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Fixed recoverable costs – The Big Debate: the judicial review dimension – some key themes from Jackson LJ’s London seminar on 13 March 2017

It is always dangerous to speculate, but might the tweaks to Jackson LJ’s seminars – increasing the focus on judicial review (JR) (which was the main topic in both London and Cardiff) – suggest that he has identified a real need to find solutions other than an extension of the fixed costs regime, for certain areas of civil litigation, including JR?

Certainly, at the event Practical Law organised in January 2017, some of the really tricky areas included actions against the state. On one side, there is the imperative of safeguarding the rule of law and providing means for citizens to challenge the exercise of executive powers. On the other, there is the cost to society if there are not checks and balances to guard against unmeritorious claims. Finding the right balance is a far from easy task.

JR took centre stage at Jackson LJ’s London fixed costs seminar, on 13 March 2017. The first half comprised presentations by Vikram Sachdeva QC and Nick Bacon QC, followed by general discussion of the options for JR and public law claims. The second half started with presentations by Robert Bourns (President of the Law Society) and Andrew Walker QC (the Vice Chairman of the Bar Council), followed by some general discussion. Again, the focus was on JR and public law claims, but it did go a little wider.

Formal presentations

Vikram Sachdeva QC and Nick Bacon QC, both assessors in Jackson LJ’s fixed costs review, gave presentations that highlighted the very special nature of public law cases, and the challenges of finding a model that works.

Vikram Sachdeva QC reminded delegates that Jackson LJ’s Final Report following the Civil Litigation Costs Review, published back in 2010, recommended an extension of qualified one way costs shifting (QOCS) to JR cases (and set out six grounds for that approach). He noted, though, that it now appears unlikely that the government will implement that recommendation.

He suggested that possible alternatives for JR cases might include:

Nick Bacon QC suggested that the solution is not in “ad hoc schemes”, but in making litigation affordable to the average citizen.

He referred to the German system (a system that Jackson LJ has previously commented on positively). Although that allows for costs shifting, the costs are fixed as a percentage of the value of the claim (or the value as assessed by the court). Parties can pay their lawyers whatever they want, but cannot recover more than the fixed amount from the paying party. One view is that this reduces lawyers’ fees. An alternative view is that this reduces access to justice. Jackson LJ and his assessors are aware of these concerns.

A particular challenge is finding a statistical base for the costs of JR proceedings. Referring to a number of sources, Nick Bacon noted that (although there is no consistent view) in most cases, the costs are less than £100,000 and, often, they are less than £50,000.

Nick Bacon QC also took some time outlining developments in the Aarhus regime for environmental claims including, from 28 February 2017, the replacement of costs protection orders with costs capping orders.

Robert Bourns, President of the Law Society, stated that the Law Society welcomes Jackson LJ’s statement that the aim is to put forward a package of proposals designed to promote access to justice and control costs in a fair and workable manner, recognising differences in the complexity and value of each individual case. The Law Society is not opposed to the introduction of such reforms in principle, subject to necessary safeguards. His full presentation has been published on the Law Society website. He concluded by emphasising the need for any extension of the fixed recoverable costs regime to be considered in the context of the overarching civil justice reforms (including, for example, proposed changes to the small claims limit, increased court fees and court closures), as part of a joined up access to justice strategy.

Andrew Walker QC, Vice-Chairman of the Bar Council, called for caution in the ongoing “conversation” about possible extension of the fixed recoverable costs regime, making the following points:

  • Many at the Bar have “woken up late” to the proposals, and many members of the specialist Bar have not put in detailed responses to this review.
  • The possibility of an extension of the Aarhus regime to JR cases seems to be a new suggestion, so no-one has had a chance to think about the possible ramifications.
  • Jackson LJ’s recommendation (in his final report for the Civil Litigation Costs Review) was to extend the fixed recoverable costs regime across the fast track first and then consider the multi-track. The view of the Bar is that the horizontal extension needs to happen first.

His full presentation has been published on the Bar Council website. It includes some interesting observations on the pros and cons of a possible new “intermediate track”.

Points from the audience

This blog aims to give a flavour of the points raised during discussion.

Some preliminary points

Reference was made to the fact some public law cases have the benefit of legal aid funding. The point was also made that a high number of JR cases are now dealt with in the Upper Tribunal (for example, immigration and cases involving oral evidence) and some of those present queried the extent to which any new costs regime might apply to those cases.

Jackson LJ responded as follows:

  • Legally aided cases: All seem to accept that, for legally aided cases, it would not be appropriate to seek to superimpose some other costs regime.
  • Tribunal cases: On this point, Jackson LJ felt that whatever he recommended should be for the civil courts only, and that it would then be for the head of tribunals to consider if any wider changes might be appropriate.

Is there a need for reform in the context of public law cases?

One speaker asked what the objective for reform would be insofar as JR cases are concerned. Costs data outlined by Nick Bacon QC suggests that, although there is significant variation, there is not a general problem of uncontrolled costs in public law cases.

Therefore, it might be argued that the key drivers should be seen as:

  • The need to provide access to justice.
  • Fairness to defendants.

What is “fair” to defendants raises its own conundrums.

One speaker suggested that “fairness”, in the context of government departments, should be viewed not in terms of costs but in terms of ensuring fairness in society and that, due to the constitutional importance of public law claims, it might be seen as only right for the government to bear most of the costs.

A number of speakers commented on whether any change was actually required, and called upon Jackson LJ to keep in mind the “do nothing” option: particularly if QOCS is not now a realistic option.

Others strongly felt that there is a problem that needs to be tackled. One made the point that, for claimants who narrowly miss the legal aid threshold, often, there is simply no way that they can bring a JR claim. For cases without a wider public interest, it will not be possible to get a protected costs order (or capped costs order).

