The general rule in court proceedings is that the successful party overall will usually be awarded its costs, subject to various exceptions. However, a change to the current costs regime means that, from 1 October 2023, the amount of legal costs that you might recover in the event that you win is changing.
This affects both claimants and defendants. It is important to note that these changes do not affect the value of your claim, but they do affect the total amount of legal costs that you might recover. You may need to bear any shortfall in recovery of costs from the amount of costs actually incurred.
What is the current position?
The Civil Procedure Rules (CPR) currently provide for defended cases to be allocated to one of three tracks. Cases are allocated to a track depending on their financial value, and the time and resources they will require, which in turn is based on their complexity. The court has a discretion as to which track to allocate cases, and so the financial values indicated in the tables below are not always determinative of track.
The track to which a claim is allocated affects the recovery of legal costs from the other party in the event that a claim is successful.
|Track||Financial Value||Suitability||Current costs recoverability (until 1.10.23)|
|Small Claims Track||Up to £10,000||A simplified system for dealing with lower value claims||
This track provides for very limited recoverable costs which means often it is not financially viable to instruct a solicitor. Parties are encouraged to progress cases through this track without legal assistance.
|Fast Track||£10,000 and £25,000||Suitable where the trial is estimated to last not more than one day and expert evidence is limited||The current rules allow for reasonable costs to be recovered from the losing party, subject to some exceptions.|
|Multi Track||Over £25,000||Suitable where the trial is estimated to last for more than one day and where expert evidence is necessary||The Court will usually order the unsuccessful party to pay the other party’s reasonable costs, subject to various exceptions and assessment.|
What will change?
A new “intermediate” track is being introduced, so that there will now be four different track options. In addition, the recoverability of costs on the fast track will change.
|Track||Financial Value||Suitability||New costs recoverability (post 1.10.23)|
|Small Claims Track||Up to £10,000||As per table above||As per table above|
|Fast Track||£10,000 to £25,000||As per table above||New fixed recoverable costs regime. Claims will be allocated to one of four complexity bands which will determine the fixed recoverable costs allowed. The complexity bands for fast-track claims are set out here at page 17. The fixed recoverable costs can be found here at page 11.|
|Intermediate track||£25,000 to £100,000||Suitable where the trial is likely to last no longer than 3 days and where oral expert evidence is limited to 2 experts per party, and 1 witness of fact per party||New fixed recoverable costs regime. Cases in the intermediate track will be required to follow new standard directions and will be assigned to one of four complexity bands (found here at page 18) which will provide a scale of fixed costs, increasing with complexity. The fixed recoverable costs can be found here at page 14. Certain claims are excluded from this track.|
|Multi Track||Over £100,000||Suitable where the trial is estimated to last for more than 3 days and where oral evidence is needed from more than 2 experts per party or 1 witness of fact per party. Certain claims must be allocated to the multi-track. These can be found here at pages 12-13.||As per table above|
When will the change happen?
The new rules will apply to court proceedings issued on or after 1 October 2023 (with a few exceptions).
Consequences of the change
The amendments will extend fixed recoverable costs to all civil claims across the fast track and the intermediate track (with some exceptions). The intention of this is to keep the costs of litigation proportionate to the sums claimed and ensure the recovery of costs is more certain across a wider range of civil claims.
This should keep costs down as the majority of fixed costs under each complexity band will be less than what would have been recoverable under the standard basis. It is worth considering whether to issue claims before 1 October 2023 to avoid certain cases falling into the new regime where fixed recoverable costs will apply. There may be tactical cost advantages to issuing before 1 October 2023 or waiting to issue after this deadline has passed. There remains a requirement to comply with pre-action protocol.
If you may wish to issue proceedings or you are defending a claim with a value of over £10,000 or are currently engaged in pre-action correspondence, you should be aware of the new fixed costs regime and what this will mean for your case moving forwards.
The cost consequences of the new regime will affect both claimants and defendants and it is important to seek legal advice on your position as soon as possible.
Our Dispute Resolution team has experience in all types of litigation and regularly act for both claimants and defendants. We have extensive experience of all track allocations and aim to bring and defend claims in a commercially proportionate way to ensure clients achieve their desired outcome.
If you are seeking legal advice on a commercial dispute, please contact Amelia Williams or Bella Rolph or complete the form below.
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