The general rule in civil ligation is that the winning party pays the losing party’s costs.  In practice, the ability of a successful party to recover their costs depends on which track the claim is allocated to by the Court. The track that a claim is allocated to determines what directions apply to the claim; how the claim is managed; and the costs that are recoverable.  The scope of this note will focus on money claims only (i.e. not claims for personal injuries).

The New Law

On 01 October 2021, the new Fixed Recoverable Costs Regime (“the FRC Regime”) was extended to cover most civil claims with a value between £10,000.00 and £100,000.00. The intention of the regime is to provide a level of certainty regarding the amount of fixed costs that a party can recover in claims with a value in this range). The FRC Regime limits the need for costs management by the Court after a Defence is filed and is intended to simplify the assessment of costs at the end of proceedings.

The effect of the regime is that the amount of recoverable costs is based not strictly on the work that is carried out by the parties' lawyers (although this will still need to be considered by the Court), but on the stage at which the case is finally resolved (be that by settlement or at Trial).

The Small Claims Track and Multi Track remain largely unchanged by the FRC Regime, which now applies to to the Fast Track and has introduced a new track named the Intermediate Track.

The “New” Fast Track

Claims issued after 01 October 2023 with a value between £10,000.00 and £25,000.00 will normally be allocated to the Fast Track. The FRC Regime will apply and the Claim will be assigned a complexity band by the Court upon allocation.  There are four complexity bands within the Fast Track, which are set out at Table 1 of CPR 26.15 (see: https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part26#15).   It is open to the parties to agree the complexity band, but the Court may direct that another complexity band applies by having regard to the factors set out at CPR 26.13(1).

The Intermediate Track

Claims issued after 01 October 2023 with a value between £25,000.00 and £100,000.00 will generally be allocated to the new Intermediate Track which was established under the extended FRC Regime.  

As with the Fast Track, the claim will be assigned to one of four complexity bands upon allocation. The complexity bands on the Intermediate Track are set out at Table 2 of CPR 26.16 (see: https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part26#16) . Again, it is open for the parties on the Intermediate Track to agree a complexity band (subject to the Court’s approval).

Costs recoverable

The amount of fixed costs allowed (both on the Fast Track and the Intermediate track) depends on which complexity band the claim has been assigned to. The complexity bands provide an ascending scale of allowable fixed costs which correlate with the complexity of the claim. Equally, the stage at which the proceedings are concluded is also an ascending scale where the allowable fixed costs increase at each stage that the proceedings progress to before settlement/Judgment is obtained.  For example. if settlement is reached before proceedings are issued, the fixed costs will be the smallest allowed. If settlement is reached after proceedings are issued, but before the trial date, the fixed costs will be greater.  If Judgment is given, or settlement is reached at trial, then the fixed costs will generally be the largest amount allowed under the FRC Regime.

The amount of fixed costs recoverable on the “new” Fast Track and Intermediate Track are set out at Tables 12 and Table 14 of Practice Direction 45 of the Civil Procedure Rules (see: https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part45-fixed-costs/practice-direction-45-fixed-costs).

So what does it all mean?

The main purpose of the FRC Regime is to provide a level of certainty of the costs that a party can recover if it is successful in litigation.   The practical effect of this is that as it will help parties to effectively set their budget for litigation at the outset by giving a good idea of the costs they will be entitled to recover if they are successful (or have to pay out if they are not!).  

For any queries about this article or any dispute resolution and litigation matters, please do not hesitate to contact Liam Horrigan 01524 61660

‍