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Civil justice, costs reforms and Jackson/LASPO update

Monthly round up of progress with the Jackson and associated civil justice reforms.

Costs budgeting - latest developments

The Master of the Rolls has recommended that the costs budgeting regime be extended so as to include all cases up to £10m in all courts.  Discretion will still exist for judges who wish to order costs budgeting in cases above that threshold.  Lord Dyson and Lord Richards set out their recommendations to the Civil Procedure Rules Committee, stating that the current threshold of £2m had only been set as a temporary fix and was too low.  For cases below the £10m threshold, costs budgeting will apply automatically, unless there is an order to the contrary.

There have been a number of decisions this month in the area of costs budgeting which, as would be expected in this area, are technical in nature:

In Bank of Ireland v Philip Pank Partnership (2014) the High Court decided that the lack of a full Statement of Truth on a form Precedent H did not mean that there had been a failure to file and exchange costs budgets. The rule providing a sanction in default in 3.14 imposed that sanction for failing to file a budget, but did not go on to say that the same sanction would apply where a budget had been filed, but with the wrong Statement of Truth. Relief from sanction was not therefore needed, but had it been, it would have been given. Whilst the statement did not comply with the exact wording prescribed by the Practice Direction, the failure had been one of form rather than substance.  

When both parties failed to file costs budgets with their DQs in Porbanderwalla v Daybridge Ltd (2014) their costs were initially limited by the District Judge to recoverable court fees only because the budgets had not been filed with the directions questionnaire. However, allowing the appeal HHJ Worster held that “absent a requirement for the exchange and filing of a budget in the rule 26.3(1) notice or a CMC, the requirement is not triggered”. The 26.3(1) notice in this case (on form N149C) directed that the directions questionnaires were due by a specific date, but had given no date as to when costs budgets were due, and on that basis the rule specifies that they are due 7 days before the first CMC, so the budgets had been dealt with in time.  The judge rejected an argument that the case had not yet been allocated to the multi-track when the rule 26.3(1) notice was served so that rule 3.13 did not apply. He also expressed concern that there are in circulation versions of N149C that do not provide for a costs budget to be filed by a specific date.  No sanction was appropriate.

We thank Gordon Exall of Zenith Chambers for the report in Burt v Christie (2014).  The defendant failed to file precedent H and a costs budget in accordance with the Court’s directions; the defendant filed the budget one day late.  Hearing the defendant’s application for relief from sanctions, District Judge Lumb in the Birmingham District Registry, did not accept that the breach was trivial.  Relief was refused and the defendant was deemed as having served a costs budget comprising only the applicable court fees.

Finally, Litigation Futures reports on the High Court case of Lotus Cars v Mecanica Solutions (2014), which was one of three separate actions, which the parties had agreed by consent, would be joined for the purpose of case management and trial.  The claimant submitted a single budget for all three cases of nearly £600,000, an approach which was challenged by the defendant.  Sitting in the High Court, Master Kay QC rejected the Mitchell challenge saying the wording of the orders - which were in places in conflict with each other - did not specify separate budgets were required for each case.  The claimant had therefore sufficiently complied.

Are the incoming buffers watering down the Jackson reforms?

It is worth bringing to your attention significant developments over the last few weeks on the widening opportunity for parties to litigated claims to agree between themselves extensions of time for taking key steps in the court process such as exchange of witness statements and expert reports.  At the same time as we do this, we need however to knock on the head rumours which have been circulating in some quarters that these developments signal a major policy change from the new litigation landscape conceived by Lord Justice Jackson and encapsulated in the recent Mitchell v NGN case.

Insurers would have been keen to know had there been any sign from these developments that the strict Mitchell approach was being watered down.  The Mitchell decision puts pressure on all litigants, but particularly on claimants, both because their systems may be less well organised and therefore are more likely to end up in a situation of default, and also because where they do the effect of that default is likely to be more significant in that claim, even as far as it being impossible for the claimant to take the claim any further forward.  At the same time however, we need to recognise the challenges that the Mitchell judgment poses for insurers and their lawyers to make sure that litigated claims are properly planned at the outset, and that those plans include how the case is going to be taken forward procedurally against anticipated court directions.

