In early 2022, the Master of the Rolls asked the Civil Justice Council to take a strategic and holistic look at costs, particularly given the ongoing transformation of civil justice into a digital justice system. The Civil Justice Council approved the setting up of a Costs Working Group (“CWG”).

 

The Civil Justice Council has now published its final report on its review on costs, following a consultation last year.

 

The four areas covered are:

 

1. Costs budgeting;
2. Guideline hourly rates;
3. Costs under pre-action protocols/portals and the digital justice system; and,
4. Consequences of the extension of Fixed Recoverable Costs.

 

Costs Budgeting

 

The recommendation of the CWG is that costs budgeting should be retained but they have suggested that it should be possible to permit a more tailored approach to costs management, to suit different work types and/or venues where the litigation is conducted. The CWG is proposing to pilot tailored costs management in a few unspecified court centres and has given an initial view that personal Injury claims, clinical negligence claims, claims in the Business and Property Courts and other specialist work are likely to be the types of cases that would be most appropriate for a tailored approach to costs management.

 

There report contains specific recommendations in relation to Qualified One Way Costs Shifting (QOCS) which will be of interest:

 

“In cases where QOCS applies, particularly in clinical negligence cases involving NHSR (NHS Resolution), the Working Group recommends that full budgets are dispensed with for defendants but the Precedent H front sheet only is supplied to the claimant and the court. This would be subject to the court having the power to direct the defendant to produce a full budget. This proposal should be piloted.”

 

There is disagreement within the group as to whether this should be extended to personal injury and the working group is of the view that if only the Precedent H front sheet was supplied this would be sufficient, provided that the court retained the ability to call for a full budget if it thought appropriate.

 

The last specific recommendation made in this paper relates to “Costs Budgeting Light” for Part 7 Claims in the Multi-track for claims valued between £100,000 and £1M. The paper does not specify what this would entail, but it does state that the aim would be to reduce the risk of incurring disproportionate cost for the value of the claim.

 

The section concludes with recommendations that there should be a staged approach to costs and case management conferences going forward which will be piloted going forward.

 

Guideline Hourly Rates

 

The CWG has recommended that guideline hourly rates as a concept be retained but has also provided recommendations for the rates in the short term whilst this is kept under review.

 

The four short term recommendations are:

 

1. That measures are taken to create a new band for complex, high value, commercial work, whether in London or elsewhere;
2. That a retrospective uplift to the 2021 figures is applied having regard to the Service Producer Price Index;
3. That counsel’s fees should also be capable of being assessed by reference to a guideline hourly rate; and,
4. That the test to be applied when considering a departure from the guideline hourly rates should be clearly stated.

 

The CWG has proposed to proceed under this basis for the next 5 years with a view to carrying out a detailed review at the end of this period.

 

Pre-action and digitisation

 

The CWG has proposed to increase engagement with pre-action processes by facilitating costs recovery pre-action, where appropriate. They suggest this could be given practical effect by making it possible to bring costs liability disputes for claims that are settled at the pre-action stage, or allowing the court to deal with costs incurred pre “issue” as it deals with costs post “issue”. They have identified housing as a suitable example where this could be implemented.

 

The CWG have also identified that the Solicitors Act 1974 is “(in parts) clearly out of step with the reality of present-day litigation practice” in respect of non-contentious costs in particular. They do not envision amendments to this Act being a legislative priority but have recommended the Civil Justice Centre or Law Commission be invited to report on the need this be revised. They have stated in the interim that the new Online Procedure Rule Committee has been set up with the jurisdiction to make suitable provisions, including costs provisions, relating to digital pre-action portals. It is important to note that this would only related to recovery of costs pre-action, and would cease to apply after issue.

 

The CWG have recommended that it may be possible for the Civil Procedure Rule Committee to make a rule change in respect of existing pre-action protocols to provide for recovery of costs in pre-action settlements to, subject to the extent of the Court’s jurisdiction, deem certain types of claim or dispute to be “issued” at the point that the pre-action protocol is commenced.

 

The CWG have also recommended amendments to CPR 46.14 to allow the Court to decide the incidence of costs between the parties.

 

Consequences of the extension of Fixed Recoverable Costs

 

The consultation summary focuses on the introduction of a costs cap in the “Shorter Trial Scheme” when considering the consequences of fixed recoverable costs being extended. Any case within the Business and Property Courts can be commenced in the Shorter Trial Scheme. The case is then subject to tight case management and a trial no more than a year from issue for a period no more than 4 days. All costs are assessed summarily with no costs budgeting and no detailed assessment.

 

The costs cap would be £500,000 for patent cases.

 

The full review is available here: https://www.judiciary.uk/civil-justice-council-costs-review-final-report/

 

We will keep an eye on these recommendations and any implementation as this develops.