At the start of this month, the new Fixed Costs Regime concerning all commercial claims for monetary relief of up to £100,000 came into force. This includes professional negligence and defended debt claims, as well as property and business disputes (housing claims have been deferred until October 2025). Litigation specialist, Brianna Garley, explains.
Fixed Recoverable Costs (FRCs) now apply to claims where Court proceedings have been issued on or after 1st October 2023.
The idea behind the initiative is one of certainty for parties involved in litigation regarding the costs they will either recover or have to pay. The general principle has always been that the party who loses a legal case pays the winner’s costs and, though this remains the case, the new FRC regime now puts limits on that amount. Inevitably, this will be a shortfall between the amount of legal costs recovered, and the amount paid by the winning party.
Tracks and Banding
The reforms mean that there will now be four Court tracks in litigation:
- Small Claims Track – remains up to £10,000 (little will change as most costs aren’t recoverable)
- Fast Track – claims up to £25,000
- A new ‘Intermediate Track’ – simple cases valued between £25,000 - £100,000.
- Multi-Track – complex cases above £25,000
Fast Track and Intermediate Track matters are further broken down into ‘Complexity Bands’.
The Fast Track has four complexity bands; one for simple cases, working up to band four for the most complex.
The Intermediate Track also has four bands:
- Band 1 – simplest claims where there is only one issue and the trial will likely take no more than one day.
- Band 2 – considered a normal, ‘intermediate’ track band when there is more than one issue in dispute e.g. a dispute on both liability and quantum.
- Band 3 – another normal band. For more complex disputes where there is more than one issue in dispute.
- Band 4 – this will be for the most complex cases where there are serious issues of fact/law and the trial is likely to last 3 days.
The amount of FRCs will be calculated by reference to which band the claim falls into. There are detailed tables setting out the sums recoverable for the various stages that can be viewed at https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part45-fixed-costs/practice-direction-45-fixed-costs
Claimants must now state in their letter of claim what track and band the case should be in and the Defendant should also do so in their letter of response.
On allocation, the Judge will allocate to both track and band. Either party may challenge the band but not the track, at the subsequent case management conference. If the only reason for the CMC is the dispute over band assignment, then the losing party on that issue pays £300 to the winner.
Relevant Factors to Band Allocation
- The nature of the claim
- The amount of money in dispute
- Complexity of legal issues
- Number of parties
- Likely length of the litigation process
Cases will follow an expedited procedure:
- Statements of case to be limited to 10 pages. Core documents are served at the same time.
- The witness statements for all of parties will be limited to 30 pages total.
- Oral expert evidence is limited to two per party, with the aim of one per party.
- Each report is limited to 20 pages plus photographs etc.
- The Court will set time limits for oral evidence and submissions.
- In so far as is possible, all applications should be made at the case management conference.
The changes are fairly extensive and so this article has only dealt with them briefly. Further information is available in the CPR https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part45-fixed-costs