Andrew McAulay’s insight into Fixed Costs.
The EU referendum has caused a delay to the progression of fixed costs for medical negligence cases. The earliest that we are likely to see fixed costs for medical negligence work is April 2017.
The Civil Justice Council held a small workshop on 11 March 2016 for practitioners drawn from a range of civil justice bodies and users to discuss the possible extension of fixed recoverable costs. Notes from the meeting can be found here.
Some legal commentators believe that fixed costs will only be introduced for all claims up to £25,000.00 in the first instance, with a review after say 18/24 months. This would be sensible, but we shall wait and see!
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Fixed costs, proportionality and budgets - how are these entwined?
There are many concerns regarding fixed costs, one of those being - will these remove access to justice, therefore giving those parties with deep pockets an unfair advantage?
Following on from the recent case of Socrates Training Ltd v The Law Society of England and Wales  CAT 10 which was a decision regarding costs capping, the Tribunal concluded that “it is important that those costs strike a fair balance between enabling access to justice for the claimant and providing a measure of protection to the defendant not only from unmeritorious claims but also from the burden of having to defend a claim which it is assumed for this purpose proves to be unfounded. That may mean that in some cases the amount is not the sum required to achieve justice only for the receiving party, but a limited contribution to that party’s costs".
Gordon Exall makes some perceptive and intuitive comments with regards to the above case as follows: “This is, of course, a case about costs capping in a specialist court. However the principle could be a good one generally. It is more difficult for a rich litigant to bully a poorer litigant just by using the strategy of hiring expensive lawyers. Indeed in many cases it is the litigant using the expensive lawyer that is most likely to be out of pocket - regardless of the outcome.”
Costs budgeting can in some instances curtail unfair spending, and at the same time ensure that the case is run in a proportionate manner whilst maintaining access to justice. This is in direct contrast to the potential problems that the fixed costs regime may create, where keeping costs proportionate appears to be the ultimate aim of this regime and access to justice seems to have been forgotten.
No regime will stop those parties with deep pockets from incurring excessive costs on litigation, however is the fixed costs regime the answer? We now have two cases that provide guidance on the new proportionality test (see Hannah’s analysis below), as well as a growing number of budgeted cases that have now proceeded to trial where the merits of budgeting can now be assessed.
Perhaps the rules that are now in place which include managing the costs throughout and a new more robust proportionality test are sufficient to control costs whilst ensuring access to justice remains.
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New proportionality test: further guidance
Another recent decision on the issue of proportionality is adding to a growing body of case law on how the new proportionality test, enshrined in CPR 44.3, is to be applied in practice.
The new test, introduced as part of the “Jackson reforms” implemented on 1 April 2013, reverses the old “Lowndes test” and provides that disproportionate costs may be disallowed or reduced, even where reasonably or necessarily incurred.
In the SCCO decision of May & May v Wavell Group PLC & Bizarri  EWHC B16 (Costs) (see Clarion blog article here for detailed analysis) Master Rowley reduced costs claimed in the sum of £208,236.54, first to £99,655.74, having considered the reasonableness of the bill on an item-by-item basis, and then to £35,000.00, on grounds of proportionality, considering each of the headings set out in CPR 44.3(5) in turn.
This is the two stage approach to CPR 44.3(2) adopted in BNM v MGN Ltd  EWHC B13 (Costs) (see Clarion Costs blog here for further details) as described by Sir Rupert Jackson in his final report at Part 1, chapter 3, paragraph 5.13:
“In an assessment of costs on the standard basis…the proportionality test should be applied on a global basis. The court should first make an assessment of reasonable costs, having regard to the individual items in the bill, the time reasonably spent on those items and the other factors listed in CPR rule 44.5(3). The Court should then stand back and consider whether the total figure is proportionate. If the total figure is not proportionate, the court should make an appropriate reduction.”
As stated by Master Gordon-Saker in BNM v MGN Ltd, “it is clear that the new test of proportionality was intended to bring about a real change in the assessment of costs,” a sentiment which certainly appears to be ringing true, as long awaited case law on the subject begins to emerge.
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