Fixed recoverable costs: mixed news for defendants

November 2016 has been a significant month for fixed costs, including the announcement of a review by Lord Justice Jackson and two Court of Appeal decisions. What are the likely implications for defendants and insurers?

The key developments have been as follows:

  • On 11 November 2016 the government announced that Lord Justice Jackson has been commissioned to undertake a review of fixed recoverable costs, to be completed by July 2017.
  • On the same day, the Court of Appeal gave its long-awaited judgment in the case of Bird v Acorn, addressing the appropriate fixed costs band for claims listed for a disposal hearing at an early stage.
  • On 16 November 2016, the Court of Appeal handed down judgment in Qader v Esure, effectively confirming that cases allocated to the multi-track can never fall under the fixed costs regime.

The outcomes in these Court of Appeal cases will be regarded as a victory for claimants, although the forthcoming review of fixed recoverable costs is more likely to be welcome news for
defendants and insurers.

Background

In his 2010 final report following his review of civil litigation costs, Jackson LJ recommended that further consideration should be given to fixing costs in the multi-track, after the fixed costs schemes for the fast track had been successfully introduced.

In the summer of 2015, fixed costs came back onto the agenda with the announcement of a consultation in relation to fixed costs in clinical negligence, but this was subsequently delayed. Meanwhile, in January 2016 Jackson LJ gave a sign of developments to come when he gave a speech recommending that plans for fixed costs in clinical negligence should be put on hold, instead recommending that all costs in civil claims up to £250,000 should be fixed.

Fixed costs review

In September 2016, a Ministry of Justice vision statement for “Transforming our justice system” was published, and included an aim to “look at options to extend fixed recoverable costs much more widely”.

It comes as no surprise that Jackson LJ has now been asked to continue the review. The terms of his new project are clear:

  • Develop proposals for extending the present civil fixed recoverable costs regime.
  • Consider the types and areas of litigation to which such costs should be extended.
  • Review the value of claims to which such a regime should apply.

A formal consultation will be launched in 2017 to consider the recommendations made.

Implications

Jackson LJ has indicated that the momentum is heavily for reform, and it seems an extension of fixed costs into the multi-track is a certainty.

In principle, we welcome an extension of the fixed costs regime, in order to maintain the proportionality of the costs recoverable, and also to achieve certainty. However, there remain two great unknowns: the financial limit for fixed costs, above which a reformed version of costs budgeting is likely to continue, and, crucially, the level of the fixed costs introduced.


Related items: 

Fixed costs: stage 3 costs where disposal hearing listed
Fixed costs: not applicable to multi-track claims started in the portal