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Costs developments in the near future

16 June 2021
It would be impossible to cover all the developments in costs in this article, so we have focused on a number of key legislative, procedural and market developments emerging or likely to emerge in the short and medium term.

Whiplash reforms

The first major event, which impacted the injury and insurance-facing costs market, was the introduction of the Official Injury Claims (OIC) system on 31 May 2021. All ‘whiplash’ claims valued at under £5,000 will now be dealt with through the online portal. The effect will be that a large number of claims valued at between £1,000 and £5,000 which would have attracted fixed costs under the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents or under the fixed costs regime on the Fast Track, will now attract only limited fees and expenses, with no legal fees recoverable.

Guideline Hourly Rates

With a broader impact on all non-fixed costs claims, following-on from its interim report published in January of this year, the Civil Justice Council's final report is expected shortly. It remains to be seen whether there will be any movement on the rates recommended in their interim report detailed below.

In the following table the figures in brackets represent the percentage uplift on the previous GHR, set in 2010. It can be seen that many of the increases are well in excess of many measures of  inflation over the same period. We considered the review was carried out using questionable methodology and data, and potentially at the wrong time. 

Costs developments in the near future

Fixed Recoverable Costs

Also with broad potential ramifications is the proposed extension to Fixed Recoverable Costs, which does appear to be back on the MOJ's agenda. We anticipate more details will be released in the coming months. As the result of another review, which ended in June 2019, it seems likely that in the foreseeable future, most civil claims valued at up to £100,000 will become subject to FRC. Only clinical negligence claims and claims considered to be too complex will be excluded.

High Value Litigation

Turning to extremely high value litigation, the approach adopted in Vattenfall AB & Ors v Prysmian SPA & Ors [2021] CAT 3 could signal a future where there is greater willingness to use costs management, even in matters which fall outside the mandatory regime as a result of their high value.  Certainly, with this Jacksonian initiative having now been in place for approaching a decade, the judiciary is generally adept at using the process to provide greater certainty for parties to litigation insofar as the potential costs are concerned, and one can see the argument that this certainty should be a reasonable expectation for as great a number of litigants as is possible.

This certainty and transparency would appear to be a key motivating factor in Trower J's judgment: “I agree with the submission made on behalf of the Prysmian defendants that the preparation of detailed cost budgets in the form of precedent H is more likely to facilitate the desirable objective of transparency as to the parties’ likely costs of the proceedings than is the simpler exercise of updating the existing summary estimates. 

“I think that these should in any event be followed by budget discussion reports. Once costs budgets and budget discussion reports have been filed, it will then be possible for the tribunal to consider the terms of any costs management order to be made in the form contemplated by CPR 3.15.”

Vulnerable Parties

All costs matters, including these actual and proposed regimes outlined above, are impacted by the formal recognition of ‘vulnerable parties and witnesses.’ The OIC system has its own definition of ‘vulnerable’ in relation to claimants who should not use the process, but in all other situations, the Civil Procedure Rules were amended with effect from 6 April 2021, to require the courts to take into account vulnerability. In the context of this article, the most important change is that from 6 April 2021, when a court considers costs and their proportionality under CPR 44.3(5), it will have to take into account “any additional work undertaken or expense incurred due to the vulnerability of a party or any witness”.

 

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