Extension of Fixed Recoverable Costs

What are fixed recoverable costs?

Fixed recoverable costs (FRCs) fix the amount of legal costs that a winning party can claim back from the losing party in civil litigation. Since 2019, they have applied to most low-value personal injury cases.

The extended fixed recoverable costs (FRC) regime will come into force on 1 October 2023. The extended FRC will represent the most substantial changes to the Civil Procedure Rules in the last 10 years.

Case Management

CPR r26.1(2) will create four tracks rather than the three we currently have. The quartet will be:

• The Small Claims Track;

• The Fast Track;

• The Intermediate Track; and

• The Multi-Track.

The scope of each track for different types of claims is set out below:

Personal Injury claims

Small Claims Track

Where:

1. General and special damages are no more than £10,000; AND

2. RTA PSLA damages are no more than £5,000 OR are no more than £1,000 where the accident happened before 31 May 2021 and the other conditions in CPR r26.10 (as amended) apply; OR

3. Non-RTA PSLA damages are no more than £1,500.

Fast Track

1. Where the Small Claims Track does not apply; AND

2. The claim for damages are no more than £25,000; OR

3. The claim includes a claim for non-monetary relief, whilst the monetary relief claimed is no more than £25,000; AND

4. The trial is likely to be for 1 day; oral expert evidence is likely to be limited to one expert per party and no more than two expert fields; and it is in the interests of justice for the claim to be allocated to the Fast Track.

Intermediate Track

1. The claim is suitable for neither the small claims track or the fast track; AND

2. The claim includes a claim for non-monetary relief, whilst the monetary relief claimed is no more than £100,000; AND

3. The court considers if case managed proportionately, the trial will not last longer than 3 days; AND

4. Oral expert evidence is likely to be limited to two experts per party; AND

5. The claim can be justly and proportionately managed under section IV of CPR Part 28; AND

6. There are no additional factors which would make the claim inappropriate for the intermediate track; AND

7. The claim is brought by one claimant against one or two defendants, or is brought by two claimants against one defendant; AND

8. There is not a claim for non-monetary relief, unless the court considers it would be in the interests of justice to allocate it to the intermediate track.

Multi-Track

1. The claim is for mesothelioma or asbestos lung disease; OR

2. There is a claim for clinical negligence (unless breach of duty and causation are admitted); OR

3. The claim is for damages in relation to harm, abuse or neglect of or by children or vulnerable adults; OR

4. The claim is for damages in relation to harm, abuse or neglect of or by children or vulnerable adults; OR

5. The claim could be tried by jury where s.66(3) County Courts Act 1984 or s.69(1) Senior Courts Act 1981 applies; OR

6. The claim is an action against the police which includes a claim for intentional or reckless tort or a relief or remedy in respect of the Human Rights Act 1998 unless it is a RTA claim arising from negligent police driving; an employer’ liability claim; or any other claim for an accidental fall on police premises.

It should be noted that personal injury claims by children and protected parties where the RTA occurs on or after 31 May 2021 or where the claim was first presented via the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents on or after the relevant date and on the date of presentation the claimant was a child; AND the claim consists of or includes a claim for whiplash injury cannot be allocated to the Small Claims Track.

Any claim that includes a claim by a tenant of residential premises

Small Claims Track

Where:

1. An order for specific performance of repair or other works is sought; OR

2. The cost of repairs or other work is estimated to be  no more than £1,000; AND

3. The value of the claim for damages is no more than £1,000.

Fast-Track

1. The small claims track does not apply; AND

2. The claim for damages are no more than £25,000; OR

3. The claim includes a claim for non-monetary relief, whilst the monetary relief claimed is no more than £25,000; AND

4. The trial is likely to be for 1 day; oral expert evidence is likely to be limited to one expert per party and no more than two expert fields; and it is in the interests of justice for the claim to be allocated to the Fast Track.