The new buffer directions

The first of the recent developments came a few weeks ago with the acceptance by the senior judiciary that in cases being pursued in the specialist clinical negligence list in the Royal Courts of Justice, a new direction would become the norm allowing the parties to agree extensions of time for taking steps required by court directions of up to 28 days, without having to obtain court approval for that extension, where the deadline in question had not yet arisen.  The direction potentially goes further and allows longer extensions, but this time with court approval.  At the time of this news emerging, it was widely but wrongly reported as applying to all litigated cases.

A further development last week is that a similar position has been announced as applying to cases in the specialist asbestos RCJ list.  The standard direction that will be used here will allow parties to agree extensions of time of up to 21 rather than 28 days, but this court will allow extension agreements to be reached between the parties even after the court deadline has passed.  A lack of full consistency there between these two RCJ courts here.

Also last week a new model paragraph has been added to those available on the Ministry of Justice website, apparently available now for use in all cases, permitting the parties to agree extensions of up to a period that will be individually specified on a case by case basis. 

In none of these three approaches will an extension be possible, we assume, if the extension would affect either the trial date or another court hearing date. 

The potential for wider application

It is reported that the Civil Procedure Rule Committee are considering whether to permit this approach generally and specifically whether litigants should be able to extend most court directions by up to say 28 days, and we will presumably see their thoughts in the next few weeks.  In the meantime however, these buffer orders are starting to be used by judges in certain courts.  We may reach the position in the next few months where this sort of direction has become the norm but many judges will be unwilling to include buffer orders until the CPRC have reached a final view.

The reason for this potential change needs to be understood.  The proposed change is judge-inspired.  The simple fact is that judges think that they will be able to get on with their workloads better if they are not side-tracked by regular applications from litigants concerned by the Mitchell judgment who want to put back the time for witness statement exchange or expert evidence exchange, and recognise that they now need court approval to do this.

Not a change in policy

What this news is not however is “a major policy change and a major blow to the Jackson/Mitchell courts” as has been claimed in some claimant quarters.  Those “Jackson/Mitchell principles”, which in turn lead to the need for careful procedural planning in all cases, remain in place.  The challenges and opportunities which Mitchell gives rise to remain intact, and it will be a failure of planning to think that this news leads us to any other position. If claimant commentators think that there will be any indirect softening of the Jackson approach as a result of this news, then we will have to await any evidence of that.

Other reform steps

On the broader Jackson reform agenda, the Civil Justice Council has set up a conference in March for stakeholder groups to discuss the impact of the reforms so far, nearly 12 months on.  Part of their agenda is in relation to access to justice issues presumably out of a desire to ensure that claimants are still able to pursue genuine claims, and they are interested to know about the types of case being taken on, and how they are funded.  They also want to discuss experiences of costs budgeting and case management to date.  Submissions in response are invited by 7 March 2014 and interested parties such as insurers are likely to want to respond.

The group led by Mr Justice Ramsey is considering the implementation of other parts of the Jackson Review not yet been put into practice.   As well as covering the issue of exemptions from costs budgeting (mentioned above), the group has been exploring the frontloading of costs caused by the fact that costs budgeting and management does not effectively control pre-issue costs.  We may see in April whether there are any specific proposals to deal with that concern which remains important to insurers.

Further developments in this area are as always awaited.

Claims volumes in the Portal

On 24 February, the Portal Company released its statistics for January and even though we cannot necessarily expect evidence of definitive trends going forward into 2014, they are as always worth studying to identify early signs of trends not only in motor claims but in casualty as well.

