Procedure, damages and costs

In this chapter of our Annual Insurance Review 2018, we look at the main developments in 2017 and expected issues in 2018 with regards to procedure, damages and costs.

Key developments in 2017

The judicial drive to reduce the cost of litigation continues. In July 2017, Lord Justice Jackson’s report to extend fixed costs was published. The original suggestion of a “one size fits all” costs regime for all claims worth up to £250,000 has been shelved for a more structured approach.

The proposals include fixed recoverable costs for all fast-track cases and for those claims allocated to anew intermediate track (ie cases worth up to £100,000 that can be tried in three days or fewer with no more than two expert witnesses per party). The new intermediate track has simpler procedural rules, with restrictions on the length of documents and limited disclosure. The fixed costs range from £4,955 for the entire case (up to and including trial) for a £20,000 fast-track claim to £32,950 for a complex intermediate track case. These include counsel’s fees.

Claims for between £25,000 and £100,000 will fall outside the intermediate track when there are factors such as reputation or public importance in play, and the court will have discretion to allocate claims to the multi-track when there are other reasons to do so. No doubt, this will be fertile ground for dispute between the parties. The proposals also include a voluntary pilot of a capped costs regime for business and property cases up to £250,000.

The Rules Committee is considering these proposals and we may see implementation in 2018. However, the reality is that parties will still have to pay the true cost of litigation. The winner though will not be able to recover those costs from the loser.

What to look out for in 2018

The next proposal to reduce litigation costs is a sweeping reform of the rules governing disclosure (often the most expensive part of case preparation). This may be far more effective in reducing the true cost of litigation than the expansion of fixed costs. The reform recognises that advances in technology mean the current rules need to be updated to reflect electronic, rather than paper, disclosure and, in turn, to ensure that England and Wales remains attractive to litigants (especially with Brexit looming).

The proposals, published on 2 November 2017, include the abolition of standard disclosure as the default(though it can still be ordered) and removal of the automatic entitlement to search-based disclosure.Instead, the parties will be required to give basic disclosure with their pleadings and engage prior to the first case management conference to agree the extent of the disclosure that is necessary to resolve the claim. The judiciary is encouraged to become more involved in assessing the most appropriate method of disclosure, rather than simply approving what the parties agree.

To address concerns that disclosure is fundamental to procedural fairness, each party will be subject to a core duty requiring them to disclose known documents that adversely affect their case, regardless of what disclosure order (if any) is made.

There is a consultation process until February 2018 and then the new draft rules (as revised) will go to the Rules Committee. If approved, there will be a pilot scheme in the business and property courts before being rolled out to all cases.

Download our full Annual Insurance Review 2018 for more insights.