Before 1 October 2023, FRC usually only applied to road traffic cases with damages of up to £10,000. The new FRC regime has now been extended so that many more claims will fall under the fixed recoverable costs rule. Now, FRC will apply to most claims (with some limited exceptions) where proceedings have been issued on or after 1 October 2023 and the claims are subsequently allocated to either the fast track or the new intermediate track. FRC does not apply to claims allocated to the multi-track.
Summary
- Fast Track
- New Intermediate Track
- Complexity Bands within the Fast and Immediate Tracks
- Assignment of Complexity Bands
- How Much Are Parties Now Able to Recover?
- Other Factors That Might Affect FRC
Fast Track
The fast track remains as it was and applies to claims up to the value of £25,000. Claims in this track are expected to be tried in one day (or less) and oral expert evidence at trial is likely restricted to one expert per party in any expert field, and evidence in two expert fields.
New Intermediate Track
This is a new track for less complex claims valued between £25,000 and £100,000. This track will apply where;
- the case can be tried in three days or less,
- where it is expected that oral evidence will be limited to no more than two expert witnesses giving evidence on each side,
- and the claim is brought by one claimant against one or two defendants or by two claimants against one defendant.
Where a party is seeking non-monetary relief, the claim will not be allocated to the intermediate track unless the court considers it to be in the interests of justice.
The procedure for the intermediate track is a combination of that for the fast track and the multi-track, with more active case management by the courts but with directions still likely to follow a standard pattern.
Expedited Procedure on the Intermediate Track
The aim is that claims allocated as intermediate cases will be subject to an expedited procedure.
This involves the following;
- statements of case are limited to no more than 10 pages
- written witness statements stand as evidence-in-chief, with a party’s statements limited to 30 pages
- oral evidence is limited to one expert witness per party, or two if it is reasonably required and proportionate. The body of each expert report should be limited to 20 pages (excluding photographs, sketch plans, diagraphs etc)
- oral evidence is time-limited and directed to the matters identified in the Case Management Conference (CMC) and
- all applications are to be made at the CMC as much as possible
Complexity Bands within the Fast and Immediate Tracks
Within the fast and intermediate tracks, the court will have to assign claims to one of the four complexity bands (bands one to four in ascending order of complexity) which will determine how much FRC are recoverable.
In the Fast Track, there are four complexity bands, with Band One for simpler cases and Band Four for more complex cases.
Four complexity bands also apply in the Intermediate Track:
- Band One - The most straightforward claims will be assigned to Band One. This will include claims that are just over the current Fast Track limit, where there is only one issue and the trial will likely take up to one day.
- Band Two – This is the ‘normal’ band for intermediate cases where there is more than one issue in dispute.
- Band Three- The band for more complex intermediate cases that are not appropriate for band two.
- Band Four - The most complex intermediate cases, where a trial is likely to last three days and there are serious issues on fact and law.
Table 1 in CPR 26.15 (Fast Track) and Table 2 in CPR 26.16 (Intermediate Track) contain examples of the types of claims falling within each of the complexity bands.
Assignment of Complexity Bands
The higher the band, the greater the fixed costs will be. As a result, assignment to complexity bands will be important for parties given its direct impact on recoverable/payable costs. Claims may therefore have an assignment hearing that will deal with the assignment of the relevant complexity band.
The parties will be able to propose what band they feel is appropriate in the Directions Questionnaire; however, it will ultimately be a question for the court to decide. Even where there is an agreed complexity band between the parties, the court can still reassign a claim but this will be rare and only occur in exceptional circumstances.
Factors that the court may have regard to when assigning a case to a complexity band within a track include:
- the nature of the claim
- the amount of money in dispute
- the complexity of the legal issues involved
- the likely length of the litigation process
How Much Are Parties Now Able to Recover?
The amount of fixed recoverable costs for each stage of a fast track or intermediate track claim is set out in a series of tables in the new Practice Direction 45.
The level of fixed costs for each complexity band in the fast track is set out in Table 12 here. Table 14 sets out the fixed costs for each band in the Intermediate Track. The Ministry of Justice has stated that the FRC tables have been updated to reflect inflation. They will review the tables again in three years to take account of inflation.
By combining the stage in the proceedings that the claim reaches and the complexity band, parties can work out what the recoverable costs are likely to be. It is evident, however, that for most cases, the sums are less than what would have been recoverable had standard basis time costs applied.
Fast Track
In the fast track, the level of FRC is fixed based on the complexity band and whether the claim settles pre-issue, pre-allocation, pre-listing, pre-trial or concludes at trial. Generally, the FRC will be a calculation based on a fixed sum plus a % of the damages.
Intermediate Track
In the intermediate track, the level of FRC is fixed based on the complexity band and the stage reached in the proceedings; whether up to and including the defence, up to the date of the CMC or direction order, up to the inspection of documents, up to the later date of witness statements or expert reports, up to the date of the PTR or 14 days before trial whichever is earlier and up to trial. Again, the FRC is a calculation based on a fixed sum plus a % of damages.
For claims on both the fast and intermediate track, the court may also allow any disbursements that have been reasonably incurred, other than a disbursement covering work for which costs are already allowed.
Other Factors That Might Affect FRC
The FRC could also be more (or less depending) on the following factors.
London Weighting
There will continue to be a 12.5% uplift on FRC where the receiving party lives, works or carries out business in the London area and instructs a legal representative who practices in the London area.
Part 36 Offers of Settlement
The new FRC regime makes changes to CPR 36, that intend to make Part 36 offers (an offer to settle all or part of a claim between parties in civil litigation) more appealing to parties and encourage more settlements before trial.
The amount of costs that a party can recover if they accept a Part 36 offer has now increased. Previously, a party could recover their costs up to the amount of their Part 36 offer, plus 10%.
The proposed changes to CPR 36 include a new 35% additional amount to be awarded where the claimant obtains judgment against the defendant which is at least as advantageous to the claimant as the proposals found in their Part 36 offer. As a result, if a claimant makes a Part 36 offer, and the defendant does not accept it and subsequently loses at trial, the claimant will be able to recover the costs from the defendant (at the FRC rates) plus an extra 35%.
It is only claimants who benefit from the new 35% additional amount to be awarded; not defendants.
Unreasonable Behaviour
In addition, new Part 45.13 CPR allows a court to penalise unreasonable behaviour by parties during litigation. Where a party has acted unreasonably, the court can reduce the fixed costs payable by 50% or have the FRC uplifted by 50%.
It is hoped that this will deter tactics such as delaying or obstructing the litigation process in the hope that the other party will give up or make a settlement offer, or aggressive or abusive behaviour, expecting that the other party will be intimidated or discouraged from continuing with litigation.
This will apply to all cases, regardless of the track on which the case is allocated.
As highlighted above, the new FRC regime brings in extensive changes to civil litigation and will have a significant impact on those involved in claims. For further advice or information on the new regime and the practical implications that this may have on your business, contact our expert commercial litigation and dispute resolution team via email us today.
