Under the present Civil Procedure Rules (CPR), there are different rules applying to the recoverability of legal costs at the conclusion of a claim. The usual rule is that the successful party is able to recover their legal costs (or a proportion of them) from the unsuccessful party.
In small claims track cases (under £10,000), legal costs, save for fixed costs, such as the issue fee, are not recoverable.
In the multi-track (cases over £25,000), legal costs are usually recoverable from the unsuccessful party.
However, in the fast-track (cases between £10,000 and £25,000), some legal costs are currently fixed, so that the successful party can only recover a fixed sum for their legal costs, regardless of whether they have been charged that amount or higher by their legal advisers. These fixed costs relate to various parts of the claim and include a fixed sum recoverable for a fast-track trial if the matter proceeds that far.
The rules on Fixed Recoverable Costs are however changing from 1 October 2023 and details of the changes have recently been released by the Civil Procedure Rules Committee.
The changes are fairly extensive, and the highlights of the new rules include the following:
- The introduction of a new ‘intermediate track’. This will deal with cases from £25,000 to £100,000, therefore increasing the multi-track threshold to claims above £100,000.
- The intermediate track will be the usual track for cases between £25,000 and £100,00 where the trial will last no more than three days and where expert testimony will be limited to two experts per party.
- Upon allocation to either the fast-track or intermediate track, the Court will also assign the claim to one of four different ‘complexity’ levels or bands. The band to which a claim is assigned will depend on the complexity of the case, and this will be determined by the Court on allocation (after receipt of the Particulars of Claim and Defence). It is envisaged that parties should seek to agree the complexity band if possible.
- The amount of recoverable costs will be determined by the track to which it is allocated, the complexity band to which it has been assigned, and the stage of proceedings that have been reached.
- The CPR Committee has provided tables (in the new Practice Direction 45) setting out the amount of recoverable costs for each stage of a fast-track or intermediate track claim.
- Judges will retain the discretion to allocate complex claims under £100,000 to the multi-track where the fixed costs regime will not apply.
- The rules will apply to most civil litigation claims with a value up to £100,000 that are issued on or after 1 October 2023. There are some exceptions for personal injury and disease claims, where the regime will only apply where the cause of action accrues on or after 1 October 2023.
- The rules will not apply to clinical negligence claims, unless a breach of duty and causation has been admitted. The rules will also not apply to housing claims at present, although it is envisaged they will be introduced for housing claims in the next couple of years.
- Disbursements will continue to be a battleground. In the intermediate track, the Court will have the discretion to allow any disbursement which has been reasonably incurred. However, in the fast-track, there will be set rules on what sums can be recovered by way of disbursements.
Until the rules come into force later this year, it is difficult to tell what effect they will have on litigation generally. A lot of practitioners believe they will lead to further satellite litigation, particularly in relation to which track and complexity bands the claims are allocated and assigned to.
The rules will however provide parties with certainty as to how much they will have to pay to their opponent if they are unsuccessful in their claim. However, if the actual costs incurred by a firm of solicitors are higher than those recovered from your opponent, then it is likely that solicitors will request their client pay the difference.