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Wider fixed costs regime is on its way

The changes extending Fixed Recoverable Costs (FRC) to most civil litigation claims with a value of up to £100,000 are now live, with the regime set to be implemented from 1 October 2023.

What are Fixed Recoverable Costs?

FRC are set amounts that the winning party in civil litigation is entitled to recover from the losing party at difference stages of the litigation process, from pre-issue to trial. The term ‘costs’ can typically include solicitor’s fees, court fees, expert witness fees and certain other disbursements. All amounts are exclusive of VAT.

Claims that are not bound by FCR traditionally include a time-consuming process of recovery or negotiation of costs using a detailed assessment process to try and recovery as much as it can from the losing party. If costs cannot be agreed between the parties, then the costs awarded to the winning party will ultimately be at the discretion of the court.

Changes to Fixed Recoverable Costs from 1 October 2023

When you apply to the court to make a civil litigation claim, once a defence is received from the other side, your case will be allocated to a particular track. This consists of the small claims track, fast track, or multi-track and from 1 October 2023 there will be the inclusion of the new ‘intermediate track’. The track allocated to your claim will depend on the amount in dispute and the complexity of your case.

Before 1 October 2023 FRC usually only applied to the small claims track. For a vast majority of cases, the new FRC will be extended to claims where proceedings are issued on or after 1 October 2023 that are subsequently allocated to the fast track and new intermediate track.

Claims up to a value of £25,000

Defended debt claims up to a value of £25,000 in damages can generally expect to be allocated to the fast track as a ‘band 1’ case (four bands are to be created with band 1 being the most straightforward type of claim). The amounts recoverable are set by way of specified sums allocated to stages of the litigation process. In bands 2-4 certain amounts are also subject to an additional fixed amount calculated based on the level of damages.

The maximum proposed fixed recoverable costs available in a fast track band 1 case which proceeds to trial is expected to be £3,800 plus a trial advocacy fee (of between £580 and £2,000– depending on the value of the claim). All amounts are exclusive of VAT and certain disbursements can also be recovered.

Claims valued between £25,000–£100,000

Simpler cases that are valued between £25,000–£100,000 in damages will find they are allocated to an expanded fast track as a newly created ‘intermediate’ case. While certain cases will be expressly excluded from being intermediate cases debt cases have been expressly identified as suitable.

Intermediate cases will have their own fixed recoverable costs regime. Intermediate cases will also be allocated to one of four bands depending on complexity – with band 1 being the simplest. Straight forward ‘intermediate’ debt claims will generally fall into ‘band 1’. Again, the amounts that will be recoverable are to be set by way of fixed sums for defined stages of the litigation process – These may be subject to an additional fixed amount depending on the level of damages. Again, all amounts are exclusive of VAT and certain disbursements can also be recovered.

Parties in both tracks may seek to escape the usual fixed costs regime in exceptional circumstances and band allocation can also be challenged.

The fixed recoverable sums may also increase (or decrease) in certain circumstances. For example, a claimant who matches or beats its own Part 36 settlement offer at trial may receive a 35% uplift on the fixed recoverable costs. Further, if there is unreasonable behaviour during litigation a 50% increase (or reduction) of fixed recoverable costs (depending on who the paying party is and who the unreasonably behaved party is) may be applied as a penalty. A 12.5% uplift is also proposed on fixed costs that are payable to a party who lives in the London area and instructs a legal representative who practices in the London area.

The current proposed fixed recoverable costs tables

TABLE 1: Rule 45.8 – Pre-action and interim applications (as proposed)

(Fixed cost in fast track and intermediate track)

A. A claim which would normally be or is assigned to complexity bands 1, 2 of 3 of Table 12 [Fast Track] £250
B. A claim—(a) which would normally be or is assigned to complexity band 4 of Table 12 [Fast Track]; or (b) to which Table 14 [Intermediate Track] or Table 15 [Noise Induced Hearing loss] applies £333
C. An application for—(a) summary judgment under Part 24; (b) an interim payment under Part 25; or (c) an interim injunction under Part 25 £750

TABLE 12: Rule 45.44 – Amount of fixed costs in the fast track (as proposed)

Stages A-C figures are the cumulative totals for costs incurred up to and including that stage
Stage D is a separate sum where the claim is disposed of at trial (final hearing)

Complexity Band
1 2 3 4
A. If Parties reach a settlement prior to the claimant issuing proceedings under Part 7
(1) Where damages are not more than £5,000 £Nil The greater of £660 or £120 + an amount equivalent to 20% of the damages £1,100 + an amount equivalent to 17.5% of the damages In each case £2,600 + an amount equivalent to 15% of the damages + £510 per extra defendant
(2) Where damages are more than £5,000, but not more than £10,000 £Nil £1,300 + an amount equivalent to 15% of damages over £5,000 £2,200 + an amount equivalent to 12.5% of damages over £5,000
(3) Where damages are more than £10,000 £580 £2,300 + an amount equivalent to 10% of damages over £10,000 £3,000 + an amount equivalent to 10% of damages over £10,000
B. If proceedings are issued under Part 7, but the case settles or is discontinued before trial
(1) On or after the date that the court issues the claim, but before the date that the court allocates the claim under Part 26 £2,100 £1,400 + an amount equivalent to 20% of the damages £3,200 + an amount equivalent to
20% of the damages
£3,000 + an amount equivalent to
40% of the damages + £760 per extra defendant
(2) On or after the date that the court
allocates the claim under Part 26, but before the date that the court lists the claim for trial
£2,500 £2,300 + an amount equivalent to 20% of the damages £4,000 + an amount equivalent to 25% of the damages £6,400 + an amount equivalent to 40% of the damages + £760 per extra defendant
(3) On or after the date that the court
lists the claim for trial but before trial
£3,800 £3,200 + an amount equivalent to 20% of the damages £5,100 + an amount equivalent to 30% of the damages £7,900 + an amount equivalent to 40% of the damages + £760 per extra defendant
C. If the claim is disposed of at trial
£3,800 £3,200 + an amount equivalent to 20% of the damages agreed or awarded £5,100 + an amount equivalent to 30% of the damages agreed or awarded £7,900 + an amount equivalent to 40% of the damages agreed or awarded + £760 per extra defendant
D. Trial advocacy fees
(1) Where the value of the claim is not more than £3,000 £580 £580 £580 £1,600
(2) Where the value of the claim is more than £3,000, but not more than £10,000 £820 £820 £820 £1,600
(2) Where the value of the claim is more than £3,000, but not more than £10,000 £3,800 £3,200 + an amount equivalent to 20% of the damages agreed or awarded £5,100 + an amount equivalent to 30% of the damages agreed or awarded £7,900 + an amount equivalent to 40% of the damages agreed or awarded + £760 per extra defendant
(3) Where the value of the claim is more than £10,000, but not more than £15,000 £1,200 £1,200 £1,200 £2,100
(4) Where the value of the claim is more than £15,000 £2,000 £2,000 £2,000 £2,900

