Fixed recoverable costs now in force from 1 October 2023

Swathes of amendments to the Civil Procedure Rules (CPR) for England & Wales have been made to provide, as from 1 October 2023, for regimes of fixed recoverable costs (FRC) in all fast track claims (ie valued up to £25,000) and for a separate FRC regime to apply to claims valued in excess of that figure but less than £100,000. These higher value cases will now proceed in a newly created intermediate track.

Little of the above will be news to anyone interested in claims and civil procedure. Although the changes, which we reported on earlier this year, are of huge significance, their effects will not emerge as a ‘big bang’ on day one. The impact of this second wave of FRC - the first wave being introduced back in 2013 for fast track injury claims only - will instead build over time. There are three main reasons for that.

1. The way in which the reforms are being introduced. For non-injury claims, the new FRC regime will apply only to proceedings issued on or after implementation date. The payment of FRC sums will be due only when such claims conclude, which would look to be several months or more from now. For injury claims, the payment of new FRC would be expected to be even later than that, given that the FRC regime applies only when the cause of action arises (or, for disease claims, the letter of claim is sent) on or after 1 October.

   A related consequence of the way FRC is being introduced is that significant amounts of claims will have been issued before 1 October to attempt to ensure that costs remain recoverable on an hourly rate basis. These will take some time to run off and may encounter challenges arguing that the issuing of proceedings was premature. 
    

2. The certainty of further amendments in April 2024. Even before the extended FRC regime came in, the Civil Procedure Rule Committee opened a consultation on further changes to made in the next formal update to the CPR. The topics covered range from fixing costs on assessments and of ‘costs only’ disputes, to dealing with inquest costs (where the civil claim relates to a fatality) and cover dealing with advocacy fees. Changes will be made in these areas from next April but, for the reasons in the previous paragraph, there will be no practical impact before then on claims subject to FRC given none of them will have concluded by then. [That said, extending FRC has been under serious consideration by policymakers since at least 2019, making it difficult to understand how these few, but important, points seem to have fallen into the cracks until now.]
    

3. A judicial review of the reforms. The Association of Personal Injury Lawyers has begun JR proceedings challenging the introduction of the reforms and seeking clarification on why there is no facility for ‘contracting out’ and on the inclusion of clinical cases in which breach and causation have been admitted.
    

Fixed costs, but where's the fixed process?

To maximise efficiency and practicality, FRC should exist within a strong and predictable procedural framework: the costs are fixed, so the steps to be undertaken taken at particular stages, especially pre-action, ought also to be clearly defined. While this may be true for fast track personal injury claims operating under the 2013 Low Value Pre-Action Protocols (PAPs), the same cannot be said for intermediate track claims in the new extended FRC regime. 

Nevertheless, the publication of part 1 the Civil Justice Council’s (CJC) Final Report on PAPs in August 2023 should act as a catalyst in this respect. The immediate pressing challenge in the intermediate track, therefore, is to develop a framework specific to this track that meets the core objectives identified in the following passage of the CJC report.

PAPs help foster fair dispute resolution without the need for litigation and facilitate more proportionate litigation when litigation is necessary. For PAPs to fulfil these objectives they need to be accessible to all, set out clear, proportionate steps towards dispute resolution and effective case management, and be consistently followed by parties and consistently enforced by the courts.

Points to take away?

With the extended FRC regime being just days old, it hardly makes sense to talk of ‘conclusions’. 

As has been seen, there are further changes on the way in the medium term and there will inevitably be satellite litigation on some of the details (regardless of the outcome of the judicial review noted above); the importance of which will emerge over the medium to longer term. Even so, the key pointers for the short-term future look to be these.

• Ensuring awareness of these changes within claims handling teams and effective triage of new FRC claims.
• Monitoring numbers of claims both in and out of scope of FRC in order to track any behavioural change and/or variability in claims patterns.
• Implementing effective handling strategies for resolving FRC claims at the most efficient point within the FRC structures and making appropriate admissions as soon as practically possible to restrict arguments about complexity banding.
• Making realistic offers as early as possible in order either to conclude claims or to ensure meaningful costs protection for later stages.
• Collecting comprehensive data during the lifecycle of FRC claims to enable modelling and analysis that can add value and insights into behaviours, handling strategies and effects on indemnity spend.