Intermediate Track

1. The claim is suitable for neither the small claims track or the fast track; AND

2. The claim includes a claim for non-monetary relief, whilst the monetary relief claimed is no more than £100,000; AND

3. The court considers if case managed proportionately, the trial will not last longer than 3 days; AND

4. Oral expert evidence is likely to be limited to two experts per party; AND

5. The claim can be justly and proportionately managed under section IV of CPR Part 28; AND

6. There are no additional factors which would make the claim inappropriate for the intermediate track; AND

7. The claim is brought by one claimant against one or two defendants, or is brought by two claimants against one defendant; AND

8. There is not a claim for non-monetary relief, unless the court considers it would be in the interests of justice to allocate it to the intermediate track.

Multi-Track

1. The multi-track is the normal track for any claim for which the small claims track, fast track or intermediate track is not the normal track.

It should be noted that the above criteria for residential landlord and tenant claims is identical for residential premises claims where the Renting Homes (Wales) Act 2016 applies.

Any claim not specified above, but which does not include a claim in respect of harassment or unlawful eviction)

Small Claims Track

Where:

1. General and special damages are no more than £10,000

Fast-Track

1. The small claims track does not apply; AND

2. The claim for damages are no more than £25,000; OR

3. The claim includes a claim for non-monetary relief, whilst the monetary relief claimed is no more than £25,000; AND

4. The trial is likely to be for 1 day; oral expert evidence is likely to be limited to one expert per party and no more than two expert fields; and it is in the interests of justice for the claim to be allocated to the Fast Track.

Intermediate Track

1. The claim is suitable for neither the small claims track or the fast track; AND

2. The claim includes a claim for non-monetary relief, whilst the monetary relief claimed is no more than £100,000; AND

3. The court considers if case managed proportionately, the trial will not last longer than 3 days; AND

4. Oral expert evidence is likely to be limited to two experts per party; AND

5. The claim can be justly and proportionately managed under section IV of CPR Part 28; AND

6. There are no additional factors which would make the claim inappropriate for the intermediate track; AND

7. The claim is brought by one claimant against one or two defendants, or is brought by two claimants against one defendant; AND

8. There is not a claim for non-monetary relief, unless the court considers it would be in the interests of justice to allocate it to the intermediate track.

Multi-Track

The multi-track is the normal track for any claim for which the small claims track, fast track or intermediate track is not the normal track.

The Allocation Criteria

The new amended rules for allocation under CPR r26.13 require the court when considering whether it should allocate a claim to the normal track for that claim to have regard to the following matters:

The financial value, if any, of the claim;

The nature of the remedy sought;

The likely complexity of the facts, law or evidence;

The number of parties or likely parties;

The value of any counterclaim or additional claim and the complexity of any matters relating to it;

The amount of oral evidence which may be required;

The importance of the claim to persons who are not parties to the proceedings;

The views expressed by the parties; and

The circumstances of the parties.

In assessing the financial value of a claim, the court will not take into account:

Any amount not in dispute;

Any claim for interest;

Costs;

Any contributory negligence; and

Where the claim is for a non-monetary relief or includes a claim for non-monetary relief, any amount prescribed under the new rule 45.45(1)(a)(ii) or rule 45.50(2)(b)(ii) to CPR Part 45.

The aggregate value of the claim where two or more claimants have started a claim against the same defendant using the same claim form and each claimant has a distinct claim against the defendant.

Assignment of Complexity Bands

Cases that are allocated to either the Fast Track or Intermediate Track will also be assigned a complexity band, unless section VIII of CPR Part 45 applies. The more complex the claim, the greater the allowable costs.

Parties are allowed to agree the complexity band that a claim is assigned to, subject to the power of the court to assign a different complexity band taking to account the r26.13 matters referred to above.

On the Directions Questionnaire (DQ), parties must state: (i) either the agreed complexity band; or (ii) their suggested complexity band together with their evidence in support.

CPR r26.15 contains a Fast Track complexity band table setting out the complexity band for different types of claims. It would be impracticable to reproduce the table in full, but some of the most notable claims would ordinarily be classed as follows:

Possession claims – complexity band 3;

Housing disrepair claims – complexity band 3;

Money claims – complexity band 3;

Complex possession and housing disrepair claims – complexity band 4

Property and building disputes – complexity band 4;

Professional negligence claims – complexity band 4;

Any complex fast track claim – complexity band 4.

