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Fixed Recoverable Cost extension could help RPs

8 July 2019 • Melanie Dirom

The Ministry of Justice (MoJ) recently completed a consultation exercise on extending the use of Fixed Recoverable Costs (FRC) in civil cases, which if implemented could affect how housing providers approach disrepair cases and possession claims.

The normal rule in civil litigation is that the losing party pays the winning party’s costs. FRC prescribes the amount of costs that can be claimed in order to provide certainty as to the maximum level of costs a party will have to pay.

How the proposed changes may affect RPs

FRC would apply to Registered Providers’ possession claims and disrepair cases. In disrepair litigation (a major issue for our clients) FRC may assist in the litigation risk analysis and decision making process regarding whether to settle or defend a disrepair claim.

The predictability of FRC potentially makes the decision to defend a disrepair claim to trial more attractive to RPs as FRC will bring some certainty in respect of the costs at risk and that could be claimed by a claimant solicitor in the event the claim succeeds.

Still potential for profits

The proposed changes would impact on housing disrepair litigation by capping the costs recoverable by claimant tenant solicitors. Whether the changes would be enough to dissuade claimant lawyers from taking on such cases, however, is not easy to predict since the changes still do offer potential profits.

Perhaps a key issue for them would be whether any payments they make to Claims Management Companies (CMCs) who “farm” these cases could still be paid but the work still be viable for them to do under FRC. But for those claimant tenant firms that do not pay CMCs then the work is likely to still be viable thus securing the MoJ’s objective to balance access to justice with keeping costs proportionate and predictable.

The consultation details

The MoJ is seeking to bring forward proposals made by Sir Rupert Jackson in his key 2017 report, and the consultation sought views on how to implement the following:

  • The extension of FRC to fast track cases
  • The extension of FRC to intermediate cases (cases valued between £25,000 and £100,000); and
  • A new process and FRC for Noise Induced Hearing Loss claims.

The change most applicable to housing disrepair claims would be the extension of the FRC to fast track cases. The recommendation is that FRC be extended to all of the cases that fall under the auspices of the fast track regime by the creation of four new bands:

Band One Road traffic accident, non-personal injury, claims and defended debt claims.
Band Two Road traffic accident personal injury claims (inside the pre-action protocol)
Band Three Road traffic accident personal injury claims (outside the pre-action protocol, employers’ liability accident claims, public liability claims, tracked possession claims, housing disrepair and other money claims.
Band Four Employers’ liability disease claims (excluding noise induced hearing loss), complex tracked possession claims, complex housing disrepair claims, property disputes, professional negligence claims and other claims at the higher end of fast track.

Housing disrepair claims would fall into Band Three or Band Four for which the FRC would be:

Pre-issue: £1,001 - £5,000 £988 + 17.5% of damages £2,250 + 15% of damages + £440 per extra defendant
Pre-issue: £5,001 - £10,000 £1,929 + 12.5% of damages over £5,000 £2,250 + 15% of damages + £440 per extra defendant
Pre-issue: £10,001 - £25,000 £2,600 + 10% of damages over £10,000 £2,250 + 15% of damages + £440 per extra defendant
Post issue, pre-allocation £2,735 + 20% of damages £2,575 + 40% of damages + £660 per extra defendant
Post-allocation, pre-listing £3,484 + 25% of damages £5,525 + 40% of damages + £660 per extra defendant
Post-listing, pre-trial £4,451 + 30% of damages £6,800 + 40% of damages + £660 per extra defendant
Trial advocacy fee a) £500
b) £710
c) £1,070
d) £1,705
a) £1,380
b) £1,380
c) £1,800
d) £2,500

The figures above are cumulative and include prior stages in the figure for that stage.

The consultation also considered FRC in the context of Part 36 offers to settle. In such cases the recommendation is that there is a 35% uplift on the FRC from the time of the Part 36 offer, should that offer not be beaten at trial.

The consultation closed last month but the documentation can still be viewed – click here.

To view Sir Rupert Jackson’s proposal in full click here.

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