Developments in Civil Litigation - New Intermediate Track and Fixed Recoverable Costs
You may be familiar with the way claims in the civil courts are allotted to “tracks” and you may have heard of the small claims track, the fast track and the multi track.
For claims issued after 1 October 2023 there is now a fourth and new track called the intermediate track. This new track has been introduced in conjunction with a new fixed costs regime (FCR) which will cover most civil claims valued up to £100,000. FRCs set the amount of legal costs that the winning party can claim back from the losing party.
Complex cases and claims worth over £100,000, will be allocated to the multi-track and will not be subject to FRC.
One FRC regime will apply to fast track claims (claims valued between £10,000 and £25,000) and another separate FRC regime will apply to claims valued over £25,000 to £100,000 on the newly created intermediate track. FRC will apply in the fast track with four bands of complexity and in the intermediate track, again with four bands of complexity. FRC vary depending on which band a claim is in.
FRC give certainty in advance about the maximum amount that the losing party will have to pay. However, FRCs also mean that the amount that can be recovered may not reflect the actual costs of the case (and all lawyers will tell you that costs can be hard to predict!). The FRC regime does not impact the amount a party has to pay its own lawyers which is subject to separate agreement between them.
As the allocation of a claim will impact on costs recovery there is likely to be lots of satellite litigation in this area. For example, disputes about the value of a claim when a claimant tactically inflates a claim to tip it out of the FRC regime.
The cost of litigation plays a significant part in deciding whether to issue a claim and if/when to settle. The changes bring this into even sharper focus and early investigation of a dispute, assessment of evidence and prospects will be even more crucial.
FRC may encourage earlier and more frequent settlements. Conversely, parties may be happy to proceed to a final hearing, on the basis that they know the costs consequence and accept the risk. It is certainly the most significant development in costs for a long time.
Posted on 01/31/2024 by Ortolan