Procedure damages & costs

In this chapter of our Annual Insurance Review 2024, we look at the main developments in 2023 and expected issues in 2024 for Procedure damages and costs.

Key developments in 2023

2023 will be remembered by litigators as the year that the Government implemented the final Jackson reform: the extension of fixed recoverable costs (FRC) to most civil cases where £100,000 or less is claimed. These reforms require a sea change to litigation tactics akin to the 2013 Jackson reforms introducing costs budgeting.  Budgeting is now out for simpler claims for £100,000 or less. Where these would be allocated to the fast or newly-created intermediate tracks, a schedule of fixed costs (increased to reflect inflation following Jackson LJ's 2017 report and due to be increased again in April 2024) will apply.  

The new rules apply to personal injury claims where the cause of action accrued on or after 1 October 2023, to disease claims where the letter of claim was sent on or after 1 October 2023 and to all other claims that were issued on or after 1 October 2023. In practice, the FRC rules are likely to capture claims where the trial will last 3 days or less, there are no more than 3 parties and between £25,000 (£10,000 for personal injury claims) and £100,000 is claimed. Within the fast and intermediate tracks, there will be four complexity bands, with higher fixed costs the higher the band. The new intermediate track will be a simpler version of the multi-track with page limits for witness statements and expert reports. 

There is no guidance beyond the rules themselves, which give sparse explanation of assignment of a complexity band within the intermediate track, for example. As such, the reforms are likely to generate substantial satellite litigation, at least at first, but are likely to reduce litigation costs in the long term. On the topics of costs and budgeting, parties can also expect a pilot scheme of "Costs Budgeting Lite" in 2024, for cases where between £100,000 to £1 million is claimed, which aims to reduce the cost of the budgeting process.

What to look out for in 2024 

Compulsory ADR likely to be the hot topic for 2024.  The Court of Appeal in the recent case of Churchill v Merthyr Tydfil [2023] EWCA Civ 1416 concluded that it was lawful for the Court to order the parties to engage in ADR, provided it does not interfere with the claimant's access to a judicial determination. 

The Churchill case is the latest iteration in the debate over whether forcing parties to engage in ADR interferes with their Article 6 rights to access to justice. The case was widely expected to lay down principles governing the Court's powers to order parties to engage in ADR and to overrule the seminal case of Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, in which the Court of Appeal said “to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court.”  Whilst the Court of Appeal in Churchill declined to lay down any definitive guidelines for use of the Court's power to order parties to engage in ADR, it concluded that the principle from Halsey was not binding, paving the way for judges to order ADR in other cases. 

The decision reflects the changing judicial attitudes towards ADR and the pressures on the justice system. The MOJ announced compulsory mediation in all County Court matters in 2022 and a pilot scheme is due to be implemented in April 2024. The pilot scheme is likely to require parties in all new defended small claims (ie up to £10,000) to attend a one-hour telephone mediation before a hearing is listed. Whilst parties are likely to be obliged to attend the telephone mediation, they will not be forced to settle the case. 

Together, these reforms mean that insurers are likely to see cases where the Court is ordering ADR in 2024. Generally, this is likely to lead to more settlements; but there will always be cases where one or both parties are unwilling to settle, either at that early stage or at all. 

Written by Aimee Talbot.