Procedural Reforms and Case Management – 2016 review - DAC Beachcroft

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Procedural Reforms and Case Management – 2016 review

Published 25 October 2016

The search for the holy grail of access to justice for everyone at proportionate cost has continued throughout 2016, at a time of budget restraints and a government policy of austerity. This year we have seen Lord Justice Briggs step into the arena and take up the challenge.  He is in charge of the Civil Courts Structure Review, which forms part of the wider HM Courts & Tribunal Service (HMCTS) Reform Programme that is looking at the administration of justice generally in England and Wales.

We look below at some of the central themes of Briggs LJ’s review and other notable developments affecting civil litigation in England and Wales.

Civil Courts Structure Review: Final Report by Lord Justice Briggs and reforms to 'Transform Our Justice System'

Digitisation
It is clear from the Reform Programme and Briggs LJ’s Final Report (published in July 2016) that digitisation of court processes is seen as the key to improving the efficiency of the courts. A move to a paperless court to break the “tyranny of paper” is proposed by Briggs LJ, although he accepts that this is likely to take at least four years to achieve.  This process has started in the Rolls Building with the CE-file, a new electronic filing and case management system.  However, Briggs LJ is proposing a much bolder initiative making use of IT for new or different processes and procedures which are not capable of being carried out on paper; not just an electronic replica of the court file and document storage.  If this is to be successful, there will need to be support from court users and a willingness to accept alternatives to the traditional court processes.  At present, although documents are being filed electronically on the CE-file, parties are reluctant to issue proceedings electronically.  Briggs LJ has commented that this may need to be made compulsory to force adoption of a new way of working.  This is just an indication of the challenges ahead.  Not surprisingly, there are concerns about HMCTS’s ability to deliver such a massive IT project.

Online Court
The main proposal put forward by Briggs LJ in his report is the establishment of an Online Court for civil claims up to £25,000 subject to specific exclusions. Although it would be designed for use by litigants without lawyers, involvement by lawyers would not be banned and Briggs LJ suggests a very limited element of fixed recoverable costs so that litigants can get initial legal advice on the merits of their case from a qualified lawyer and the provision of skilled cross-examination from an experienced advocate in cases which really need it.  The value of the upper limit has prompted much discussion with opinions ranging from £2,000 to £200,000.  Briggs LJ notes that £25,000 conveniently matches the dividing line between fast track and multi-track and would capture the vast majority of civil claims.  However, he acknowledges that the Online Court may initially have to start with a ceiling of £10,000, with the ambition of the Court's limit increasing to £25,000 at a later date.  Briggs LJ’s view is that personal injury claims above the small claims limit should be excluded from the Online Court.  He also recommends that professional (non-clinical) negligence, intellectual property and possession claims should also be excluded.  Briggs LJ also voices concerns about the effect of the government’s plans to raise the small claims limit for personal injury claims, which could leave many more such claims below the limit.

A three-stage process is envisaged, to be preceded by guidance on treating litigation as the last resort and an assessment of whether a dispute requiring Court resolution exists. The process of the Court will be: (1) evaluation – investigation and triage, the interactive triage system differentiating the Online Court from the small claims track and digital processes used in other jurisdictions and creating the Particulars of Claim in the dispute; (2) facilitated attempts to resolve the dispute, including conciliation and other forms of ADR to be decided on by a case officer; and (3) resolution by judge, if the other measures fail.  Briggs LJ hopes that few cases would reach stage 3 but, if they do, determination could often be on the documents, on the telephone, by video or at a face-to-face hearing.

The report highlights Briggs LJ's concerns in relation to the implementation of the Online Court, including the availability of 'assisted delivery' access for the 'computer-challenged' and the need for the technology procured to be suitable for delivery of the Online Court.

Other proposals
Other proposals included the greater use of case officers, increasing the share of work dealt with in the main regional cities rather than in London, and the commencement of all claims online. Briggs LJ takes the view that no case is too big to be resolved in the regions, and raises questions over the future structure of the High Court and the increasing of threshold below which claims should remain in the County Court.  Briggs LJ has also identified as a key issue the need to deal with the current workload of the Court of Appeal.  A separate consultation has been carried out on this and we provide further details below.

Key developments affecting civil litigation

Fixed costs
In his speech ‘Fixed Costs – The Time Has Come’ in January 2016, Lord Justice Jackson called for fixed costs to apply to all claims valued up to £250,000 and for fixed recoverable costs to be set, albeit the intended timetable to introduce fixed recoverable costs in clinical negligence cases of 1 October 2016 has not been achieved. Presently, fixed costs apply only to personal injury claims valued up to £25,000.  For low value claims, fixed fees will provide certainty for both sides in litigation and also avoid disputes over costs.

