From 1st October 2023 a new Fixed Recoverable Costs regime (FRC) came into force following a consultation on Sir Rupert Jackson’s 2017 Report. The FRC extends across the fast track (cases valued up to £25,000 that will last no longer than a day) and a new intermediate track for simpler cases valued between £25,000 and £100,000 with an estimated trial length of no more than 3 days. Judges will retain the discretion to allocate claims with a value less than £100,000 to the multi-track if they are complex and would be inappropriately captured by the new FRC.
Which cases will they apply to?
The new FRC will apply to civil litigation proceedings which are valued at less than £100,000 and which are issued on or after 1st October 2023. Any cases which are particularly complex and valued above £100,000 will be allocated to the multi-track and not subject to FRC.
There are exceptions to when FRC will apply such as when any party is a protected party, personal injury claims where the cause of action accrued on or after 1st October 2023 and disease claims where the letter of claim has not been sent to the defendant before 1st October 2023.
FRC will not apply to cases which are generally more suited to the multi-track, irrespective of value, such as clinical negligence, abuse of/by children and trials by jury. Residential housing claims are also currently exempt but FRC may apply from 2025 once other relevant legislation has been put in place.
Part 8 claims will also be exempt and will be treated as allocated to the multi-track.
What has changed?
Part 45 of the Civil Procedure Rules has largely been written and a new Practice Direction (PD) 45 has been created. There have also been changes made to Part 26 and PD 26, Part 28 and PD 28, and Part 36.
Claims are no longer just allocated to a track, they are now also split within that track by complexity. Within the fast track there are four complexity bands (1 to 4 in ascending order of complexity). The new intermediate track is also split into four complexity bands.
The parties may agree which complexity band within the relevant track the claim is assigned to. If the parties cannot agree, or the Court disagrees with the parties’ choice, the Court may assign the claim to whichever band it considers most suitable. There has been minimal guidance provided on what factors should be considered when deciding the level of complexity, but consideration should be had for the number of issues in dispute and the likely length of trial needed. For example, in the intermediate track, band 1 would be suitable for a claim where there is only one issue in dispute and a trial is expected to take no longer than a day.
Each complexity band has an associated grid of costs that are recoverable depending on what stage of litigation the parties reach before settlement. For example, a claim for £23,000 allocated to the fast track and complexity band 3, where the parties reach a settlement before any Part 7 proceedings are issued, the costs that would be recoverable are fixed at £3,000 plus an amount equivalent to 10% of the damages over £10,000.
Costs greater than FRC can be applied for where vulnerable parties or witnesses have resulted in additional work leading to costs 20% above the FRC. There is also a London Weighting which provides for a 12.5% bonus where the work is carried out from a London office.
For claims allocated to the intermediate track, restrictions have also been placed on the number of pages witness statements and expert reports can have. The total length of all parties’ witness statements are limited to 30 pages and an expert’s report to 20 pages.
Who is affected?
Solicitors and Counsel, no matter how senior they are, will be affected as well as Litigants in Person whose recovery will be restricted to two-thirds of the FRC. Multiple Claimants represented by the same solicitor will each get their own FRC except where the claim is for a joint remedy or the Court orders that the additional Claimant is only entitled to 25% of the principal Claimant’s FRC. There is no equivalent for multiple Defendants but the assumption is they will each get their own FRC too.
Are there any plans to review?
The current figures used in the FRC tables set out in PD 45 have been taken from Sir Rupert Jackson’s 2017 report but uprated for inflation using the January 2023 Services Producer Price Index (SPPI) and rounded so that the regime starts off with whole figures. The Ministry of Justice proposes to review the figures and the FRC in general in 3 years’ time.
