Part 36, Fixed Costs Reforms and Indemnity Costs – August 2017

Part 36, Fixed Costs Reforms and Indemnity Costs - August 2017

Adam Thorpe

Adam updates us on Part 36, Fixed Costs Reforms and Indemnity Costs

A Solicitor and Manager of the Litigation Team at Winn Solicitors in Byker, Adam is also MASS Regional Co-ordinator – North East

Developments in the world of costs continues to dominate the news in the PI world and this month has been no different. Moving away from the big issue of small claims reforms and the associated costs there, this article looks at recent developments related to Part 36, Jackson LJ’s latest proposals and some of the uncertainty we are left with in relation to indemnity costs.

The first issue is the latest twist in the pursuit of an answer to the vexed question – what happens when a Defendant accepts a Part 36 offer late? Are they entitled to fixed costs, standard costs or indemnity costs? The latest in the line of Appellate authorities on this issue is Hislop v Perde, heard by HHJ Walden Smith in the Central London County Court. Whilst some Judges have suggested no indemnity costs can be awarded, Hislop goes some way to restoring the balance in favour of Claimants. This was a fixed cost RTA case where the Defendant accepted an offer 19 months late. The Judge held that fixed costs applied for the relevant period and standard costs applied thereafter. Claimants should not be prejudiced, financially or otherwise, for making sensible offers to settle early on in proceedings. This decision outlines that assessed costs are appropriate in circumstances where Part 36 Offers are accepted out of time. This represents a further development in what are now a number of competing authorities on a gap in the Rules, and it is hoped that the Court of Appeal may bring finality to the issue in the near future.

Whilst certainty is sought on indemnity costs in relation to the above, Jackson LJ’s recent report into fixed costs pushes fast track cases and associated costs towards a further period of change. The paper still needs to go through a consultation, but implementation is anticipated by October 2018. Firms need to grapple with the issues now and prepare for further changes. Of most interest is the development of an ‘intermediate’ track for claims between £25,000 and £100,000 with bands of complexity introduced. It is not hard to envisage regular arguments, debate and satellite litigation over what band your case falls into.

In addition, Jackson LJ has recommended that indemnity costs be abandoned, to be replaced with a 30-40% increment in costs. This would, to an extent, do away with the principles established by the Court of Appeal in Broadhurst v Tan and remove the need for detailed assessment. This was a closely contested point in the preparation of Jackson LJ’s report and could potentially change further as the consultation goes ahead. It all goes to show that whilst there are substantial changes with the whiplash reforms, all PI practitioners face new rules over the next year.

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