LORD JUSTICE JACKSON S REVIEW OF CIVIL LITIGATION COSTS FINAL REPORT. Summary of Recommendations
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1 LORD JUSTICE JACKSON S REVIEW OF CIVIL LITIGATION COSTS Recommendations: Executive Summary FINAL REPORT Summary of Recommendations Lord Justice Jackson s report contained an executive summary of his recommendations please see copy attached. Recommendations: As set out per chapter 1. Part 1, Chapter 3: Proportionate Costs 1 : a. Proportionate costs to be defined in CPR by reference to sums in issue, value of nonmonetary relief, complexity of litigation, conduct and any wider factors, such as reputation or public importance. Test of proportionality should be applied on a global basis. b. The consequential amendments which will be required have been set out above, but do not need to be the subject of a separate recommendation Part 1, Chapter 4: The Causes of Disproportionate Costs and How and They Should be Tackled Whilst Promoting Access to Justice: a. In respect of factors (i) (Requirements of the Rules of Procedure) and (xv) (Court Fees) identified in report: i. Striking balance between need for predictability and need for simplicity - the Rule Committee, the MoJ drafting team and the authors of PDs, protocols and court guides should accord higher priority to simplicity. ii. No further increases in civil court fees, save for increases which are in line with the RPI rate of inflation. All receipts from civil court fees should be ploughed back into the civil justice system. b. Conclusion: During Costs Review 16 general causes of excessive costs and large number of specific causes identified. Apart from two mentioned above recommendations are set out in Chapters below. c. If causes of excessive costs tackled effectively - will promote access to justice at proportionate cost. 3. Part 1, Chapter 5: The indemnity Principle: a. Common law indemnity principle to be abrogated. 4. Part 1, Chapter 6: Costs Council: 1 Note that not all Chapters within each Part of the Report contained recommendations, which is why not all Chapters reflected in this document (for example Chapters 1 and 2 of Part 1 contained no recommendations so are not represented in this document). 2 Consequential amendments: CPR: Costs necessarily incurred not automatically proportionate (reversal of Home Office v Lownds [2002] EWCA Civ 365); Costs PD: Amendments would be necessary to paras and 11.6 and it should be made clear that proportionality prevails over reasonableness.
2 a. ACCC (Advisory Committee on Civil Costs) to be disbanded and a Costs Council to be established Part 2, Chapter 8: Before the Event Insurance: a. Positive efforts to be made to encourage the take up of BTE insurance by SMEs in respect of business disputes and by householders as an add-on to household insurance policies. b. No further specific recommendations in relation to BTE issues. 6. Part 2, Chapter 9: After the Event Insurance and How to Deal with the Liability for Adverse Costs: a. S Act 4 and all related rules to be repealed. b. Litigants who merit protection against adverse costs liability on policy grounds to be given the benefit of qualified one way costs shifting. c. If rejected - alternative proposals to limit impact of s. 29 set out below: i. no ATE insurance premium to be recovered if liability is admitted within protocol period; ii. no ATE insurance premium to be recovered for Part 36 risks; iii. cap premiums at 50% of damages awarded; and iv. in cases where the ATE insurer is entitled to avoid, allow recovery from the insurer with rights against the policyholder preserved. 7. Part 2, Chapter 10: Conditional Fee Agreements: a. S. 58A(6) CLSA and related rules to be repealed. b. Level of general damages for PIs, nuisance and all other civil wrongs to individuals to be increased by 10%. c. If rejected - alternative proposals to limit impact of s. 58A(6) 1990 Act set out in section 5 of this Chapter Part 2, Chapter 12: Contingency Fees: a. Solicitors and counsel should be permitted to enter into CFAs with clients. Costs to be recoverable against opposing parties on conventional basis and not by reference to contingency fee. b. CFAs to be properly regulated and invalid unless client received independent advice. 9. Part 2, Chapter 13: CLAF or SLAS: 3 Costs Council: a proposed Council that would be established to review, among other things, fast track fixed costs. 4 s. 29 Access to Justice Act 1999 Recovery of Insurance Premiums by Way of Costs. 5 s. 58A(6) Courts and Legal Services Act 1990 Conditional Fee Agreements: Supplementary. Success fees payable under a CFA are recoverable under a costs order. 6 Several proposals were made which are too lengthy to write here, but the main gist of them was that recoverable success fees will need to be rigorously controlled. 2
