The St Valentine’s massacre?
Date: 19 November 2010
Authors: Dominic Regan
Issue: Vol 160, Issue 7442
Categories: Opinion, Costs
Dominic Regan reviews the government’s take on the Jackson plan
February 14th is the closing date for responses to the government consultation on Jackson, just published.
Interestingly, some major issues are not addressed. Referral fees will be considered after the outcome of the Legal Services Board consultation on the issue. Fixed fast-track costs, which Jackson LJ expended a great deal of time upon, are still under consideration but there will be an announcement (para 37 of the government paper).
At the core of the consultation issued this week is whether additional liabilities should remain recoverable. While the government view is that the radical proposal to end recovery is needed, the tantalising prospect of something less draconian is mooted, with limited recovery put out to consultation as an alternative.
The Jackson plan
The impact of the Jackson plan is illustrated by the following example given to me by Tom Jones of Thompsons.
- Today, a claimant recovers damages of £8,000, of which £6,000 are for general damages.
- Applying Jackson, the generals should go up by 10% to help the claimant bear his own additional liabilities. This means that the claimant would then receive generals of £6,600 and, as before, his specials of £2,000 making the gross award £8,600. However, the claimant would then have to meet the success fee, capped at 25% of damages, which equals £2,150 plus the cost of ATE (after the event insurance) cover—£665 in this case.
- The net result is that the claimant today receiving £8,000 will tomorrow recover £5,785—a deficit of 27.5%.
I assure you that I ploughed through a vast array of examples given to me and this was very much the typical case. Some were much worse.
Whitehall concerns
That the government is even thinking of the less extreme measure of curbing additional liabilities may well betray real concern in Whitehall that this will be a hard reform to sell. Remember that in April, Parliament refused to endorse rules capping success fees in defamation at 10%. How much harder will it be where the injury is not to vanity but life and limb? Anticipate a vicious period of lobbying by all concerned.
The Jackson line
The government has an eye on reversing two areas of case law. Lowndes [2002] was Lord Woolf’s decision which Jackson savaged in his Final Report. Whereas the Court of Appeal considered that taking steps seen as reasonable would always be proportionate, Sir Rupert insisted that one must ultimately look to the cost involved. Costs that were about treble the damages were held to be recoverable in Lowndes. The Jackson line, supported by the government, is that the law should be clarified to emphasise that economics must prevail. Was it worth doing in the circumstances of that case having regard to the value?
Was it worth it?
The second proposed reform, upon which the ministry is consulting, is whether to reverse Carver v BAA. This case introduced the “was it worth it test?” to Part 36. The claimant bettered the defendants offer by all of £51 when recovering about £4,000 at trial. Not worth it held the Court of Appeal which ordered Miss Carver to pay costs even though financially she had just outrun the defendant.
Applying the test
In his Final Report, Jackson fully supported HH Michael Cook, who ripped into Carver when the ink was still wet on the transcript. How was the test to be applied? Why should the claimant who experienced delay and presumed anxiety be the victim by losing out on costs? Please can it be our little secret, but the great legal powers in government do not seem to have heard of a case decided five months ago by the Court of Appeal which effectively ditched Carver. There is no mention of Gibbon v Manchester City Council at all. It beggars belief that those in charge of law reform could be so ignorant. The pedantic might say that they are decisively killing off Carver but it still strikes me as odd.
Part 36 & beyond
To beef up Part 36, Jackson proposed giving a successful claimant a 10% uplift on their damages which would make a defendant think long and hard about the virtues of going onto trial. This formula is simple and straightforward so, of course, the government is thinking instead about bands and degrees of success. Nonsense. Part 36 is tricky enough without adding more layers of calculation and incumbent uncertainty.
On the horizon, it is made clear that the Young proposals have been accepted by government (see p 1593 this issue). A pilot for predictable damages is intended to be in place in June 2011. Those pesky litigants in person are likely to get a fat pay rise from £9.25 to £16 an hour. Finally, a judicial steering group is looking at how costs can be managed. By a remarkable coincidence I delivered to Jackson LJ just two hours ago the report, which he and the master of the rolls commissioned me to write about the current costs pilot regime.
Professor Dominic Regan is a leading commentator on civil litigation and adviser to the senior judiciary on costs reform. He is indebted to Judith Gledhill, Doug Christie & Tom Jones for access to research material at very short notice. Diana Adorno helped with speed reading the entire government paper. Website:www.profdominicregan.blogspot
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