What is the new regime?
Proceedings issued on or after 1 October 2023 for most civil claims of up to £100,000 will now be caught by the extended fixed recoverable costs regime. Fixed recoverable costs relate to the legal costs a successful party can claim from their opponent in civil litigation. Exceptions to the new regime include housing claims, mesothelioma claims and claims for damages for the abuse of children or vulnerable adults.
Previously, fixed recoverable costs only applied to cases allocated to the small claims track (claims under £10,000). However, under the new regime, fixed recoverable costs will now extend to cases allocated to the fast track (claims valued between £10,000 and £25,000), as well as the new intermediate track that has been introduced as part of the amendments to the Civil Procedure Rules (CPR). The CPR sets out that the scope of the intermediate track includes claims of up to £100,000 that are expected to be tried within three days, with expert evidence likely being limited to two experts per party. The court is still able to allocate claims valued at under £100,000 to the multi-track if the claim is complex, which would therefore exclude the claim from the new regime.
How will fixed costs be calculated?
The fixed recoverable costs available in relation to claims allocated to both the fast track and intermediate track will partly depend upon the complexity band that is assigned to the claim (band 1 being the least complex and band 4 being the most complex). The allocation criteria of the complexity bands differ between fast-track and intermediate-track claims. For instance, defended debt claims will normally be allocated to band 1 in the intermediate and fast track. Property and building disputes and professional negligence claims will normally be assigned to band 4 in the fast track, whereas band 4 in the intermediate track will normally be for claims where there are serious issues of fact or law. Higher fixed recoverable costs are reserved for claims that fall within a higher complexity band.
Within their directions questionnaires, parties must note the agreed complexity band of the claim, or if a consensus cannot be reached, parties must set out which band they consider the claim to fall within and their justifications for this. The court has the discretion to assign a claim to a different complexity band notwithstanding the parties reaching an agreement on this point.
Together with the complexity band of a claim, the stage at which the claim settles is also considered in determining the value of fixed costs available.
The new regime may provide parties with more certainty and transparency as to the extent of recoverable costs available to them. Parties will be able to make an informed decision in deciding whether to progress a claim or to accept/make a settlement offer due to recoverable costs being pre-determined. However, only time will tell whether the new regime can promote access to justice and bring about proportionate litigation costs, which were highlighted by the government as important objectives within their 2019 consultation paper on fixed recoverable costs.
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