#3667 - Woolf Reforms - Civil Procedure

The Woolf reforms to civil justice

Malleson and Moules: The Legal System

Introduction

In 1994, Lord Woolf was asked to conduct an inquiry into the civil justice system and make proposals for its modernisation. The request was promoted by growing criticism from lawyers, the judiciary and litigants that the system had become unacceptably inefficient and ineffective, to the point where it was in a state of crisis. Lord Woolf undertook consultations with those who worked in the civil justice system as well as reviewing the systems in other countries. Access to Justice – 1996 (with interim report in 1995).

The main problems with the civil justice system which he identified were: cost, delay, complexity and uncertainty of outcome. He argued that these were interrelated and stemmed from the fact that the litigation process was controlled by lawyers. Since they set the pace, it was in their interests to draw out the process and so increase costs. Because there was very little judicial management the process often degenerated into an excessively adversarial contest.

Access to Justice stated that the overriding objective of the civil justice system was to deal with cases fairly. To achieve this, the report determined that it was necessary to ensure that, as far as possible, the parties to the litigation are on an equal footing and that the amount of time and money spent on each case was proportionate to the amount of the claim and the complexity of the issues.

Lord Woolf’s proposals

Recommended that the following key changes should be made:

• Cases should be dealt with through different procedures according to the amount of money involved and their complexity

• Stricter timetables by which different stages of the litigation should e completed should be imposed by the court

• The judge should actively manage cases from the point at which a claim is made

• Unified and simpler procedural rules should be drawn up for the county court and the High Court

• There should be a reduction in adversarial techniques e.g. there should be full disclosure of evidence by both sides and use of agreed expert witnesses where possible

• Information technology should be developed to manage and track cases

• One senior judge should be appointed to head the civil justice system.

Not all these changes were completely new to the civil justice system e.g. rules to encourage a more co-operative approach between the parties and the more active involvement of judges in managing cases had been used in the family courts for some years. In relation to the problem of increasing delays and growing costs, a number of earlier reforms had paved the way for more active judicial intervention in the court process.

In 1995 a practice direction to judges issued by the Lord Chief Justice, Lord Taylor and the Vice Chancellor, Sir Richard Scott, encouraged judges to limit the time taken by lawyers in court when presenting their case or cross-examining witnesses. To some extent, therefore, the Woolf reforms built on existing reforms. Nevertheless, the range and ambition of the changes went far further than any previous developments. They were intended to represent a complete change of litigation culture which would operate throughout the system.

Almost all Lord Woolf’s recommendations were accepted by the Government and implemented. Because the changes amounted to such a root and branch reform of the system, it was recognised that their success was largely dependent on comprehensive training for judges and lawyers to prepare them for the new system. The Judicial Studies Board was therefore provided with an extra budget so as to ensure that all judges would be trained, while the Law Society and the Bar Council offered equivalent training sessions for solicitors and barristers.

The civil procedure rules

The key to the changes was the creation of a new set of written rules governing the civil justice process. These were implemented through the Civil Procedure Act 1999 which gave authority for the creation of the CPR drawn up by the Civil Procedure Rules Committee, which is headed by the Master of the Rolls as head of civil justice. The rules are supplemented by detailed practice directions which are guidance notes drawn up by senior judges to help lawyers and judges interpret and apply the rules. In addition, pre-action protocols have been drawn up for different areas of civil justice which guide practioners on how they should be conducting litigation in a particular field. These have been created by specialist practioner groups.

The rules explicitly confirm Lord Woolf’s view that the overriding objective of the system is to enable the court to deal with cases justly e.g. by ensuring that the parties are on an equal footing and that costs are kept down. The purpose of the overriding objective is to ensure that all discussion and disagreement about the interpretation and application of the rules are informed by this principle so that the ultimate goal of the civil justice system is not lost sight of in the detail of the litigation process.

An important feature of the rules is that they apply equally to both the county court and High court. By creating a set of unified rules, Lord Woolf intended that the question of whether a case began in the county court or High Court would matter less than it had in the past.

Costs

Lord Woolf identified high costs as the most serious problem besetting the litigation system. He argued that it deterred litigants and led to unacceptably low levels of settlement even when a party had a sound case to pursue. In this way richer litigants could take unfair advantage of poorer opponents. He emphasised that costs were often out of all proportion to the amount in dispute. Quite apart from the unfair distribution of costs, he stressed that the economy suffered from excessive costs. The uncertainty of costs also prevented litigants from predicting the likely liability which they might face and made the civil justice system less attractive as a forum for dispute settlement for parties to overseas commercial contracts.

His response to these problems was to propose fixed and determinate cost regimes. Predictability and transparency were the goals. However, this is one aspect of the reforms which has proved difficult to implement.

In 2003 some progress was made in this area when a system of fixed pre-trial costs in less serious road accident cases was established, but the implementation of fixed costs in all fast-tracked cases as Lord Woolf intended has not materialised.

Lord Phillips, then Master of the Rolls in 2002 – stated the current costs regimes were failing and needed root and branch change. He argued that: “Questions over what costs can be recovered are poisoning the relationship between the two sides of the litigation industry.”

As a result of these concerns, Lord Justice Jackson has been appointed to conduct a major review of costs of civil litigation and to make recommendations in order to promote access to justice at proportionate costs. His interim report was published in May 2009 and it calls for far reaching reforms. Lord Justice Jackson questions the government’s policy of making the courts self-financing. His report says that court fees now account for about 80% of the 650m a year cost of running the civil and family courts in England and Wales, yet such fees have risen substantially above the rate of inflation. He also calls for review of the sacred cow principle in English civil litigation that the loser pays the winner’s costs. That principle is aimed at deterring unmeritorious C’s, but as the report notes, it does not apply to all disputes: for instance in tribunals each side bears its own costs. Lord Justice Jackson has ruled out complete abolition of the loser pays rule as not realistic, but he suggests that it could be modified or abolished in certain areas because: “We have arguably reached the position in this jurisdiction where the level of costs is so high that facing a full adverse costs order is likely to be a disaster for most ordinary citizens.”

Lord Justice Jackson published his final report on civil costs in January 2010. One of his key findings was that in many cases, especially those where the sums of money in dispute were small, costs were disproportionate to the amount in dispute. However, he did not believe that the UK should follow the US approach and abandon the indemnity principle – that is the principle that the loser pays the winner’s costs. He considered that the indemnity principle was an important deterrent against bad and spurious claims.

The Final Report advocates some major changes to conditional fee agreements. It proposes that success fees and after the event insurance premiums should cease to be recoverable from the losing party in civil litigation so would have to be borne by the client. It also argues that US-style contingency fees should be permitted.

A major innovation is proposed in relation to fast track cases in the form of fixed costs for all types of litigation. It is hoped that this will help to achieve proportionality between what is at stake and the costs of arguing about what was at stake.

The Report also looks at the role of third parties and proposes that third parties who fund litigation should potentially be liable for adverse costs orders. It also seeks to ban referral fees for personal injury claims i.e. fees charged by claims management companies merely for referring a case to a solicitor. In keeping with the tenor of the Woolf reforms, the Jackson Report also strongly endorses the wider use...