Fixing up the rules: changes to the fixed recoverable costs regime coming soon to a White Book near you!

We've read the latest so that you don't have to! Read on to find out what's new in the world of FRC.

The extension of fixed recoverable costs (FRC) to most simpler claims for £100,000 or less came into force on 1 October 2023, triggering arguably the biggest sea change in litigation tactics since the increase of costs budgeting in 2013. Litigants in cases assigned to the fast and intermediate tracks now have their costs recovery fixed.  Once a sufficient body of case law builds up to enable lawyers to predict the court's approach to allocation and assignment, litigants in cases captured by the regime can expect greater certainty and lower costs overall, enabling litigants to carry out a better cost/benefit analysis from the outset.  FRC could be applied to claims exceeding £100,000, too, if the claim otherwise fits the criteria for the intermediate track and the Court considers it to be in the interests of justice to do so. Our previous articles here and here explain how the new regime works.

Practitioners are eagerly awaiting the first decisions to see how the Court deals with tricky issues such as the effect of the transitional provisions and assignment of a complexity band.  In the meantime, the Civil Procedure Rules Committee and the Ministry of Justice have been busy refining the rules and the 163rd update to the Civil Procedure Rules has been published. We've read it all so that you don't have to and explain below what's new in the world of FRC.

163rd update: in-force date and transitional provisions

The 163rd update to the CPR will apply from 6 April 2024.  The increased FRC figures and the new amounts allowed in respect of inquest and restoration fees (see below) will be recoverable in any FRC claim where an order for costs is made on or after 6 April 2024, even if the claim was issued before then. Of course, this will only apply to claims issued on or after 1 October 2023 as claims issued before this date are unlikely to be subject to FRC.

Coming April 2024: Increased FRC to reflect inflation

The FRC are the same figures proposed by Jackson LJ in 2017, but increased to reflect inflation (in line with SPPI) up to January 2023, when the proposed new FRC rules were first published. The MOJ originally proposed to review the figures in 3 years' time, but conceded in their July 2023 consultation that high rates of inflation justified an increase from April 2024.

The increased figures which will apply from April 2024 have been uprated in line with SPPI to reflect inflation between January 2023 and October 2023.  This is an increase of 3.2%.

Trial advocacy fees on the fast track bands 1-3 will also be increased in line with SPPI plus a further 4% to reflect the fact that the figures referred to by Jackson LJ in 2016/17 were from 2013. The MOJ confirmed that it will use SPPI for future increases to advocacy fees.

The 163rd update to the Practice Directions contains replacement tables 12 and 14 (the main tables showing the amounts payable in fast track claims (table 12) and intermediate track claims (table 14) at each point that a claim is resolved or determined).

Coming 6 April 2024: recoverable brief fees in late-settled cases

Brief fees for cases settling on the doorstep of the Court will be recoverable under the rules from April 2024. Currently, brief fees on the fast track are recoverable if the claim settles on the day of trial and no provision is made for late settlement in intermediate track cases. However, from April 2024:

• 100% of the advocacy fee will be recoverable in fast track cases that settle (or the trial is vacated) on the day of trial or on one clear day before trial.
• 75% of the advocacy fee will be recoverable in fast track cases that settle (or the trial is vacated) two clear days before the trial date.
• 100% of the advocacy fee will be recoverable in intermediate track cases that settle (or the trial is vacated) on the day of trial or one clear day before trial.
• 75% of the advocacy fee will be recoverable in intermediate track cases that settle (or the trial is vacated) five clear days before trial.

The differing rules for intermediate and fast track cases are intended to reflect the fact that, as intermediate track cases are more complex, the brief will need to be delivered earlier to give Counsel sufficient time to prepare.  In cases where settlement is still a possibility, delivery of the brief is a balancing exercise in waiting as long as possible to make settlement as attractive an option as possible versus giving Counsel enough time to prepare to ensure that the client's prospects of success are not damaged. Whether 5 days for intermediate track claims strikes the right balance remains to be seen.

In response to the Government's July 2023 consultation on these issues, the Bar asked for an additional 25% allowance where the claim is settled (or the trial vacated) more than 5 clear days before the trial, but the MOJ declined to implement this proposal, citing a perceived lack of evidence. 

Coming 6 April 2024: head-scratching disclosure rules

Some puzzling amendments are being made to the disclosure requirements in the April 2024 CPR update, apparently in response to a request for clarification by Thompson Reuters over whether standard disclosure is still the default in personal injury claims. It seems the answer is "no", since rules 28.2(4) and 31.5(1) are being removed, leaving the disclosure requirements for claims involving personal injuries unclear. Further clarification will be necessary as the MOJ's consultation response simply states that the changes are being made to "provide clarity as to which case management tracks the rule [ie 31.5] applies to".   

Coming 6 April 2024: parties can agree to disapply FRC as part of a settlement

Generally, parties are free to agree whatever bargain they wish in settlement of a claim, including a party agreeing to pay their opponent's costs without reference to FRC.  Nevertheless, defendants are unlikely to offer to do so unless there is some exceptional factor justifying such an approach.  Despite this, rule 45.1(3) could be read as interfering with the parties' freedom of contract, since it states "Where a claim is [a FRC claim] and the parties agree… that a party is entitled to costs… the court may only award costs in an amount that is neither more nor less than the fixed costs… set out in the relevant table in Practice Direction 45." This would arguably have captured cases where the parties have settled, but Part 8 (costs only) proceedings are necessary to enable the receiving party to proceed to assessment.

