Article written by Bimal Kotecha, Litigation Solicitor
From 1 October 2023, the Civil Procedure Rules (CPR) will be amended to extend the scope of fixed recoverable costs (FRC).
What are fixed recoverable costs?
FRC is a fixed amount of costs that a successful party in litigation can recover from its opponent. Currently FRC is only applicable in limited circumstances, as set out in CPR part 45.
The amount of costs recoverable by a winning party is very much dependant on which track the claim is allocated to. Currently, there are three possible tracks that a claim can be allocated to. These are
- The small claims track: for claims with a value of up to £10,000 that are straightforward. The winning party is unlikely to recover any legal costs from its opponent but may be able to recover nominal disbursements such as the Court fee for issuing the claim.
- The fast track: for claims with a value of between £10,001 and £25,000 where the trial is likely to last for no longer than one day and expert evidence is limited. The winning party is likely to be able to recover a percentage of its legal costs. The advocate’s costs for the trial are fixed in accordance with CPR part 45.
- The multi-track: for claims with a value of more than £25,001. A winning party ought to be able to recover a reasonable and proportionate amount of their costs, subject to assessment by the Court in the usual fashion. It is rare for a winning party to recover all of their legal costs.
What is going to change?
The proposed amendments are in draft form and if implemented, will be applicable to a vast majority of cases issued after 1 October 2023 that have a claim value of between £10,000 and £100,000. The highlights of the proposed amendments are set out below:
In the fast track
- FRC will apply to all costs in the fast track and not just the advocate’s fee for preparing for and attending trial.
- Upon allocation of claims to the fast track, the Court will also assign the claim to one of four different ‘complexity’ bands. The band to which a claim is assigned will depend on the complexity and type of case as set out in the newly drafted CPR 26.15.
- The amount of fixed sums payable to the winning party will be determined by (i) the band to which the claim is assigned; and (ii) the stage at which the claim is determined or settled – see tables 12 & 13 of CPR PD 45.
- However, the criteria for a claim to be allocated to the fast track will remain as set out above.
In the intermediate track
- The proposed new rules create a new ‘intermediate track’ which will deal with claims between £25,000 to £100,000. Therefore, the multi-track threshold would be increased to claims above £100,000.
- The intermediate track will be the usual track for cases between £25,000 and £100,000 where the trial will last no more than three days and where expert evidence will be limited to two experts per party.
- Very much like the proposed new fast track rules, the Court will also assign the claim to one of four different ‘complexity’ bands. The band to which a claim is assigned will depend on the complexity and type of case as set out in the newly drafted CPR 26.16.
- The amount of fixed sums payable to the winning party will be determined by (i) the band to which the claim is assigned; and (ii) the stage at which the claim is determined or settled – see table 14 of CPR PD 45.
- The notes to the new rules state that “…judges will retain the discretion to allocate more complex cases valued at under £100,000 to the multi-track, so that complex cases will not be inappropriately captured by the extended FRC regime in any event”.
It is noteworthy that the new FRC tables make provision for recovery of costs based on the damages a party has been awarded. The notes to the new rules state “[m]ost FRC claims will be for damages, and the tables of FRC recognise this by incorporating a percentage of damages recovered. Sir Rupert [Jackson] recognised that not all claims are for damages; his 2017 report noted the need for the Court to assign a value to non-monetary relief in claims for, or including, non-monetary relief. It has now been agreed that there will be fixed assigned values for individual bands, and that, in mixed claims (involving both monetary and non-monetary relief), FRC will be calculated in part by reference to the damages awarded, and also the assigned value for non-monetary relief, taken together”.
The rules for small claims track claims will remain largely the same.
Commentary on the amendments
One of the main advantages of extending FRC is that it is likely to reduce satellite litigation, such as detailed assessment proceedings to decide how much a winning party should receive from the losing party.
However, within the legal industry there has been significant criticism of the proposed amendments with many practitioners commenting that the extension to FRC will deny many parties access to justice. The reality of the proposals are that successful parties may only recover a fraction of the legal costs they have spent on their case.
The Law Society has stated that it does “not support the extension of FRCs in civil litigation under the current proposals, either across the existing fast track or to intermediate cases”. The Law Society forms the view that “the proposals pose a substantial risk to access to justice”.
How to avoid FRC from applying to your claim
If your claim is relatively complex, involves multiple expert witnesses and multiple witnesses of fact (thereby resulting in a trial lasting longer than three days) it is likely to be allocated to the multi-track and as such FRC will not apply.
However, if your claim has a value of between £10,000 and £100,000 and is not complex, it may be worth issuing the same at Court before 1 October 2023. Before you issue your claim you ought to have investigated the merits, collated the relevant evidence and complied with any relevant pre-action protocols as set out in the CPR. Accordingly, if you have a claim that you think is worth between £10,000 and £100,000, please contact us urgently via email or on 020 8858 6971 so that we can advise you in good time before the new FRC rules come into force.