3 a. Financial modelling to be undertaken to ascertain the viability of one or more CLAFs (Contingency Legal Aid Fund) or a SLAS (Supplementary Legal Aid Scheme), after and subject to, any decisions by Government in respect of other recommendations of this report. 10. Part 2, Chapter 14 Litigants in Person: a. Prescribed rate of 9.25/hour recoverable by litigants in person be increased to 20/hour - subject to periodic review. 11. Part 3, Chapter 15: Fast Track Fixed Costs: a. Recoverable costs of cases in fast track to be fixed. 12. Part 4, Chapter 19: One way costs shifting: a. Regime of qualified one way costs shifting to be introduced for PI cases. 13. Part 4, Chapter: 20 Referral Fees: a. Payment of referral fees for PI claims to be banned. b. If accepted - two ways to implement: i. Primary legislation prohibition on buying or selling PI claims; or ii. Solicitors Code of Conduct amended prohibition on paying referral fees. c. If rejected - referral fees to be capped at a modest figure (suggestion 200). d. If either accepted - serious consideration to be given to question whether referral fees should be banned or capped in other areas of litigation. 14. Part 4, Chapter 21: Assessment of General Damages for Pain, Suffering and Loss of Amenity: a. Working group to be set up to establish a uniform calibration for all software systems used in assessment of damages for PSLA 7 up to 10,000. Calibration to accord with awards of general damages made by courts. 15. Part 4, Chapter 22: Personal Injuries Litigation: Process and Procedure: a. New process for low value RTA (Road Traffic Accident) to should be monitored to ensure that costs savings achieved are not negated by satellite litigation and avoidance behaviour. b. There should be discussions between C and D representatives, under the aegis of the CJC, in order to develop a streamlined process for fast track PI cases which fall outside the MoJ s new process. c. The effect of MROs (Medical Reporting Organisations) upon the costs of PI litigation should be kept under close scrutiny. d. Direct communication should always be permitted between a solicitor and any medical expert whom an MRO instructs on behalf of that solicitor. 7 Pain, Suffering and Loss of Amenity, consequential on personal injury. 3
4 16. Part 4, Chapter 23: Clinical Negligence: a. Financial penalties introduced for health authorities which, without good reason, fails to provide copies of medical records requested in accordance with the protocol. b. Time for Ds to respond to letters of claim should be increased from 3 to 4 months. Any letter of claim sent to an NHS Trust or ISTC (Independent Sector Treatment Centre) should be copied to the NHSLA (National Health Service Litigation Authority). c. In respect of any claim where the NHSLA is proposing to deny liability, the NHSLA should obtain independent expert evidence on liability and causation during the 4 month period allowed for the response letter. d. The NHSLA, the MDU (Medical Defence Union), the MPS (Medical Protection Society) and similar bodies to nominate an experienced and senior officer to whom claimant solicitors should, after the event, report egregious cases of D lawyers failing to address the issues. e. The protocol should provide a limited period for settlement negotiations where the defendant offers to settle without formal admission of liability. f. Case management directions for clinical negligence cases should be harmonised across England and Wales. g. Costs management for clinical negligence cases should be piloted. h. Regulations should be drawn up in order to implement the 2006 Act (NHS Redress Act 2006). 17. Part 5, Chapter 24: Intellectual Property Litigation: a. Consideration should be given by the Patents Court judges and the IPCUC (Intellectual Property Court Users Committee) to the question whether the Guide 8 should be amended to include any of the proposals set out in paragraph 2.5 of Chapter 24. b. The proposals in the IPCUC Working Group s final report for reforming the PCC (Patents County Court) should be implemented 9. c. After reformation of the PCC, the Guide should be amended to give clear guidance on the requirements for statements of case, illustrated by model pleadings annexed to the Guide. d. There should be a small claims track in the PCC for IP claims with a monetary value of less than 5,000 and a fast track for IP claims with a monetary value of between 5,000 and 25,000. e. District judges, deputy district judges or recorders with specialist patent experience should be available to sit in the PCC, in order to deal with small claims and fast track cases. 8 Patents Court and Patents County Court Guide. 9 The principal proposal was that the financial limit for remedies available in the PCC should be 500,000. Other detailed recommendations included that the Guide should contain guidelines to assist in determining transfer applications as between the PCC and the Patents Court. The full text of the Working Group s proposals can be found at 4
5 f. There should be consultation with court users, practitioners and judges, in order to ascertain whether there is support either for (a) an IP PAP or (b) the Guide to give guidance regarding pre-action conduct. 18. Part 5, Chapter 25: Small Business Disputes: a. A High Court judge should be appointed as judge in charge of the Mercantile Courts. b. A single court guide should be drawn up for all Mercantile Courts. c. Consideration to be given to devising a special streamlined procedure for business disputes of lower value. d. HMCS to prepare a guide in respect of small business disputes for the assistance of business people who wish to deal with such disputes themselves without the assistance of lawyers, either by mediation or on the small claims track. 