What are the Changes to the Fixed Recoverable Costs Regime from 1st October 2023?

Most civil claims valued up to £100,000 issued on or after 1st October 2023 will be subject to a new fixed recoverable costs (FRC) system.

Under the new rules, cases valued up to £25,000 will be allocated to the fast track, and less complex cases under £100,000 will be allocated to a newly created, separate intermediate track.

However, the regime will only apply to personal injury claims, where the cause of action has accrued on or after 1st October 2023 and disease claims, where the letter of claim has not been sent to the defendant before this date. 

The extension of the FRC system aims to make costs fairer and more transparent and the litigation process more efficient, although it is likely that there will be a possibility of satellite litigation over track allocation and the complexity bands.

Practice Direction 45 sets out how much the Fixed Recoverable Costs are in each scenario, depending on which complexity band applies to the case and at what stage the case was settled or resolved.

Table 12 of the new CPR PD 45 sets out the FRC for claims allocated to the fast track, and Table 14 sets out the fixed costs for claims in the intermediate track.

The bands are categorised in ascending order of complexity, meaning that the higher the band of complexity, the greater the FRC.

The type of claims that fall into the complexity bands in the fast track are as follows: 

• Complexity band 1 - road traffic accident-related, non-personal injury claims and defended debt claims.
• Complexity band 2 - road traffic accident-related personal injury claims started under the RTA Protocol and personal injury claims to which the Pre-action Protocol for Resolution of Package Travel Claims apply.
• Complexity band 3 - road traffic accident related, personal injury claims to which the RTA Protocol does not apply, employer’s liability (accident) and public liability personal injury claims, possession claims, housing disrepair claims and other money claims. 
• Complexity band 4 - employer’s liability disease claims (other than a claim for noise-induced hearing loss), complex possession and housing disrepair, property and building disputes, professional negligence claims and any claim which would normally be allocated to the fast track but is nonetheless complex. 

The criteria for complexity bands in the intermediate track are as follows: 

• Complexity band 1 – any claim where only one issue is in dispute and the trial is not expected to last longer than one day (personal injury claims where liability or quantum is in dispute, non-personal injury road traffic claims and defended debt claims). 
• Complexity band 2 – any less complex claim where more than one issue is in dispute, including personal injury accident claims where liability and quantum are in dispute.
• Complexity band 3 – any more complex claim where more than one issue is in dispute but which is unsuitable for assignment to complexity band 2, including noise-induced hearing loss and other employer’s liability disease claims.   
• Complexity band 4 - any claim which would normally be allocated to the intermediate track but which is unsuitable for assignment to complexity bands 1 to 3, including any personal injury claim where there are serious issues of fact or law.

Changes are also being made to Part 36 offers.

An additional 35% is to be awarded where a claimant obtains a judgment against the defendant, which is at least as advantageous to the claimant as the proposals contained in their part 36 offer.

A claimant will be able to recover a 35% additional uplift on their costs; however, this does not apply to the defendant. 

What do practitioners need to consider?  

This new regime will likely cause disputes in relation to track allocation.

Many parties may claim that their case is over £25,000 and is therefore suited to the intermediate track, as this will attract greater FRC.

Alternatively, parties may argue that their claim is too complex to be dealt with in the intermediate track to escape the FRC regime entirely.  

It is anticipated that there will be disagreements over the complexity of cases for the purposes of allocating in band 4 in the intermediate track.

For civil claims that fall within this category, case law will be required to establish what type of cases will be regarded as sufficiently ‘complex’.