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Fixed costs in Civil Litigation - what's next?

Lord Justice Jackson published his supplemental report on the civil litigation fixed costs regime this week. This follows his original report published in January 2010.

Jackson LJ previously suggested that fixed costs should apply to all claims up to £250,000 in a ‘one-size-fits-all’ proposal. Instead, he has taken a softer approach, recommending a number of proposals dependent upon the value and type of claims brought.

In his report, Jackson LJ recommends:

  • a grid of fixed recoverable costs for all fast track cases (those up to £25,000), which will be separated out into four bands of complexity. The costs will be reviewed every three years to take inflation into account;
  • in cases of unreasonable litigation conduct, the court should have the power to award either a percentage uplift on costs or to make an award against the unreasonable party for indemnity costs. This should ease concerns from some larger organisations who were apprehensive a fixed costs regime would increase the volume of frivolous actions;
  • a new ‘intermediate’ track for certain claims up to £100,000. This will include any case that can be tried in three days or less, with no more than two expert witnesses giving oral evidence on each side. The new regime will apply to claims that are principally for monetary relief.  This intermediate track will have streamlined procedures and will also follow a grid of fixed rate costs (separated into four bands). The intermediate track will have its own practice direction. Jackson LJ hopes that, once the new fixed costs regime is in place, fixed costs for experts, including mediators, translators and interpreters will be developed; and
  • ring-fencing counsel or other specialist lawyers’ fees in more complex fast-track and intermediate-track cases.

If the proposals for an intermediate track are accepted and, after a review in four years, they are working satisfactorily, Jackson LJ suggests that the scope of the intermediate track (and the range of fixed rate costs) might be expanded to monetary claims above £100,000 and/or claims for non-monetary relief.

Where contracts contain express provisions governing costs in the event of litigation (such as mortgages, loans, guarantees or leases), the current position will not be affected. The court will therefore continue to enforce the contractual right, and be unable to exclude or override it, subject to its equitable power to disallow unreasonable expenses. 

While the Federation of Small Businesses argued there should be a fixed costs regime in place for commercial cases up to £250,000, to create better access to justice for SMEs, Jackson LJ has, at this stage, recommended only a voluntary two year pilot of a ‘capped costs’ regime for business and property cases up to £250,000. 

This Capped Costs Pilot will also have streamlined procedures and will cap recoverable costs at £80,000. If the Capped Costs Pilot is successful, Jackson LJ suggests the regime could be rolled out more widely for use in appropriate cases, under a ‘Capped Costs List’ and may well be extended to cases up to £500,000.

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