‘New Fixed Recoverable Costs in Litigation Regime’

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Google ‘Extending Fixed Recoverable Costs: a note on the new rules’. NB:

  • From 1 October 2023, fixed recoverable costs (FRC) will be extended across the fast track1 , and in a new intermediate track for simpler cases valued up to £100,000 damages.
  • There have been substantial changes to Part 45 (Fixed Costs), which has been largely re-written. A new Practice Direction (PD) 45 sets out the relevant tables of costs. Changes have been made to Part 26 (Case Management – Preliminary Stage) and PD 26, as well as Part 28 (The Fast Track) and PD 28; changes have also been made to Part 36 (Offers to Settle). Consequential changes have also been made to other Parts.
  • There will be a separate intermediate track, as recommended by Sir Rupert. The MoJ 2021 consultation response had envisaged intermediate cases being part of an expanded fast track. Instead, however, the fast track will remain as it is, and less complex multi-track cases under £100,000 damages will be allocated to a separate intermediate track.
  • In the intermediate track, 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 (see Table 14 in PD 45). The stages of intermediate track claims have been revised from those proposed by Sir Rupert, to provide greater clarity and better reflect the stages of cases, particularly because the costs for each stage include costs for earlier stages. As with the fast track, the figures of FRC costs for the intermediate track in the 2017 Jackson report (which were fixed at July 2016) have been uprated for inflation using the January 2023 SPPI.
  • The normal bands for different types of case are set out in the rules (at rule 26.15 and rule 26.16). There will be new standard directions for the intermediate track.
  • The new FRC will apply to claims where proceedings are issued on or after 1 October 2023.
  • FRC in claims for or including non-monetary relief (NMR): Most FRC claims will be for damages, and the tables of FRC recognise this by incorporating a percentage of damages recovered. Sir Rupert recognised that not all claims are for damages; his 2017 report noted the need for the court to assign a value to non-monetary relief in claims for, or including, non-monetary relief. 5 It has now been agreed that there will be fixed assigned values for individual bands, and that, in mixed claims (involving both monetary and non-monetary relief), FRC will be calculated in part by reference to the damages awarded, and also the assigned value for non-monetary relief, taken together.
  • FRC where there is more than one claimant represented by the same lawyer: Under rule 45.5, each claimant will be entitled to the costs of their own claim except: (i) where the claim is for a remedy to which the claimants are jointly entitled, and they are joined to the proceedings to comply with rule 19.3; or (ii) where the court orders that additional claimants are each entitled only to 25% of the principal claimant’s FRC. In respect of the second exception, the court may make such an order if it considers that it is in the interests of justice to do so, having regard to whether the claim of each claimant arises from the same or substantially the same facts and gives rise to the same or substantially the same issues. The court shall consider making such an order at allocation or assignment (see rule 26.7(9))
  • Part 36 offers: the arrangements for Part 36 offers to settle in low value personal injury cases already subject to FRC have been updated to cover all FRC claims.

So where in accordance with the CPR a Contentious Probate claim is properly/necessarily issued in the High Court, and following service is transferred by a Master to the CLCC, and no allocation to track is directed until the hearing of the first CMC – then from 1 October there appears to be a very real litigation risk that:
– The Judge may allocate the case to the Fast/Intermediate track.
– For costs incurred, only fixed costs can and will be awarded – which may amount to only a small fraction of case-preparation costs and the costs of any interim applications made up to that point in strict conformity with the CPR.
– If at the CMC, the judge, who may be a Circuit Judge, technically mischaracterises e.g. a breach of fiduciary duty claim by an executor as being a simple ‘sibling’ dispute, that the case will be treated for ‘costs as being a ‘simple’ case. The Judge could be appealed, but the Claimant may not want to incur further costs and litigation risks and may decide to settle, in which case the other party will only agree to payment of fixed costs in settlement.
The litigation risk uncertainty this new regime creates therefore ought to focus parties minds early about entering into Mediation.

Where in a substantial claim, e.g. a £1m + self-dealing claim, there has been no allocation to track prior to the first CMC, and prior to the hearing property is voluntarily transferred back to the estate by the fiduciary without making any admission of liability, i.e. by the allegedly self-dealing executor, this may provide the executor’s counsel will a specious argument that because what else remains in the claim appears to be relatively modest by comparison – and of course where an inventory and account is being sought, it will be an unknown and indeterminate value, that the Fast/Intermediate Track is per se appropriate, and therefore in relation to a claim for the recovery of costs regarding the self-dealing element of the claim, which will require a finding at trial of breach of fiduciary duty unless admitted, that only fixed costs should be awarded.