Fixed Fee or not Fixed Fee for Clinical Negligence
Wednesday, 10th August 2016
With proposals to introduce fixed fees for Clinical Negligence claims and all litigation with a value of £250,000 it cannot be denied that fixed fees are here to stay.
At present fixed fees only apply to injury claims valued at £25,000 or less. Whilst Claimant solicitors are getting used to a reduction in their income, Defendants have largely welcomed the certainty and savings that fixed fees bring.
Whilst fixed fees for clinical negligence claims will not be introduced on 1 October as had been planned, Jeremy Hunt has recently confirmed that their introduction remains a priority, despite the recent political upheaval.
Lord Justice Jackson has always been a keen advocate of fixed costs. In a speech in January he reiterated his support for all claims up to £250,000 to be subject to fixed costs. Although in reality the limit is likely to be lower than this, with an uplift permitted for more complex areas of work such as privacy claims or Clinical negligence.
The introduction of fixed costs for all litigation, will largely do away with cost budgeting (which most judges dislike) and will save court time (and costs) being incurred on assessment proceedings.
Defendants welcome this development and insurers have long been campaigning to reduce the cost of litigation. However, the Defendant's do not get it all their own way.
Recent case law has highlighted that effective use of Part 36 can allow Claimants to escape the draconian fixed fee levels.
In Broadhurst v Tan (2016) a unanimous court held that a Claimant making a good Part 36 offer which the Defendant fails to accept will recover fixed costs up the date of the offer and indemnity costs thereafter. And the reason this decision was so important….indemnity costs are not fixed, and neither (crucially) are they proportionate.
A successful Claimant can claim costs on an hourly rate basis, without fear of the proportionality test.
And what of late acceptance of an offer? CPR 36.13 (4) states that the court must determine costs in the absence of an agreement. Guidance was given in Sutherland v Khan (2106) where DJ Besford awarded indemnity costs following late acceptance of an offer.
Unhelpfully, Part 36 does not entitle the Defendant to indemnity costs if the Claimant fails to beat a reasonable offer.
The practical implication for Defendants in fixed cost cases is that reserves for costs, which have reduced so dramatically over recent years, must now be carefully reviewed when the Claimant makes a Part 36. The risks associated with rejecting a potentially reasonable offer are now substantial and Claimants may return to the days where a win at trial is a win indeed.