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If you want proportionate costs then fix them!

01/06/2016

In a speech on Monday 23 May, Lord Justice Jackson took a swipe at critics complaining about the lack of guidance on the meaning of “proportionate costs” introduced into the CPR in April 2013.

The rule introducing “proportionate costs” provides that the court will only award proportionate costs and will not award any more, even if further costs were reasonably and necessarily incurred.

So far so good? But hang on… how do you know whether they are proportionate?

Well… costs incurred are proportionate if they bear a reasonable relationship to the sum in issue or the value of any non-monetary relief; the complexity of the litigation; any additional work caused as a result of the conduct of a party; and any wider factors in the proceedings such as reputation or public importance.

Well ok… hhhmmmm… but I still don’t get it? What do proportionate costs look like?

Jackson explained that, “The best way to satisfy the requests for clarification is to convert the five identified factors into hard figures: in other words, to create a fixed costs regime.”

This will involve two principal steps:

(i) Determining for each level of claim (e.g. £25,000 to £50,000; £50,000 to £100,000 etc) what amount of costs would be proportionate for such litigation.

(ii) Then devising a set of rules for adjusting those costs in order to take into account complexity, conduct and wider factors.

This might be done by means of specifying percentage additions to the costs established at the first stage.  There may then be a need to add an escape clause or some other provision to deal with exceptional circumstances.

And for that “here is one I produced earlier” moment… Jackson referred back to the table of fixed fees he invited us to consider in his “The Time has Come” speech in January when he called for the extension of fixed costs to all claims up to a value of £250,000.

Jackson repeated the call for an extension of fixed fees to be taken up by Government. He garnered support from a survey carried out by the Federation of Small Businesses during the Costs Review which showed the majority were in favour of fixed costs in business disputes up to £500,000.

He cited the introduction of fixed fees in the Intellectual Property Enterprise Court for disputes up to £500,000 as an example increasing access to justice because of the increase in matters dealt with by the court.

Jackson also addressed what he called the “anomaly” of fast track employers’ liability disease (ELD) claims. Responding to those asking whether fixed costs were unsuitable for these claims, Jackson said, “The answer is that ELD cases are not unsuitable for fixed costs.” A CJC working party is now progressing this piece of work with support from Keoghs.

This is the third time Jackson has called for an extension of fixed fees… now it’s up to all of us to take up the baton and call for change!

Howard Dean
Author

Howard Dean
Partner
Head of Costs

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