06 October, 2023
From 1 October 2023, fixed recoverable costs (FRC) have been updated and extended across the fast track and in a new intermediate track for cases with values of up to £100,000 damages by way of implementation of The Civil Procedure (Amendment No 2 Rules).
The new intermediate track has been developed with the aim of providing transparency and certainty with regards to costs in litigation; it will cover claims between the value of £25,000 to £100,000. The aim of the extension of FRC to other civil cases is to ensure that there is access to justice at proportionate costs across wider categories of civil cases.
For personal injury claims the new regime will apply to personal injury claims when the accident occurred on or after 1 October 2023. This article does not cover disease claims. For guidance on how the regime will work in disease claims please contact Nicola Dawn. For claims involving accidents before 1 October 2023 the old rules still apply with FRC for fast track claims and hourly rates a budgeting in the multi track.
In these cases where the court will have to decide which track is applicable to the claim.
Any claim where damages are pleaded at £100,000 or more will usually be allocated to the multi track and FRC will not apply.
Claims that are valued between £10,000 and £25,000 or which are under that value but have complex issues will usually be assigned to the fast track. The trial must be expected to last no more than 1 day and oral expert evidence limited to 1 expert per party in any field and in no more than 2 expert fields.
The intermediate track is the normal track for cases valued at between £25,000 and £100,000. The trial cannot be expected to last more than 3 days, oral expert evidence at trial is limited to 2 per party, the claim involves only 1 claimant against no more than 2 defendants or 2 claimants against only 1 defendant. There must be no additional factors that make the claim inappropriate for the intermediate track, thereby retaining judicial discretion on allocation. Any intermediate track value claim that involves an accident before the 1 October 2023 cannot be allocated to the intermediate track, and will go into the multi track.
Within the fast and intermediate tracks each case will fall into a different complexity band according to the complexity of the case. The complexity band to which the claim is assigned will determine the costs that are to be applied.
Parties can agree the complexity band in the directions questionnaire, but the court can reassign it if they see fit. If the parties disagree on the complexity band then the parties must set out their various reasons in the directions questionnaire.
In the fast track the rules specify that most personal injury claims will fall into band 3 unless is it a more complex claim when it will fall into band 4. RTA accident claims will be band 2.
In the intermediate track the rules are not prescriptive about what claims types fall into what band. It very much depends on the complexity of the claim, with factors such as how long the trial might take (1 to 3 days at most or it will be a multi track claim), how many issues are in dispute, the complexity of the issues, and if there are serious issues of fact or law involved. The more complexity the higher than hand and the higher the applicable fixed costs.
The tables of fixed costs applicable can be found in the revised Practice Direction 45 of the Civil Procedure rules . Tables 12 to 14 provide for increasing costs depending on the track, complexity band and stage reached. And pre issue in the fast track it also depends on the settlement value with different figures depending on whether damages are under £5,000, between £5,500 and £10,00 or over £10,000. VAT and allowable or reasonable disbursements are payable in addition.
There are exclusions from this new regime including the following claims types:
And certain claims must be allocated to the multi track (and are therefore not subject to fixed costs) regardless of value, including:
Exceptional circumstances - the court will consider a claim for an amount exceeding FRC where there are exceptional circumstances making it appropriate to do so. There is no guidance as to what exceptional circumstances might be. If a court is persuaded that there are exceptional circumstances it can assess costs or order a detailed assessment. The person seeking the increased amount has to show that the assessed costs are 20% or more than the applicable FRC otherwise they get the lower of the FRC or the assessed costs and they risk not being paid for the costs of the assessment.
Vulnerability - the court can award a sum greater than FRC if the party claiming them is vulnerable and that vulnerability required additional work, and that additional work alone amounted to a sum of 20% or more then the applicable FRC. As with the exceptional circumstances rule, if the person seeking the increased amount can't show that the assessed costs are 20% or more than the applicable FRC they get the lower of the FRC or the assessed costs and they risk not being paid for the costs of the assessment. Vulnerability has not been further defined in the new rules but guidance can be obtained from CPR Practice Direction 1A which sets out some factors which may cause vulnerability.
Part 36 offers - Part 36 has been changed in relation to FRC. Instead of indemnity costs there will be an uplift of 35% on relevant FRC if a defendant fails to beat a claimant's part 36 offer at trial. The relevant FRC are the difference between the FRC applicable when the relevant period expires (usually 21 days after the offer was made) and those applicable at the date of judgment. The other penalties such as interest damages and costs and an uplift on damages remain.
Unreasonable behaviour - if the court considers that a party has behaved unreasonably the other party may apply for an order increasing the costs they are to receive or decreasing the costs they are to pay by 50%. It seems that this is a fixed amount. It is 50% or nothing. Unreasonable behaviour is less than helpfully described as "conduct for which there is no reasonable explanation".
Claims will not have been allocated to a track and complexity band before a claim is issued and the claim is formally allocated by the court. However, FRC do still apply, and it will be up to the parties to agree what the likely track and band would be. We understand that there will be a pre action protocol to assist, in due course, but not until next year at the earliest. Those handling claims will need a detailed understanding of the rules to be able to engage with claimants' solicitor to ensure that the right level of FRC is paid. If no agreement can be reached then the only remedy will be for costs only proceedings so that the court can decide. The difference between the tracks and the bands is significant so it matters. For example, a claim that settles for £25,000 in complexity band 3 pre issue attracts FRC of £3,800. If it were band 4 that increases to £4,500. The increase if it were intermediate track settled at say £25,500 would be £7,930 in band 3 and £11,340 in band 4.
Learn more about our Insurance department here