the extension of fixed Costs. Up to now, these have primarily troubled those dealing with lower value injury. The game is going to change. It will be a rude awakening and the more prescient practitioners are already asking me what will happen and when.
The Jackson Fixed Costs Consultation published on 31st July 2017 is the template for reform. A belated MOJ Consultation closed on June 6th. Whilst the Department had indicated that it would respond by 6th September, I can tell you this deadline will be missed.
There are 2 strands to the proposals. The first is that every costs bearing case up to £25,000 will be subject to fixed costs. More dramatic though is the extension of the Fixed Costs Track ceiling from £25,000 to £100,000. This will mean that over 90% of Civil Claims will be captured. Obviously, there are plenty of multi-million cases out there, but they are a tiny minority of the cases being pursued.
The Ministry is minded to carve out 3 bands of case within the extended track. Band 1 will be “bent metal” and other simple claims. The middle tier will deal with cases such as Employers Liability and mainstream disputes. Band 3 will be reserved for more difficult disputes such as a professional negligence claim against a surveyor or architect.
The importance of the bands is that recoverable costs escalate as we ascend. Costs will be ascertained by first looking to the band allocated. A costs grid will dictate the numbers. So, if it is Band 3 we look down the column and then, reading across, identify the point of settlement. Costs understandably increase the further a case proceeds. This enables one to alight upon the relevant box.
Let us look at a few examples. Assume we have a top band case which settles for £30,000. Were it to settle pre-issue the claimant would recover costs as follow. There would be a fixed sum, £8,000, plus a further sum calculated as 8% of the damages. By aggregating those elements, we arrive at a total of £10,400 (£8,000 and £2,400).
Were it to settle up to the CCMC the fixed sum would go up to £11,000 and the percentage would go up to 14% giving us a total of £15,200 (£11,000 and £4,200).
Should it go the distance to Trial costs would soar to £31,300 (£24,700 and 22% of the recovery). These figures exclude VAT and disbursements.
Cleverly, a good Part 36 offer will not complicate matters. Just top up the total by 35%. How simple is that?
Budgeting will cease to operate at the outset and detailed assessment will vanish at the end. The indemnity principle will not apply. The Costs are a fee for the job, regardless of how much or little work is actually undertaken.
Complex cases will carry on unaltered. The working definition is that a matter that would engage more than 2 experts a side or would take more than 3 days to try would be immune to fixed costs. Budgeting would continue.
But when will this happen?
My latest take is October 2020 although slippage could mean April 2021. It is a done deal.