However, from 6 April 2024, the full rule will read as follows (amendments shown in red):

"Where—

(a)a claim is one to which Section IV, Section VI, Section VII or Section VIII of this Part applies; and

(b)the parties agree or the court orders that a party is entitled to costs,

subject to rule 44.5 and to the application of any rule in those Sections or this Section by which costs are to be allowed, disallowed, increased or reduced, the court may only award costs in an amount that is neither more nor less than the fixed costs allowed by the applicable Section and set out in the relevant table in Practice Direction 45 unless the paying party and the receiving party have each expressly agreed that this Part should not apply."

Of course, this does not mean that the parties can agree in advance that an ongoing claim allocated to the fast or intermediate tracks will not be subject to FRC when determined by the court.  Once a claim is allocated to the fast track or intermediate track, the court's power to award costs is limited (by rule 28.8) to awarding FRC unless there are exceptional circumstances making it appropriate to consider a claim for costs exceeding FRC (rule 45.9).

Coming 6 April 2024: a pardon (for now) for clinical negligence

Even casual followers of the implementation of FRC will have clocked the furore surrounding the MOJ's proposal to apply FRC to clinical negligence claims, which included a hastily issued consultation by the MOJ and a judicial review by the Association for Personal Injury Lawyers (APIL). 

Although the extension of fixed recoverable costs generally is likely to catch up with clinical negligence claims at some point, personal injury lawyers can relax for the time being as amendments to rule 26.9(10)(b) in force from April 2024 clarify that a clinical negligence claim can only be allocated to the intermediate track where the defendant has admitted liability in the letter of response.

Coming 6 April 2024: special dispensation for inquest fees and company restoration fees

In response to concerns raised by stakeholders, the MOJ asked in its July 2023 consultation whether inquest costs in Fatal Accident Act claims and costs incurred in restoring a company to the register should be recoverable under FRC.  Unsurprisingly, the answer was a resounding yes, so the rules will be amended to permit recoverability of these costs. 

New rule 45.15A and Table 15A permits the claimant to recover £1,280 plus disbursements in cases where it was necessary to make an application to restore a defendant company to the register.  Previously this head of costs was limited to noise-induced hearing loss cases. The rule leaves open the opportunity for defendants to argue that it was not necessary to restore the company.

New rule 45.1(10) states that recoverable costs incurred in relation to inquest proceedings will not be fixed, disapplying the FRC regime altogether.

Coming 6 April 2024: miscellaneous other points

Other, smaller, amendments to the FRC regime which will apply from April 2024 include:

• Clarification in rule 28.14(c) to the 20 page limit on expert's reports: CVs and supporting materials are outside the page limit (along with photographs, plans, academic or technical articles).
• Changes to rules 26.7, 28.2, 28.12 to make clear that the Court has discretion to decide whether to fix a case management conference (CMC) or issue directions in intermediate track claims. In fast track claims, the court will fix a CMC only if necessary.
• The addition of a presumption that claims against public authorities for trespass to the person will be allocated to the multi-track (new rule 26.9(10)(f)).
• Clarification to rule 45.5(8) to make clear that, where there are two or more claimants jointly entitled to one set of costs under rule 45.5, they could in theory be entitled to both additional costs under Part 36 and increased costs under rule 45.13(2) to reflect their opponent's unreasonable behaviour.

(Maybe) coming October 2024: shortened costs assessment procedure and fixed costs of assessment

The MOJ canvassed views on a streamlined costs assessment procedure including fixed costs of assessment in their July 2023 consultation.  According to their consultation response published in February 2024, this proposal received some support and the Government committed to implementing these changes, hopefully in October 2024.  However, the CPRC's minutes from December 2023 reveal that the committee felt that an "additional and lengthy new procedure" was unnecessary. It therefore remains to be seen whether (or when) this reform will be implemented. 

Maybe coming October 2024: miscellaneous other points

The CPRC are considering a number of further amendments which may come into force in October 2024, which include proposed changes to:

• rule 3.7A1(7) and (8) (sanctions for non-payment of the trial fee by the claimant) and rule 44.9(1) (cases where costs orders are deemed to have been made) to ensure that a defendant’s entitlement to costs will be determined in accordance with Part 27 or Part 45, where applicable.
• rules 45.2, 45.8 and 45.15A, and, in the interim, Tables 1 and 15A in PD 45, to respectively clarify and ensure the recoverability of VAT, where appropriate, in addition to the FRC under rule 45.8 and the FRC and disbursements in restoration proceedings under rule 45.15A.
• rules 45.48 and 45.51 (preliminary issues and separate trials in the fast track and intermediate track respectively) to address the situation where a costs order is made in favour of the claimant following the preliminary issue, but, because part of the claim is for a monetary remedy, the costs cannot be calculated at that stage as the damages will not have been quantified.
• rules 45.58, 45.59 and 45.61, to align with the wording in rule 45.57(2)(a), to ensure that the approach to recoverable disbursements is consistent across the new FRC rules, and that the court’s broad discretion in respect of allowing the recovery of disbursements is preserved.

The Government will review FRC again in October 2026, although there will of course be a general election before then. We will watch out for any significant developments and keep you up to date.

In the meantime, please do let us know if you have any queries or comments.