Jackson LJ has proposed a single fixed costs grid for all multi-track cases up to £250,000 rather than separate grids for different areas of work. He has gone on to suggest appropriate staged fees, based on his experience and various sources, which range from £18,750 for claims up to £50,000 to £70,250 for claims up to £250,000.  Certain factors need to be added to those base figures to reflect the complexity either of a certain type of case or in an individual case. 

The Lord Chancellor, Liz Truss, indicated on 15 September 2016 that fixed costs will be extended to 'as many civil cases as possible', and the paper 'Transforming Our Justice System' presented by the Lord Chief Justice, Lord Thomas, and the Senior President of Tribunals, Ryder LJ, indicates an intention to use fixed recoverable costs to ensure proportionality to the issues in dispute and enable litigants to assess their potential costs liability before taking legal action.

Fixed costs will inevitably mean there are winners and losers as there will be few claims where the actual costs incurred match the fees set. However, for insurers facing claims, there will be the significant benefit that much more accurate reserves can be set for claimants’ costs.

Court of Appeal consultation
Over recent years, the time required to conclude proceedings before the Court of Appeal has increased significantly as the court’s workload has risen, whereas the number of Lord and Lady Justices has not. In January 2016, the court was noted to be disposing of 1,042 appeals per year, giving a deficit of 179 appeals per year, with the total backlog equated to a full year’s work of the court.  Since then the backlog has got worse.

The Civil Procedure Rule Committee consulted practitioners on changes in the court’s process, intended to enable it to deal with cases more quickly. The consultation proposed raising the threshold for permission to appeal to the Court of Appeal to “a substantial prospect of success” in place of the current “real prospect of success”, removing the automatic right of oral renewal for applications to appeal (replacing it with a discretion for the court to decide whether to hold a hearing or to make a decision on the papers) and removing the automatic right to an oral hearing for reconsideration of decisions of other applications made in the course of proceedings in the Court of Appeal.

Following completion of the consultation, the Civil Procedure Rules Committee has confirmed that the threshold for permission to appeal will not be changed at this point in time. The rules have been amended so that applications for permission to appeal will be considered on paper, unless a judge decides that an oral hearing is required for fair determination of the question.  The benefit of the change, which should reduce the time spent considering applications for permission to appeal, combined with the recent change in rules which sees the transfer of first appeals in County Court cases to the High Court, remains to be seen. 

Litigation funding
Introduced by the Jackson reforms, damages-based agreements (DBAs), a form of ‘no win, no fee’

agreement where recoverable fees are calculated as a percentage of any damages recovered by the client, have remained unpopular due to insufficient detail in the DBA Regulations 2013 and uncertainty about their operation in practice.

In November 2014, the government asked the CJC to review the Regulations, and in September 2015, the CJC published its recommendations. These are being considered by the government and draft legislation is expected imminently.

It is anticipated that the new legislation will allow ‘sequential’ forms of funding, where a DBA is one of the funding methods used by the client during the course of litigation, but not allow ‘concurrent-hybrid DBAs’, where a firm receives funding through both a DBA and some other form of retainer concurrently. Commentators suggest that these reforms will not go far enough and that DBA uptake will remain low.

With DBA difficulties, and the inability to recover CFA success fees and ATE premiums now firmly embedded, third-party funding (TPF) has seen rapid growth in recent years and the value of assets managed by UK funders is now reported to stand at £1.5 billion. TPF, where funds for litigation or arbitration are advanced by funders to claimants usually in return for an agreed share of the claim proceeds, can be a sensible option in appropriate cases.

Some concerns have been raised recently that the backing of litigation for ‘investment’ should be regulated by the Financial Conduct Authority. Funders defend their self-regulated status as providing a valuable means of access to justice and for now, at least, it seems the industry will escape formal regulation, with willing funders opting to subscribe to the Association of Litigation Funders’ code of conduct instead.

Given the growth of TPF, Lord Justice Jackson gave a keynote speech in February 2016 reviving his proposal to create a contingent legal aid fund. This would be a fully self-financing scheme run by the Law Society, Bar Council and Chartered Institute of Legal Executives.  It would pay the claimant’s costs if unsuccessful and take a share of the proceeds of action if successful.  The Bar Council, the Chartered Institute of Legal Executives and the Law Society have followed his recommendation and set up a joint working party to examine the viability of this proposal.  Recommendations are expected by the end of 2016.

Consequence of court fee rises
From 9 March 2015, the court fee payable on the commencement of claims increased to 5% of the sum claimed (for claims over £10,000 and less than £200,000) up to a cap of £10,000, seeing the fee payable increase by up to 622%. Alongside the increase in fees, the availability of remission and partial remission from fees has been extended, exempting many litigants from the liability to pay the fee or all of the fee.

