Extension of Fixed Recoverable Costs

In September 2021 the Ministry of Justice released the Government’s response to the Extension of Fixed Recoverable Costs (FRC) regime for claims up to the value of £100,000.00. The response was approval of the extension, but the implementation was not as previously consulted upon.

The Ministry of Justice has decided to spare the Civil Procedure Rules Committee the undoubtedly daunting task of creating a whole new intermediate track for the claims valued between £25,000-£100,000. Instead, the response confirms that the Fast Track will be expanded and applied to ‘intermediate cases’.

However, the proposals still include a number of significant variations, as can be considered appropriate given the far wider cases that will be allocated to the Fast Track will apply to and also how the newly created ‘intermediate cases’ will be dealt with.

Fast Track cases will be allocated to one of four bands of complexity. These bands appear to be as follows:

Band 1 – Non-personal injury RTA claims and defended debt claim;

Band 2 – RTA personal injury claims (pre-action protocol claims);

Band 3 – RTA personal injury claims (outside of the pre-action protocol), Employers’ Liability Accident claims, Public liability claims, tracked possession claims, housing disrepair, other money claims;

Band 4 – Employers’ liability disease claims (excluding Noise Induced Hearing Loss claims), complex tracked possession claims or housing disrepair claims, property disputes, professional negligence claims and other claims at the top end of the Fast Track.

It is interesting to note that it is also being considered to introduce ‘punitive’ fines or uplifts to encourage engagement with the new regime and discourage opportunism. For example, a cost liability for unsuccessful band challenges, a 35% uplift of FRC for beating Part 36 offers, a 50% uplift for FRCS for ‘unreasonable behaviour’, and a 25% uplift for each additional Claimant.

The escape clause for exceptional circumstances under CPR 45.29J will remain and will continue to be an area that will continue to develop through case law.

Intermediate cases will be cases that are valued between £25,000-£100,000. However, mesothelioma/asbestos, complex personal injury and professional negligence, actions against the police, child sexual abuse, and intellectual property will all be excluded as ‘intermediate cases’.

‘Intermediate cases’ will then be allocated to 4 bands:

  • Band 1: the simplest claims that are just over the current fast track limit, where there is only one issue and the trial will likely take a day or less, e.g. debt claims.
  • Band 2: along with Band 3 will be the ‘normal’ band for intermediate cases, with the more complex claims going into Band 3.
  • Band 3: along with Band 2 will be the ‘normal’ band for intermediate cases, with the less complex claims going into Band 2.
  • Band 4: the most complex, with claims such as business disputes and ELD claims where the trial is likely to last three days and there are serious issues of fact/law to be considered.

It has been noted that PI cases which are ‘straight-forward’ quantum-only cases will be generally Band 1. Where liability and quantum are in dispute then Bands 2 and 3 will be used. Band 4 will only be used for the most complex cases and where the case is likely to last at least three days in Court. However, it is going to be left up to the discretion of the Courts as to which banding should be applied on a case by case basis.

Interestingly, it is being recommended that within the Letter of Claim and Letter of Response will be the first instances where parties should state their proposed banding and that parties should be encouraged to agree bandings. A further incentive to agree will be the recommendation that an unsuccessful challenge to a band allocation will incur a costs liability of £300.

We now await the CPRC to prepare their proposed new rules and practice directions to shed further light on how the new regime will work in practice.

If you have any comments or queries regarding this post, please contact Kris Kilsby at [email protected]

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