19. Part 5, Chapter 26: Housing Claims: a. The Government should reconsider undertaking a simplification of substantive housing law, as proposed by the Law Commission in 2003, 2006 and b. Where a landlord could use PCOL (Possession Claims Online) to issue possession proceedings but chooses to issue manually, he should only be able to recover an amount equivalent to the PCOL issue fee. c. The Rent Arrears Protocol should be amended in order to set out what steps should be taken by landlords, so as to comply with their obligations under ECHR article 8. d. Paragraph 24.2 of the Part 52 PD 10 should be amended in order to set out what categories of documents should be lodged by the respondent in homelessness appeals and when these should be lodged. e. Consultation should be carried out on the proposal that where a housing claim is settled in favour of a legally aided party, that party should have the right to ask the court to determine which party should pay the costs of the proceedings. 20. Part 5, Chapter 27: Large Commercial Claims: a. After 18 months, the question whether section D6 of the Guide 11 ought to be repealed or amended should be reconsidered in the light of experience 12. b. Sections D4 13 and D8 14 should be amended to permit more frequent allocation of appropriate cases to designated judges. 21. Part 5, Chapter 28: Chancery Litigation: 10 Appeals under ss. 204 and 204A of the Housing Act Admiralty & Commercial Court Guide. 12 Section D6 of the Guide states that a key issues list is to be produced. Jackson LJ points out in his report that this is a contentious issue; some argue that the lists assist in focusing the parties on the central points of the case while others say that the production of the list in itself wastes time and is costly. In light of this Jackson LJ recommends that there is further review of D6 after it has been used for 18 months. 13 The recommendation in relation to section D4 (which covers the designated judge ) is that the category of cases that may be assigned to a designated judge be broadened, so that it is no longer confined to exceptional cases. 14 Jackson s recommendation for section D8 (which covers CMCs) is that it be amended to provide that the question whether a case warrants assignment to a single judge should be specifically considered at the first CMC. Currently there is no provision in D8 in relation to assignment of a case to a single judge. 5
6 a. CPR Part 8 should be amended to enable the court to assign a case to the fast track at any time. b. Amount of costs deductible from a trust fund or estate to be set at a proportionate level at an early stage of litigation. Whether the balance of costs should be paid by the party who incurred them or by some other party should be determined by the judge. c. PD B supplementing CPR Part 64 (Estates, Trusts and Charities) should be amended to provide that, save in exceptional cases, all Beddoe applications 15 will be dealt with on paper. d. A suitable body of tax experts should become an approved regulator within section 20 of the 2007 Act 16. e. Part 6 of the Costs PD (Costs Estimates) should be amended to require parties in Part 8 proceedings to lodge costs estimates 14 days after the acknowledgment of service (if any) has been filed. f. A scheme of benchmark costs should be implemented for bankruptcy petitions and winding up petitions. g. Costs management procedures should be developed in order to control the costs of more complex insolvency proceedings. h. The Law Society and the ChBA (Chancery Bar Association) to set up a working group in order to consider the remaining chancery issues raised by the Preliminary Report. 22. Part 5, Chapter 29: Technology and Construction Litigation: a. S. 5 of the TCC Guide (Case Management and the First CMC) should be amended to draw attention to the power of the court to disallow costs in respect of pleadings or witness statements which contain extensive irrelevant or peripheral material. b. Paragraphs and of the TCC Guide (s Pre-trial Review: Issues) 17 should be amended, so that they are focused upon key issues rather than all issues in the case. c. The CPR should be amended so that appropriate TCC cases can be allocated to the fast track. The 1981 Act (Senior Courts Act 1981) should be amended, so that district judges of appropriate experience may be authorised to manage and try fast track TCC cases. d. Mediation should be promoted with particular vigour for those low value construction cases in which conventional negotiation is unsuccessful. 23. Part 5, Chapter 30: Judicial Review: a. Qualified one way costs shifting should be introduced for JR claims. 15 Beddoe application: A Beddoe application is similar to, but not the same as a pre-emptive costs order. It is an application made by the trustee to the court for an order permitting the trustee to start or continue litigation and for the trustee's costs incurred in litigation to be recoverable against the estate of the trust whatever the eventual outcome of that litigation. This application is a separate action from the main proceedings (Re Beddoe, Downes v Cottam [1893] 1 Ch 547). 16 s. 20 of the Legal Services Act 2007 Approved Regulators and Relevant Approved Regulators The parties should, if possible, provide the judge at the PTR with an agreed list of the Issues for the forthcoming trial (including, where appropriate, a separate list of technical issues to be covered by the experts) If the parties are unable to agree the precise formulation of the issues, they should provide to the court their respective contentions as to what the issues are, and why. 6
