A new “intermediate track” involving lower-value multi-track cases and fixed recoverable costs (FRCs) could be piloted on a voluntary basis, Lord Justice Jackson revealed today.
He also recorded that evidence submitted to his review of FRCs showed increased support for costs management.
In a speech today, Sir Rupert said that while there was widespread acceptance in principle of FRCs across the fast-track, there was “much more controversy” about which, if any, other cases should be subject to them.
“One view is that costs management should take care of everything above the fast track. The alternative view is that lower-value multi-track cases should have fixed costs.
“Many people are arguing that the value of a claim should not be the sole determinant of whether it is suitable for fixed costs. One must also look at the complexity of the case, the number of issues, the number of experts and so forth.”
He acknowledged that ‘lower value’ has different meanings according to context. In the mercantile courts, he understood, it meant claims up to about £250,000; but in personal injury litigation, the figure would be much lower.
He said there was “force” in the point that one size does not fit all. “I have therefore got to identify which types of case and which ‘levels’ of case are suitable for fixed costs.”
Nonetheless, the judge said that, if some lower-value multi-track cases were to have fixed costs, it might makes sense to create a new ‘intermediate track’ to accommodate them.
He said he was exploring the possibility of piloting such a regime on a voluntary basis, subject to the approval of the rule committee.
“In that event, what should be the procedural rules for the intermediate track? These are questions which I am considering with the assessors. In lower-value business disputes involving individuals and SMEs, some litigants may welcome a fixed-costs regime combined with a streamlined process.”
Jackson LJ said “one strong message” which had come over so far was that, despite all the criticisms in the past, “costs management is now working much better”.
He continued: “It applies the new proportionality rule to the circumstances of each individual case. Many people are arguing that this does away with the need for fixed costs in the multi-track. The counter-argument is that for lower value cases, a fixed costs regime is simpler and cheaper.
“Defendants and liability insurers are inclined to accept that costs management controls future costs. But they maintain that fixed costs would be better.
“Also they are worried about costs incurred before the CCMC. Initial analysis by my judicial assistants indicates that ‘incurred’ costs represent about 31% of total costs on the claimants’ side and about 14% of total costs on the defendants’ side.”
Jackson LJ added that a “curious omission” from many of the submissions he has received was recognition that, outside of personal injury and clinical negligence, “costs shifting is a two-edged sword”.
He explained: “It both promotes and inhibits access to justice. Some litigants are enabled to litigate, because they know that they will get costs back at the end. Others are deterred by the fear of an adverse costs order.
“The ‘no costs recovery’ regime in employment tribunals promotes access to justice because of the latter factor. Somehow I have got to take account of these conflicting considerations in whatever I recommend.”
Francis Kendall, vice-chairman of the Association of Costs Lawyers, commented: “I hope the positive support for costs management that Lord Justice Jackson acknowledges in his speech will temper the need for wholescale change by way of fixed costs. It is less than four years since his own reforms were introduced and it was to be expected that such a significant change to legal practice would take time to bed down.
“Nonetheless, if he is to press on with major reform, it is positive that he has already recognised that there is no way that a ‘one-size-fits-all’ fixed costs regime would be justifiable. This makes his task more difficult, but should go some way to making it more tolerable.”