Unsurprisingly, some claimants and their solicitors have sought to pay a lower court fee than they ought, through undervaluing the claim on commencement of proceedings. This practice was found by the High Court (Lewis & others v Ward Hadaway) to be an abuse of process and, while the claims were not struck out as that sanction would have been disproportionate to the breach of rules, the claims which were delivered to the court on the cusp of limitation without the appropriate fee, and therefore not properly issued until after limitation had expired, were statute barred.

The relevance of this decision to claims involving personal injury is less clear. In Lewis the court did not have discretion under section 33 of the Limitation Act 1980 to extend the limitation period whereas that discretion would be available in injury claims.

Court fees have continued to increase over the last 12 months with a number of civil court fee increases coming into effect in March, April and July 2016.

Shorter Trials Scheme and Flexible Trials Scheme
As part of the HMCTS Reform Programme, two pilot schemes have been launched for cases conducted out of the Rolls Building in London. The Shorter Trials Scheme (STS) and Flexible Trials Scheme (FTS) started to operate on 1 October 2015 and will run for three years.  The aim of both pilot schemes is to achieve shorter and earlier trials for business-related litigation, at a reasonable and proportionate cost.

As the name suggests, the STS is designed to offer “dispute resolution on a commercial timescale” and it will be suitable for cases which do not require extensive disclosure, or witness or expert evidence. The aim is that trial will be reached within ten months of issue.  The maximum length of trial will be four days, including reading time.

The FTS allows parties, by agreement, to adopt more flexible case management procedures to suit their particular case. The aim is to achieve a simplified and faster procedure than the full trial procedure currently provided for under the Civil Procedure Rules.

The intention is that the schemes will be refined over time. We can expect those aspects of the schemes which work well to be introduced to all civil litigation.

New Financial List and market test case procedure
The new Financial List opened in London in October 2015 to hear financial disputes worth over £50 million, or which require particular expertise in financial markets, or raise issues of general market importance. A pilot scheme has also been launched for a test case procedure to resolve market issues on which there is no previous English authority without the need for an existing cause of action.

With the promotion of speed and efficiency at its core, the List is presided over by 12 judges, all experienced in financial disputes, who are responsible for cases allocated to them from inception to conclusion.

The creation of the Financial List is a positive signal that London remains the pre-eminent venue for international dispute resolution and reflects the important contribution made by the financial services industry to the UK economy.

New bill of costs and J codes
In Jackson LJ’s final report on his review of civil litigation costs in 2010, he recommended that a new form bill of costs be developed. The current model was criticised as being expensive and cumbersome to draw up, not making use of new technology and not providing a clear picture of what work was done and why.  In furtherance of Jackson LJ’s recommendations, ‘J codes’ have been produced.  These are a set of standard codes for recording time which categorise work by a structure of phase, task and activity.  The phases are similar to those now used in Precedent H, the prescribed form for costs management.

A new bill of costs was produced for detailed assessment, adopting the J codes. A voluntary pilot scheme for the new bill began on 1 October 2015.  Initially, it was intended to run until the end of April 2016 but was extended until 30 September 2016 and then extended again in a modified form for a further year.  Lack of use of the pilot scheme was blamed on the use of J-codes and these were therefore dispensed with in the revised version of the bill of costs.  It is currently the intention to establish a mandatory form of bill of costs to apply to all work done after 1 October 2017.

Civil Procedure Rules
From a rules and procedural perspective, there have not been many radical changes over the last 12 months. As highlighted above, there have been significant changes to the Civil Procedure Rules relating to appeals.  The Rules on charging orders and attachment of earnings orders have also been rewritten and there have been some further changes to the costs management rules.

Costs management
Judges and practitioners are still trying get to grips with costs budgets and the concept of proportionality. Some TCC judges have been taking a firm line with costs that they consider to be disproportionate and excessive, with some budgets being slashed.  However, in our experience there is considerable inconsistency in the approach being adopted by different courts and different judges.

Third-party costs orders
Finally, here is a note of warning to insurers. In Legg and others v Sterte Garage Ltd and another, the Court of Appeal upheld a third- party costs order against public liability insurers on the basis of ample evidence that the insurers were acting exclusively or predominantly in their own interests in defending the claims.

An earlier version of this article was first published in the DAC Beachcroft Insurance Market Conditions and Trends Report (2016 edition) on 1 September 2016. Information in this article has been updated and is correct as at 13 October 2016.

Authors

Andrew Parker

Andrew Parker

London - Walbrook

+44 (0)20 7894 6232

David Williams

David Williams

Leeds

+44 (0)113 251 4844

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