CPR r26.16 contains the Intermediate Track complexity band table. Again, it would be impracticable to reproduce the table in full, but unlike the table for the Fast Track the guidance is not based on the types of claims, but rather on the features of the claims, e.g. the number of issues in dispute, and whether there are serious issues of fact or law.

Once a claim has been allocated to a track, the court will serve notice on all the parties. However, a claim may be subsequently reallocated track and assigned a complexity band on application by the parties or through the court’s own initiative. Civil practitioners should note that specifically in relation to intermediate track claims, once a claim has been allocated to that track and a directions order made, the court may only reallocate the claim if there are exceptional reasons to justify doing so.

In terms of reassignment to a different complexity band, it mut be shown there has been a change of circumstances since the assignment and the court deems the change of circumstances justify reassignment.

The fixed costs under the Fast Track

Table 12 to Practice Direction 45 sets out the amount of fixed costs in the fast track and as well as the complexity bands mentioned, there are also distinctions drawn between the stage at which a claim settles or is decided. For example:

• Stage A – claims that settle prior to the claim being issued under Part 7;

• Stage B – claims that are issued under Part 7 but settle or are discontinued before trial;

• Stage C – claims that are disposed of at trial.

The amount of recoverable costs are a mix of fixed costs, plus a percentage figure based on the amount of damages agreed or recovered.

Trial advocacy fees are based on the value of the claim and there are very few variations between the complexity bands or sometimes not at all, which is curious.

There is also the introduction of fixed costs for post issue advice in writing or in conference of £1,000 and £500 for drafting a statement of case.

Table 14 to Practice Direction 45 sets out the amount of fixed costs in the Intermediate Track and the basis of costs is also a mix of fixed costs and a percentage figure. The amounts payable to counsel for post issue advice in writing or in conference or drafting a statement of case is higher, £2,000 for the two under Bands 1 & 2, or £2,300 OR £3,500 in Bands 3 & 4 depending on whether counsel is also instructed to draft a defence to a counterclaim.

Under the Intermediate Track there are more litigation stages:

• Stage 1 – pre-issue up to and including the date of service of the defence;

• Stage 2 – specialist legal advice post-issue in writing or in conference or drafting a statement of case;

• Stage 3 – from the date of service of the defence to the CMC or the date of the directions order;

• Stage 4 – from the end of Stage 3 to the date set for the inspection of documents;

• Stage 5 – from the end of Stage 4 up until the later of the date for service of witness statements or expert reports;

• Stage 6 – from the end of Stage 5 up until the pre-trial review or up to 14 days before the trial date, whichever is earlier.

• Stage 7 – specialist legal advice in writing or in conference following the filing of a defence;

• Stage 8 – from the end of Stage 6 up to the date of trial

• Stage 9 – attendance of a legal representative that is not the trial advocate at trial per day;

• Stage 10 – advocacy fee for day 1 of trial;

• Stage 11 – refresher advocacy fees;

• Stage 12 – handing down of reserved judgment;

• Stage 13 – alternative dispute resolution (ADR);

• Stage 14 – attendance by counsel at ADR as per Stage 13;

• Stage 15 – approval of settlement for a child, unless the settlement is approved at trial.

Conclusion

It will not be easy for civil litigators to make informed decision on whether to take cases on under the new fixed recoverable costs regime. I anticipate that a lot more anxious scrutiny will have to be undertaken of cases and their quantum in particular as this will play a significant role in the track and complexity band a claim will fall into.

Furthermore, it is anticipated that clients will want to undertake a costs benefit analysis of the difference between the costs they will be charged for legal services versus the recoverable costs.

The rules on the assignment and reallocation of claims and in particular the exceptionality requirement is likely to see a number of reported decisions as Judge and lawyers try to establish relevant principles to provide a better steer as the current guidance is very vague.

Simao Paxi-Cato