7 b. If D settles a JR claim after issue and C has complied with the protocol, the normal order should be that D pay C s costs. 24. Part 5, Chapter 32: Defamation and Related Claims: a. If recoverability of success fees and ATE insurance premiums is abolished: i. General level of damages for defamation and breach of privacy claims to be increased by 10%. ii. A regime of qualified one way costs shifting should be introduced. iii. Paragraph 3.3 of the defamation protocol should be amended to read as follows: The Claimant should identify in the Letter of Claim the meaning(s) he/she attributes to the words complained of. iv. The question whether to retain trial by jury in defamation cases should be reconsidered. 25. Part 5, Chapter 33: Collective Actions: a. Default position in collective actions should be i. in PI actions, qualified one way costs shifting; and ii. in all other actions, two way costs shifting. At the certification stage, the judge may direct that a different costs regime shall operate. b. Rule 9.01(4) of the Solicitors Code of Conduct 2007 (Rule 9 Referrals of Business 18 ) to be amended, so as to permit the 3 rd party funding of collective PI claims. 26. Part 5, Chapter 34: Appeals: a. There should be a separate review of the procedures and costs rules for appeals, after decisions have been reached following this report concerning first instance litigation. b. Pending that review, appellate courts should have a discretionary power, upon granting permission to appeal or receiving an appeal from a no-costs jurisdiction, to order i. that each side should bear its own costs of the appeal; or ii. that the recoverable costs should be capped at a specified sum. 27. Part 6, Chapter 35: Pre-Action Protocols: a. The PAP for Construction and Engineering Disputes should be amended, so that 18 Rule 9.01 (4): You must not, in respect of any claim arising as a result of death or personal injury, either: (a) enter into an arrangement for the referral of clients with; or (b) act in association with, any person whose business, or any part of whose business, is to make, support or prosecute (whether by action or otherwise, and whether by a solicitor or agent or otherwise) claims arising as a result of death or personal injury, and who, in the course of such business, solicits or receives contingency fees in respect of such claims. 7
8 i. it is less prescriptive; and ii. the costs (or at least the recoverable costs) of complying with that protocol are reduced. The need for that protocol should be reviewed by TCC judges, practitioners and court users after b. The general protocol, contained in Sections III and IV of the PDPAC 19, should be repealed. c. Annex B to the PDPAC should be incorporated into a new specific protocol for debt claims Part 6, Chapter 36: Alternative Dispute Resolution: a. There should be a serious campaign i. to ensure that all litigation lawyers and judges are properly informed about the benefits which ADR can bring; and ii. to alert the public and small businesses to the benefits of ADR. b. A handbook should be prepared, explaining clearly and concisely what ADR is and giving details of all reputable providers of mediation. This should be the standard handbook for use at all JSB seminars (Judicial Studies Board) and CPD training sessions concerning mediation. 29. Part 6, Chapter 37: Disclosure: a. E-disclosure as a topic should form a substantial part of i. CPD for solicitors and barristers who will have to deal with e-disclosure; and ii. the training of judges who will have to deal with e-disclosure. b. A new CPR 31.5A should be drafted to adopt the menu option in relation to i. large commercial and similar claims; and ii. any case where the costs of standard disclosure are likely to be disproportionate. PI claims and clinical negligence claims should be excluded from r. 31.5A. 30. Part 6, Chapter 38: Witness Statements and Expert Evidence: a. CPR Part 35 (Experts and Assessors) or its accompanying PD to be amended in order to require that a party seeking permission to adduce expert evidence do furnish an estimate of the costs of that evidence to the court. b. The Australia procedure, known as concurrent evidence should be piloted where all parties consent. If the results are positive, CPR Part 35 could be amended to provide for use of that procedure. 19 Section III The principles governing the conduct of parties in cases not subject to the PAP; Section IV - Requirements that apply in all cases. 20 Annex B - Information to be provided in a debt claim where the claimant is a business and the defendant is an individual. 8