RTA portal

The number of new CNFs to this portal in January was 74,700, which is an increase of 18,000 over the previous month of December. As recognised at the time, in the case of December we were dealing with a short month of fewer working days where the number of new claims had historically been lower in previous years. What we were looking for in the new figures we now have is not so much whether they would be increased from December’s level, which was always going to be the position, but what the extent of the increase would be.

Our answer is that with an increase of 18,000 we have a significant rise, but still it is a predictable one. There is always a rise between the relatively quiet December and the relatively busy January as claimant lawyers catch up. In both 2010/11 and 2011/12 the increase was around 15,000 extra claims, in 2012/13 the increase was 21,000 claims. So with an increase of 18,000 we are mid-range. No easy pointer to future trends from that.

What we do have with the number of new claims of 74,700 is a relatively high number – in fact it is the sixth highest number of new monthly claims since the portal was born. The only five higher months were in late 2012 and early 2013 as the Jackson and portal reforms were imminent and claimant lawyers were taking steps urgently to avoid the downside to both them and to their clients from the new processes. It is though still too early to be deciding where the figure for new CNFs will settle down at as 2014 continues, as we will still probably need most of the first half of the year to see where the new claims numbers are likely to end up. As we move forwards from 31 July 2013, the accident date after which new £10-25k claims had to enter the portal, we must accept that certainly a percentage of the new CNFs entering the RTA system will be in this higher value band, so when we are comparing the monthly total of new claims to the average number of new CNFs of around 70,000 where it stood before the reforms started coming in, there will be an element – small but increasing – of us comparing apples with pears.

But at the end of the day, we have this month breached the 70,000 watershed again. The question remains of whether we will remain at that level as the year progresses, and on that we will we have to wait and see.

Other RTA trends

Two other trends seen last month are continuing significantly. Firstly, the number of court packs being produced has increased again from 1642 in November (1545 in the short month of December) to 1865 as the stage 3 fixed costs continue to look more attractive to the claimant side when set against the reduced level of Stage 1 and 2 fixed costs.

Also, the level of general damages (or PSLA) has risen from £2,400 to £2,414. While not a huge uplift it is the ninth consecutive monthly increase, one potential reason being the fact that this figure is not only relevant to claimants themselves, but also to their lawyers whose success fees in post 1st April 2013 retainer cases are partly calculated by reference to the amount of PSLA and past losses.

Casualty portals

These 3 portals have now been open for 6 months, and so they are still too new to be able to use to identify trends for future new claims volumes. As before, this will have to be done by looking at the RTA trends from that more mature process and making assumptions. But there are other trends to recognise and to take account of.

In the casualty portals the numbers of settlements continue to increase. There are now over 200 settled claims across the three portals. The average general damages (or PSLA) figures are also raised in all three portals, EL is up to £2,257, EL disease up to £5,208, and PL up to £2,105. The EL and PL quantum levels are likely to rise further as larger claims settle, which is expected to increase these average figures up to and then over the RTA average of £2,414. Another reason for this is the same reason which has been identified as in relation to the corresponding RTA increase in PSLA agreements, that is the increased interest in quantum levels of not only claimants but also their lawyers whose success fees on new post 1st April 2013 retainers are calculated by reference to the level of recovery of past losses including PSLA.

On retention rates, it looks as though last month’s lower figures were a blip, when that month retention rates fell to 44% for EL, 23% for EL disease and 31% for PL, all lower than the previous month. This month the EL retention rate is back up to 49%, EL disease to 30%, and PL to 39%. The overall casualty retention rate is now 41%. The RTA retention rate has generally fallen within the 40-50% range, and we can see that casualty is currently within that band, but we would go further and say that while it will begin to stabilise, it is unlikely to do so at a level which will see it overtake RTA any time soon because in part of the relatively new processes which are still bedding in.

