Extending Fixed Recoverable Costs: A Look at the Changes [Part 1]

On 31 July 2013, Fixed Recoverable Costs (FRC) were introduced to most personal injury claims worth not more than £25,000 – that is, those heard on the fast track. It had long been anticipated that they would be extended both in respect of the types of claims to which they applied and in respect of the value.

It is now known that FRC are going to be extended across the fast track and to the new intermediate track for claims valued at up to £100,000. The Statutory Instrument implementing the changes was laid before Parliament on 24 May 2023 and will come into force on 1 October 2023.

Transitional provisions

For non-personal injury claims, the relevant date is the date of issue of the claim form. Only those proceedings issued on or after 1 October 2023 will be subject to FRC. As 1 October 2023 falls on a Sunday, the last date for issue of the claim form without FRC applying is effectively 29 September 2023. Unlike limitation, where receipt by the court of the claim form stops time running, it will be the date that the court actually issues the claim that counts.

For personal injury claims other than disease claims, the relevant date is the accrual of the cause of action. There will likely be personal injury claims issued well into 2026 which are therefore exempt.

For personal injury disease claims, the relevant date is the date of the letter of claim.

Fixed costs on the fast track

Matters on the fast track (except NIHL – see below) will be allocated to one of 4 complexity bands. Generally speaking, the band to which a claim will be allocated depends on the type of claim – e.g. non-injury RTAs fall in Band 1, and professional negligence claims fall in band 4.

The level of FRCs is fixed based on the complexity band and whether the claim settles pre-issue, pre-allocation, pre-listing, pre-trial or concludes at trial, broadly as it does now. Generally the FRC will be a calculation based on a fixed sum plus a % of damages.

There is also a prescriptive list of disbursements (although in cases where none of the low value personal injury protocols applies, this includes ‘any disbursement which has been reasonably incurred’).

Fixed costs in fast track NIHL cases

NIHL cases on the fast track are not assigned a complexity band. Instead the amount of FRC depends upon the stage reached and the number of Defendants in respect of whom damages are awarded/agreed. The sums are fixed without reference to the damages awarded.

Fixed costs on the intermediate track

Matters on the intermediate track will also be allocated to one of 4 complexity bands. Here the band to which the claim will be allocated depends on the issues in dispute – e.g. claims with only one issue in dispute fall in Band 1 and claims where there are ‘serious issues of fact or law’ fall in Band 4. It would appear that there is greater scope for dispute or judicial discretion as to the relevant banding in the intermediate track than the fast track.

The level of FRCs is fixed based on the complexity band and the stage reached, whether up to and including the defence (S1), up to the date of the CMC or direction order (S3); up to inspection of documents (S4); up to the later date of witness statements or expert reports (S5); up to the date of the PTR or 14 days before trial whichever is earlier (S6); and up to trial (S8). The FRC is a calculation based on a fixed sum plus a % of damages.

There are additional FRCs available in appropriate cases for specialist legal advice post issue or drafting the statement of case (S2); specialist advice following the filing of a defence (S7); attendance of a legal representative other than the advocate at trial (S9); advocacy fees on the first and subsequent days of trial (S10 and S11); handing down of reserved judgment (S12) attendance at a mediation or JSM (S13 and S14 if a specialist legal representative also attends) and approval of settlement of a child (S15). These are all by way of fixed sums which are not based on a % of damages.

Use of specialist legal advice at S2, S7 and S14 has to be ‘justified’ and so there is scope for dispute on assessment as to whether these stages apply.

There is no list of disbursements, and they are allowed provided they are ‘reasonable’ unless provision is already made for them in the FRCs (i.e. specialist legal advice and Counsel’s fees).

Non-monetary claims

Where a claim has no monetary value, then it is deemed to have a monetary value depending upon the complexity band assigned.

In the fast track, these are £10,000, £15,000 and £20,000 for complexity bands 2-4 respectively (non-monetary claims cannot be assigned to complexity band 1).

In the intermediate track these are £25,000, £50,000, £75,000 and £100,000 for complexity bands 1-4 respectively.

In a mixed claim for monetary relief and a non-monetary remedy, the value is the monetary value plus the deemed value for the non-monetary relief as defined above.

London weighting

There will continue to be a 12.5% uplift on FRC where the receiving party lives, works or carries on business in a defined area and their legal representative also practices in a defined area – the defined areas being the areas served by county court centres within London and those at Bromley, Croydon, Dartford, Gravesend and Uxbridge.

Split trials

Separate provision is made for FRC in split trial cases. Broadly speaking, there is a separate set of FRC available for each trial. For example if a Claimant were to succeed at a liability only trial and then succeed again at a final (quantum) trial then they would be entitled to FRC for each.

Claims in excess of FRC

It is possible to make a claim for costs in excess of FRC in exceptional circumstances (as is the case with the existing FRC regime).

It will also be possible to make a claim for costs in excess of FRC where a party or witness for a party is vulnerable; the vulnerability has required additional work to be undertaken; and by reason of that additional work alone, the claim is for an amount that is at least 20% greater than the FRC. This is a new provision – previously those acting for vulnerable parties or witnesses had to rely on exceptional circumstances.

Unreasonable behaviour and Claimant’s Part 36 offers

Where the receiving party has acted unreasonably, the paying party may apply for an order that the receiving party’s FRCs be reduced by 50%.

Where the paying party has acted unreasonably, the receiving party may apply for an order that the receiving party’s FRC be increased by 50%.

Where a Claimant betters a Part 36 offer at trial, instead of indemnity basis costs they will receive an additional sum equivalent to 35% of the difference between the fixed costs at the date of expiry of the offer and the fixed costs at trial.

Pre-action and interim applications

Where a party makes a pre-action or interim application in a case to which FRC apply, the allowable cost will be an extra £250 (fast track, complexity bands 1-3), £333 (fast track, complexity band 4 or intermediate track), or £750 (summary judgment, interim payment or interim injunction) plus any court fees.

Exemptions

FRCs will not apply to housing claims – that is, a claim or counterclaim relating to residential property for possession, disrepair or unlawful eviction. It is expected that FRCs will be extended to these claims in October 2025.

FRCs will not apply where a party is a protected party.

The following types of claims must be allocated to the multitrack (and therefore fall outside the scope of FRCs):

• mesothelioma or asbestos lung disease claims
• clinical negligence claims, unless breach of duty and causation are both admitted
• claims for damages in relation to harm, abuse or neglect of or by children or vulnerable adults
• claims which the court could order to be tried by jury (fraud, malicious prosecution and false imprisonment claims)
• claims against the police involving intentional or reckless torts or relief under the Human Rights Act 1998. This exemption does not apply to road accident claims arising from negligent police driving, employer’s liability claims, or claims arising from accidental falls on police premises

In addition, the court will retain the discretion to allocate matters to the multitrack (and therefore outside the scope of FRCs) where matters valued at less than £100,000 are sufficiently complex. This will generally be the case where the trial will be longer than 3 days or there are more than 2 expert witnesses giving oral evidence on each side.

For more information on the extenion to FRC and the practical implications of the changes, please revisit us for Part 2.