Another agreed that “do nothing” should not be an option but felt that it is important for there to be optional alternatives, not least due to the fact that some cases will be dealt with within the legal aid regime.

Interestingly, the point was also made that not all claimants are poor, and that legal aid is available for people who are quite impecunious. That also needs to be taken into account.

Views on a fixed costs regime

One speaker referred to the fixed costs regime in the Intellectual Property Enterprise Court (IPEC) and said that that is really excellent, and has worked well in terms of providing access to justice (for example, for SMEs). He saw great value in having near absolute adverse costs risk certainty.

However a number of concerns were voiced, including:

  • Covering the costs of doing the necessary work: The key concern seemed to be that, in complicated JRs challenging systemic issues, lawyers won’t be able to recover the costs of work that has been reasonably done. It was suggested that those cases might be considered to be the most important for society. Jackson LJ noted that his terms of reference do not require him to propose a universal regime for all cases. He recognised that some complex JR cases may well be unsuited to a fixed costs regime. That is why Vikram Sachdeva QC has proposed an optional fixed costs regime that might, for example, be used for simple cases.
  • Duty of candour: One speaker referred to the duty of candour and disclosure that falls on public bodies. Compliance with that duty generates a lot of costs on the defendant side. It was suggested that it might be worth exploring whether that could be limited, or if there could be more certainty about exactly what is required.

Thoughts on the workability of a variant on the Aarhus regime approach

Several speakers referred to recent changes to the Aarhus regime, suggesting that Jackson LJ should allow more time for reflection, so that an assessment can be made of how the new model is working. On that point, Jackson LJ emphasised that the report that he is required to produce by 31 July 2017 will be the subject of consultation by the government. Therefore, there will be plenty of further opportunities for comment after his report comes out.

A number of concerns were voiced regarding the Aarhus regime:

  • Covering the costs: The point was made that there are many claimants for whom even £5,000 is expensive.
  • When and how the complexity of JR cases should be assessed? Several speakers suggested that it is not easy to assess the complexity of a JR case at the outset. However, at least one speaker was “not as pessimistic” on this point. He said that he would generally know quickly if he was looking at a half day, one day or two to three-day case.
  • How will the court assess the importance of the matters at stake?

Other speakers were in favour of a modified Aarhus approach. One made the point that the focus of a fixed costs regime would be on seeking to ensure that litigation costs were proportionate, rather than ensuring that individuals were able to bring claims. For example, in a case over respite care, raising complex points of law, if it fell outside the legal aid regime, fixed costs would not help in terms of allowing the claimant to bring the claim. His preference was for a modified form of the Aarhus regime. He suggested that it should be possible to agree a variation of the caps, pre-action, but that, once they were agreed, they should be set for the entire proceedings. On this point, Jackson LJ agreed that, with a variation of the Aarhus model, it would clearly be necessary to withdraw the right to vary the caps at any stage.

Does costs management obviate the need for fixed costs?

A number of points were made about costs management. Jackson LJ himself commented that feedback from the seminars to date seems to suggest that costs budgeting is now working well, and that practitioners are getting used to the new discipline. He observed that some have sought to argue that, because the costs management regime is now working well, there is no need to extend the fixed costs regime.

However, at least one speaker suggested that it would not work for JR cases because there isn’t enough certainty.

Possibility of an intermediate track

Interestingly, a District Judge who had recently been doing some judicial training in costs management made the following observations:

  • Increasingly, new tools for case management are becoming available.
  • It should not be about setting budgets for phases, and expecting solicitors to keep on doing the same amount of work. Rather, there is a need to limit the amount of work that is done, and to ensure that there is equality of arms.
  • A new track with new rules would be the preferred route, as that would allow a completely fresh approach – including a revised disclosure process. That could also be helpful for solicitors when outlining the proposed approach to a case with their clients (as it would allow them to explain that the rules only allowed for certain levels of work to be done).
  • The rules could provide for exceptional “opt outs”: for example, based on proportionality (as under the current CPR 44.3 (5)), or due to the conduct of the paying party (as currently, under CPR 44.3 (5)(d)).

Another speaker said that they would be “horrified” if it was not possible to “turn over every stone” during the disclosure process, giving the example of asbestos claims where (in quite a number of cases, due to the behaviour of the defendants and their solicitors) it was only through the disclosure process that important issues came to light. The riposte to this, though, was that, where inappropriate behaviour by a defendant justified an “opt out” from the fixed costs regime, there should be no question that that would be the case.

At least one other speaker also voiced concern about the concept of an intermediate track, suggesting that that would lead to a further muddling of relevant procedures, and difficulties with the allocation process.

Jackson LJ pointed out that, in the fast track, there is no CMC and the trial usually lasts no more than one day, and fixed costs work. In the multi-track there can be vast oil claims, for example, lasting months and worth literally trillions. It is clear that those cases might require the “full panoply” in terms of case management. However, he posed the question whether there might be a band of cases that could be managed with relatively lean case management directions.

At least one speaker rejected that option, on the basis that, when looking at a whole basket of cases, it would be necessary to scrutinise them very closely in order to decide which would need more resources.

Questions posed by Jackson LJ

During the seminar, it was agreed that Jackson LJ would be provided with further submissions on the following points:

  • Would it be helpful for the pre-action protocol to address the question of costs: for example, requiring the claimant to indicate that they wish to use the Aarhus regime and to provide some relevant information?
  • Details of how the Aarhus model might be adapted for JR cases.

 

The diversity of views expressed – like the huge range of claims and claimants – highlights just how difficult the balancing exercise will be. The great debate continues!

Practical Law Dispute Resolution Beverley Barton

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