EL disease portal

We expect EL disease to remain the portal with the lowest retention rate, because of the difficulty in using the process successfully for disease cases as the process currently stands. This will drag down the average retention rate for the casualty portals when the figures for the three portals are merged to form a casualty average. If the portal processes were later adapted for disease to allow both more time for decision making, and ensured that a medical report became available before an admission had to be made, then we would expect retention rates to increase as a more appropriate and user friendly process would have been created. Unfortunately there is no sign of that being on the agenda at present.

The limited suitability of disease claims for the portal can be seen from a comparison between the casualty portals of the percentage of the claims dropping out at Stage 1 where a specific decision has been made by insurers not to admit liability (or in terms to repudiate the claim), as opposed to the claim being timed out at Stage 1. In EL accident the percentage of “repudiations” is 57%, in PL it is higher still at 78%, but in EL disease it is only 25%. Perhaps this confirms that the portal processes are not ones within which a positive Stage 1 decision can easily be made in disease claims and again hints at unsuitability of process for disease.


At the same time, the high levels of repudiations in EL accident and PL are worth noting at 57% and 78% respectively. Both are much higher than the current corresponding figure for RTA of 32%. Some robust decision making seems to be on-going as those involved with the EL accident and PL portal processes consider how to operate them most effectively. It is too early to say whether these high EL and PL repudiation rates are realistic. More time is needed to see whether one effect of these higher levels of repudiations is a higher number of these types of claims proceeding outside the portal, including into

As with most things portal, while there are again this month signs of developments worth studying, it is too early in relatively new processes to be able to guarantee future trends.

We will continue to keep you informed as we move through 2014.

Jackson in action – recent case law

Relief from sanctions/failure to serve list of documents

In Lakatamia Shipping Co Ltd v Nobu Su & Ors (2014) the defendants believed they had until 5pm to serve a list of documents, when in fact the list needed to be served by 4.30 and whilst that was not a good reason for failing to comply with the actual deadline of 4.30, it was explicable and the failure to comply was trivial. The High Court took the view that narrowly missing a deadline was a circumstance which the Court of Appeal in Mitchell expressly contemplated as being de minimis and usually deserving of relief from sanctions.

Relief from sanctions/failure to comply with unless order

In Summit Navigation & Anor v Generali Romania Asigurare Reasigurare SA & Anor (2014) the claimant’s failure to comply with an unless order that provided that a case be stayed unless they provided security for costs, should not lead to the case being struck out. The claimants had missed the deadline by one day and it was unreasonable for the defendant not to have agreed to lift the stay. The High Court warned litigators not to deploy the decision in Mitchell in an opportunistic way.

Relief from sanctions/failure to comply with directions

In Newland Shipping & Forwarding Ltd v Toba Trading FCZ & Ors (2014) an application for relief from sanctions was refused by the High Court following the defendant’s failure to comply with their obligations regarding disclosure and exchange of witness statements. The failures were matters of substance and importance, particularly given that a trial date was approaching. The loss of legal representation (solicitors withdrew from acting after a fee dispute) did not provide good reason for the default, as there should have been warning that that might happen and what consequences might flow.

Relief from sanctions/failure to file witness statements

In Chartwell Estate Agents Ltd v Fergies Properties SA & Anor (2014) the High Court granted relief from sanctions to adduce evidence from witnesses whose statements had been served late and where both parties had been in default.  The trial date could be maintained and a refusal of relief would effectively have ended the substantive claim.

Nicky Kinnear of DWF draws our attention to her case of Hillier v Pounder (2014), where the claimant was in default of an order to exchange witness statements, filing witness statement two months late.  Notwithstanding the fact that liability had been admitted, relief from sanction was refused and the claim was struck out.  District Judge Lynch held that the breach was not trivial and there was no good reason for the breach.  The claimant had delayed in making an application to seek relief from sanctions.  Leave to appeal was refused.


For further information please contact Fiona James, Director, Professional Support Lawyer on 0191 233 5220 or Marcus Davies, Professional Support Executive on 0161 603 5146.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.