TABLE 13: Rule 45.46 – specialist legal advice (as proposed)

(An additional sum is available for fast track claims normally assigned to band 4. For advice or drafting of statement of case from a specialist legal representative /intended advocate where justified. Limit to one advice in writing or conference unless justified)

A. Providing post-issue advice in writing or in conference £1,000
B. Drafting a statement of case £500

TABLE 14: Rule 45.50 – Amount of fixed costs in the Intermediate Track (as proposed)

Figures in stages S1, S3, S4, S5, S6 and S8 are the cumulative totals for costs incurred up to and including that stage
Figures in stages S2, S7 and S9 to S15 are separate sums for those steps if carried out.

Stage Complexity band
Band 1 Band 2 Band 3 Band 4
S1 From pre-issue up to and including the date of service of the defence £1,600 + an amount equivalent to 3% of the damages £5,000 + an amount equivalent to 6% of the damages £6,400 + an amount equivalent to 6% of the damages £9,300 + an amount equivalent to 8% of the damages
S2 Specialist legal representative providing post-issue advice in writing or in conference or drafting a statement of case £2,000 £2,000 (a) £2,300; or (b) £3,500 if counsel is also instructed to draft a defence to a counterclaim (a) £2,300; or (b)
£3,500 if counsel is also instructed to draft a defence to a counterclaim
S3 From the date of service of the defence up to the earlier of the date set for CMC or the order giving directions under 28.2 £4,000+ an amount equivalent to 10% of the damages £7,700 + an amount equivalent to 12% of the damages £9,100 + an amount equivalent to 12% of the damages £13,000 + an amount equivalent to 14% of the damages
S4 From the end of Stage 3 up to and including the date set by the court for inspection of documents £4,600 + an amount equivalent to 12% of the damages £9,400 + an amount equivalent to 14% of the damages £11,000 + an amount equivalent to 14% of the damages £16,000 + an amount equivalent to 16% of the damages
S5 From the end of Stage 4 up to and including the later of the dates set by the court for service of witness statements or expert reports £5,200 + an amount equivalent to 12% of the damages £11,000 + an amount equivalent to 16% of the damages £12,000 + an amount equivalent to 16% of the damages £20,000 + an amount equivalent to 18% of the damages
S6 From the end of Stage 5 up to and including the date set for the pre-trial review or up to 14 days before the trial date, whichever is earlier £5,900 + an amount equivalent to 15% of the damages £15,000 + an amount equivalent to 16% of the damages £16,000 + an amount equivalent to 16% of the damages £24,000 + an amount equivalent to 18% of the damages
S7 Specialist legal representative advising in writing or in conference following the filing of a defence £1,400 £1,700 £2,300 £2,900
S8 From the end of Stage 6 up to the date of the trial £6,600 + an amount equivalent to 15% of the damages, less £580 if that party did not prepare the trial bundle £17,000 + an amount equivalent to 20% of the damages, less £870 if that party did not prepare the trial bundle £19,000 + an amount equivalent to 20% of the damages, less £1,120 if that party did not prepare the trial bundle £29,000 + an amount equivalent to 22% of the damages, less £1,400 if that party did not prepare the trial bundle
S9 Attendance of a legal representative (other than the trial advocate) at trial per day, less an amount equivalent to 50% per day where, on any day, the trial lasts no more than half a day £580 £870 £1,200 £1,400
S10 Advocacy fee: day 1 £3,200 £3,500 £4,000 £5,800
S11 Advocacy fees for subsequent days, less an amount equivalent to 50% per day where, on any subsequent day, the trial lasts no more than half a day £1,400 £1,700 £2,000 £2,900
S12 Handing down of a reserved judgment and consequential matters, where dealt with separately from the trial £580 £580 £580 £580
S13 Alternative Dispute Resolution: additional fee payable once only where a mediation or joint settlement meeting takes place £1,200 £1,200 £1,200 £1,200
S14 Alternative Dispute Resolution: additional fee payable once only for specialist legal representative attendance at a mediation or joint settlement meeting covered by S13 £1,400 £1,700 £2,000 £2,300
S15 Approval of settlement for child, unless the settlement is approved at trial £1,200 £1,400 £1,700 £2,000

 

For more information on fixed recoverable costs, speak to a member of our expert commercial litigation team on 0800 652 8025 or request a consultation.

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