Martin Partington: Spotlight on the Justice System

When Lord Woolf started out on his major programme of reform of the Civil Justice system – which came into effect with the introduction of new Civil Procedure Rules in 1999 – he was concerned about a wide range of issues. The most intractable of the problems he identified was how could the costs of litigation be kept proportionate to the subject matter and value of the dispute.

While there was considerable agreement that many of the changes he recommended had worked well, his proposals on the control of costs had not been as successful as they should have been.

Thus in 2009, Lord Justice Jackson was asked to undertake more work on the costs of civil litigation. His first report on the issue was published in 2010. (Noted in this blog in March 2010)

In 2016, Jackson was asked to revisit this topic, on which he has now published (July 2017) this supplementary report.

As Jackson notes:

In England and Wales, the winning party in litigation is entitled to recover costs from the losing party. The traditional approach has been that the winner adds up its costs at the end and then claims back as much as it can from the loser. That is a recipe for runaway costs.

He therefore argues (as indeed he did in his first report) that there are two fundamental ways to prevent runaway costs.

(i) a general scheme of fixed recoverable costs , i.e. those costs that the winning party can claim from the losing party;

(ii) imposing a budget for each individual case (“costs budgeting”)

Although fixed recoverable costs (FRC) had been introduced for  limited categories of cases before he reported in 2010, he recommended that FRC should be introduced for all fast-track cases. In its response to his first report, the Government did not at the time go that far.

The introduction of costs budgeting was also regarded initially by the legal profession as very controversial, and was not universally welcomed. In this later report, however, evidence from witnesses to his review stated that the system for costs budgeting had now settled down and was widely seen to be working pretty well.

At the heart of this review, there are the following recommendations:

1. FRC should be introduced for all fast track cases. The amount of costs which are recoverable are laid out in a grid. Different sums are permitted for different stages of proceedings.
2. Above the fast track, Jackson recommends the creation of a new ‘intermediate’ track for certain claims up to £100,000 which can be tried in three days or less, with no more than two expert witnesses giving oral evidence on each side. The intermediate track will have streamlined procedures and its own grid of FRC.
3. Clinical negligence claims are often of low financial value, but of huge concern to the individuals on both sides. The complexity of such cases means that they are usually unsuited to either the fast track or the proposed intermediate track. For these Jackson recommends that the Department of Health and the Civil Justice Council should set up a joint working party with both claimant and defendant representatives to develop a bespoke process for handling clinical negligence claims up to £25,000. That bespoke process should have a grid of FRC attached. This scheme will capture most clinical negligence claims.
4. In relation to business cases, Jackson states that it is essential that small and medium-sized enterprises  should have access to justice. The Federation of Small Businesses argued that there should be an FRC regime for commercial cases up to £250,000; the costs levels must be reasonable; they must balance incentives and “reduce the costs of going to law for small businesses”; there must be rigorous case management of cases subject to this regime; and there must be investment in modern IT systems to speed up court processes. Jackson does not think that all business cases require FRC up to the level suggested by the Federation. Instead he recommends a voluntary pilot of a ‘capped costs’ regime for business and property cases up to £250,000, with streamlined procedures and capped recoverable costs up to £80,000. If the pilot is successful, the regime could be rolled out more widely for use in appropriate cases.
5. Jackson recommends measures to limit recoverable costs in judicial review claims, by extending the protective costs rules which are currently reserved for environmental cases. As he observes: Citizens must be able to challenge the executive without facing crushing costs liabilities if they lose.
6. In relation to costs management, the budgeting process will continue to apply to proceedings falling outside the scope of FRC. One problem is that costs management cannot currently apply to costs incurred before the costs management process takes place. Jackson thinks that at some point further consideration may need to be given to setting a limited to these incurred costs, but that should not be considered further at this stage.

It is not known what the response of Government to these proposals will be. Any changes would be subject to further consultations.

The 2017 Jackson review may be accessed at https://www.judiciary.gov.uk/wp-content/uploads/2017/07/fixed-recoverable-costs-supplemental-report-online-2-1.pdf