9 31. Part 6, Chapter 39: Case Management: a. Cases should be assigned to designated judges with relevant expertise. b. A menu of standard paragraphs for case management directions for each type of case of common occurrence should be prepared and made available to all district judges both in hard copy and online in amendable form. c. CMCs and PTRs should either i. be used as occasions for effective case management; or ii. be dispensed with and replaced by directions on paper. Where such interim hearings are held, the judge should have proper time for pre-reading. d. In multi-track cases the entire timetable for the action should be drawn up at as early a stage as is practicable. e. Pre-action applications should be permitted in respect of breaches of PAPs. f. The courts should be less tolerant of unjustified delays and breaches of orders. This change of emphasis should be signalled by amendment of CPR Courts should monitor the progress of the parties in order to secure compliance with orders and preempt need for sanctions. g. The Master of the Rolls should designate two lords justices, at least one of whom will so far as possible be a member of any constitution of the civil division of the Court of Appeal, which is called upon to consider issues concerning the interpretation or application of the CPR. h. Consideration should be given to the possibility of the Court of Appeal sitting with an experienced district judge as assessor when case management issues arise. 32. Part 6, Chapter 40: Costs Management: a. The linked disciplines of costs budgeting and costs management should be included in CPD training for those solicitors and barristers who undertake civil litigation. b. Costs budgeting and costs management should be included in the training offered by the JSB to judges who sit in the civil courts. c. Rules should set out a standard costs management procedure, which judges would have a discretion to adopt if and when they see fit, either of their own motion or upon application by one of the parties. d. Primary legislation should enable the Rule Committee to make rules for pre-issue costs management. 33. Part 6, Chapter: 41: Part 36 Offers: 21 The Courts Management Powers: Relief from Sanctions. 9
10 a. The effect of Carver v BAA plc 22 should be reversed. b. Where D rejects a C s offer, but fails to do better at trial, the C s recovery should be enhanced by 10%. 34. Part 6, Chapter 42: Courts Administration: a. Most county court cases should be issued at regional centres, but a facility to issue proceedings at all county courts must be retained. b. Only if cases are defended, should they be transferred to, or retained in, county courts, where the staff should be specifically trained for, and focused upon, the administration of contested cases. c. The Association of District Judges and HMCS should together draw up a scheme for the increased delegation of routine box work from district judges to proper officers within the court service. 35. Part 6, Chapter 43: Information Technology: a. A suitable body should be appointed to exercise strategic oversight over all IT systems which are installed in the civil courts. b. Judges and practitioners should be included in future development teams for individual court IT projects. c. E-working (electronic working 23 ) should be extended to the rest of the High Court in London, in particular the QBD and also to the SCCO (Senior Courts Costs Office). d. Once e-working has been introduced across the High Court in London, it should be rolled out across England and Wales. e. Consideration should be given to establishing an IT network for the courts which is separate from, and therefore not constrained by the security requirements of, the gsi system. This network should have its own appropriate level of security. f. Judges, legal practitioners and their staff should receive proper training in relation to court IT systems and should be willing to adapt their procedures. 36. Part 7, Chapter 44: Summary Assessment: a. If any judge at the end of a hearing within Costs PD paragraph 13.2 (Summary Assessment: General Provisions) considers that he or she lacks the time or the expertise to assess costs summarily, they should order a substantial payment on account of costs and direct detailed assessment. b. A revised and more informative version of Form N260 (Statement of Costs: Summary Assessment) should be prepared for use in connection with summary assessments at the end of trials or appeals. 37. Part 7, Chapter 45: Detailed Assessment: 22 Carver v BAA plc [2008] EWCA Civ 412; [2009] 1 WLR 113: A claimant in a personal injuries case beat the defendant's Part 36 offer by 51. The trial judge held that, having regard to all the consequences of going to trial, it could not be said that the final outcome (although 51 higher) was "more advantageous" than accepting the defendant's offer made a year previously. The Court of Appeal upheld that decision. 23 Electronic working: Provides an electronic filing system for court users and an electronic case file for judges and court staff plus the listing component from CCIT. 10
11 a. A new format of bills of costs should be devised, which will be more informative and capable of yielding information at different levels of generality. b. Software should be developed which will i. be used for time recording and capturing relevant information; and ii. automatically generate schedules for summary assessment or bills for detailed assessment as and when required. Long term aim must be to harmonise procedures and systems which will be used for costs budgeting, costs management, summary assessment and detailed assessment. c. A package of measures to improve detailed assessment proceedings should be adopted, as set out in section 5 of this Chapter 45. d. The proposals for provisional assessment should be piloted for one year at a civil justice centre outside London in respect of bills up to 25,
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