Navigating the New Fixed Costs Regime in Civil Litigation

Navigating the New Fixed Costs Regime in Civil Litigation image

As of 1 October 2023, a significant shift occurred in the landscape of civil litigation with the extension of the fixed costs regime. Now encompassing most claims initiated from that date with a value up to £100,000, this overhaul aims to streamline processes and provide clarity for parties embarking on legal battles. Below, we outline some key changes brought about by this new regime in accessible terms for our clients and the wider public.

Introduction of the Intermediate Track

One notable introduction under the new rules is the creation of the ‘intermediate track’ for claims falling between £25,000 to £100,000. This track supplements the existing Small Claims Track (for claims up to £10,000), Fast Track (for claims £10,000 to £25,000), and Multi-track (for claims over £100,000). While these tracks provide a general framework, the Court retains discretion in allocating claims, considering factors such as complexity.

Complexity Bands Implementation

Claims on the Fast or Intermediate Track are further classified into complexity bands ranging from 1 to 4. These bands determine the level of recoverable costs, with the Court taking into account various factors including financial value, nature of remedy sought, and complexity of facts or evidence. The assignment of a complexity band guides the calculation of fixed costs through tables outlined in Practice Direction 45 of the Civil Procedure Rules (CPR).

Recoverable Costs Principles

Recoverable costs under this regime depend on the stage of the claim—settlement, discontinuation, or trial. While Complexity Band 1 cases have set fixed fees at each stage, bands 2 to 4 involve a fixed fee plus a percentage of damages recovered. Additionally, for non-monetary claims, a specified value is assigned to calculate fixed costs. VAT and disbursements are also recoverable, with disbursements deemed reasonable being included within fixed costs.

Cost Budgeting Changes

A notable impact of the extended fixed costs regime is the removal of mandatory cost budgeting for claims under fixed recoverable costs. This streamlining aims to simplify processes and reduce administrative burdens on parties.

Exceptions to Fixed Costs

While fixed costs generally apply, the Court retains discretion in exceptional circumstances to depart from this regime. Such exceptions include cases involving vulnerable parties or witnesses, as well as instances of unreasonable behaviour where costs may be reduced or increased by 50% of fixed recoverable costs.

Part 36 Offers

Parties making offers pursuant to Part 36 of the CPR may now see significant consequences under the new regime. Claimants, in particular, may benefit from a 35% uplift on fixed costs if a judgment exceeds a defendant’s offer.

Contracting Out and Settlement

Parties have the option to contract out of the fixed costs regime or pursue alternative dispute resolution (ADR) mechanisms. Settlement terms may also include provisions for costs exceeding those outlined in the fixed costs regime, offering flexibility in resolving disputes.

Final Thoughts

The extended fixed costs regime aims to provide clarity and certainty in civil litigation proceedings. However, it may result in parties recovering less than under the previous system, necessitating careful consideration of the risks and strategies involved in pursuing or defending claims. As the new rules settle into practice, we anticipate further developments and case law that will shape the application of this regime in the months to come

For further information please contact the Dispute Resolution team on info@farnfields.com or 01747 825 432 

Article written by Sam Glascow.

 

 

Share:

Get in touch