What Are The New Rules For Fixed Recoverable Costs In Civil Cases In England And Wales?
Fixed recoverable costs (FRC) are a way of controlling legal costs in civil litigation by prescribing the amount of costs that can be claimed back from a losing party. FRCs give certainty in advance about the maximum amount that the losing party will have to pay. The aim is to ensure that legal costs remain certain and proportionate, and thereby promote access to justice.
Fixed recoverable costs already apply in most low-value personal injury cases. The government is planning to extend FRCs to more areas from October 2023, following the recommendations of Sir Rupert Jackson, a former judge of the Court of Appeal, who conducted a review of civil litigation costs in 2017.
The Ministry of Justice (MoJ) published its proposals on extending FRCs in a consultation paper in 2019, and its response in September 2021. The Civil Procedure Rule Committee (CPRC) has now approved and published the draft rules that will implement the extension of FRCs, subject to ministerial approval and parliamentary scrutiny.
The main features of the new rules are:
- Fixed recoverable costs will be extended to all civil cases in the fast track, which is the normal track for claims up to a value of £25,000 where the trial is likely to last for no longer than one day and oral expert evidence is limited to one expert per party in any expert field, and expert evidence is limited to two expert fields. There will be four complexity bands (1 to 4 in ascending order of complexity) with associated grids of costs for the stages of a claim. The normal bands for different types of case are set out in the rules.
- There will be a separate intermediate track for less complex multi-track cases under £100,000 damages. The intermediate track will capture cases which can be tried in three days or less, with no more than two expert witnesses giving oral evidence on each side. There will also be four complexity bands (1 to 4 in ascending order of complexity) with associated grids of costs for the stages of a claim. The normal bands for different types of case are set out in the rules.
- There will be some exceptions from FRCs for certain types of cases that are either excluded from the fast track or the intermediate track, or allocated to the multi-track instead. These include mesothelioma and other asbestos related lung disease claims, clinical negligence claims (unless both breach of duty and causation have been admitted), claims for damages in relation to harm, abuse or neglect of or by children or vulnerable adults, claims that could be tried by jury, and claims against the police involving an intentional or reckless tort or human rights issues. Housing claims will also be exempt from FRCs for two years from October 2023 pending further work by the MoJ.
- There will be new rules for calculating FRCs in claims for or including non-monetary relief, where there is more than one claimant represented by the same lawyer, where there is a counterclaim, and where there is a preliminary issue trial. There will also be new rules for Part 36 offers to settle in FRC cases.
- There will be a new process and FRCs for noise-induced hearing loss claims, which were addressed separately by Sir Rupert in his 2017 report.
- The figures of FRC costs have been uprated for inflation using the Services Producer Price Index (SPPI) since they were set out by Sir Rupert in 2017. The MoJ proposes to review the tables of costs and the extended FRC regime more generally in three years’ time, and adjust them for inflation accordingly.
The new FRC regime will apply to claims where proceedings are issued on or after 1st October 2023, except for personal injury claims where the cause of action accrues on or after 1st October 2023; and disease claims where the letter of claim has not been sent to the defendant before 1st October 2023.
The MoJ hopes that the extension of FRCs will reduce litigation costs, increase access to justice, encourage early settlement, and promote proportionality and efficiency in civil litigation. However, some critics have raised concerns about the impact of FRCs on access to justice, especially for complex or novel cases that may not fit into the prescribed bands or grids. They have also questioned the quality and currency of the data used to set the FRC levels, and the effect of FRCs on solicitors’ willingness and ability to take on certain types of cases.
The draft rules are available here: https://www.gov.uk/
The MoJ’s consultation response is available here: https://www.gov.uk/government/consultations/
The Law Society’s view on FRCs is available here: https://www.lawsociety.org.uk/topics/civil-litigation/
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Author: Glayson Tavares-Costa, Trainee Solicitor at Blake-Turner LLP