Fixed costs regime extended to claims worth up to £100,000

The Ministry of Justice has just released the proposed draft changes to the Civil Procedure Rules set out below. The final version will be published in late May. This article concentrates on the application of these changes to personal injury claims.

What claims are covered?

The new fixed cost regime applies in principle to all cases worth less than £100,000 which are suitable for the fast track and the new intermediate track, save for housing claims.  

Claims above £100,000 will be allocated to the multi-track, and in addition the Court rules state that the types of claims listed below must be allocated to the multi-track and so will be excluded from the fixed cost regime:- 

1. A mesothelioma claim or asbestos lung disease claim.
2. A claim for clinical negligence, unless both breach of duty and causation have been admitted.
3. A claim for damages in relation to harm, abuse or neglect of or by children or vulnerable adults.
4. A claim that could be tried by a jury.
5. A claim against the police involving an intentional or reckless tort, or relief or remedy in relation to breach of the Human Rights Act save that this exclusion does not apply to a road accident claim for negligent police driving, an employer’s liability claim or a claim for accidental fall on police premises.

From when will the fixed costs regime apply?

1. Personal injury claims – it will apply where the cause of action/accident occurs on or after 1 October 2023.
2. Disease claims – will apply when the notice of claim is sent to defendant on or after 1 October 2023.
3. Other claims – will apply where proceedings are issued on or after 1 October 2023.

How will it work?

The existing small claims track will remain for claims not worth more than £10,000 where the claim for general damages is not worth more than £1,500.  The fast track will remain for claims worth up to £25,000.  However, there will be introduced a new intermediate track for claims worth between £25,000 up to £100,000.  All claims worth over £100,000 will continue to be dealt with within the multi-track.  

Can a claim be allocated to the intermediate or multi-track and so avoid the fixed costs regime even if it does not qualify on value? 

Yes, it can.
 
A fast track valued claim can be allocated to the intermediate track if the court considers that the trial is likely to last for longer than one day or that oral expert evidence is required in more than two expert fields.
 
A claim worth between £25,000 and £100,000 can be moved from the intermediate to the multi-track if a court considers that the trial will last longer than three days, or that oral expert evidence is likely to be required from more than two experts per party, or the claim is brought against more than two defendants or there are other additional factors that would make a claim inappropriate for the intermediate track. 

How will the fixed costs be calculated?
 
The level of costs recoverable will depend upon the track that the claim falls within, the value of the claim, the stage at which the claim settles (in the fast track there are 5 stages and in the intermediate track 6 stages plus trial covering the period pre-proceedings through to trial), and into which of the newly introduced four complexity bands the claim is assigned. 
 
What are the Four Complexity Bands?

These are to deal with cases of increasing levels of complexity and the higher band the claim is assigned to, the higher the level of costs that are recoverable.

In the fast-track, complexity band 1 is for non-personal injury RTA claims and defended debt claims and so cannot apply to personal injury claims.  Complexity band 2 only applies to personal injury claims started under the RTA protocol or to which the pre-action protocol for the resolution of travel claims applies.  Complexity band 3 will apply to employer’s liability and public liability accident personal injury claims and complexity band 4 to employer’s liability disease claims (other than claims for noise induced hearing loss which are dealt with separately).
 
In the intermediate track, complexity band 1 will apply to personal injury claims where only quantum is in dispute.  Complexity band 2 applies to personal injury accident claims where liability and quantum are in dispute. Complexity band 3 refers to a more complex claim where more than one issue is in dispute and noise induced hearing loss and other employer’s liability disease claims.  Finally, complexity band 4 is for any claim which would normally be allocated to the intermediate track but is unsuitable due to complexity to bands 1-3 including any personal injury claim where there are serious issues of fact or law.

How is the Complexity Band chosen?

The appropriate complexity band is to be discussed between the parties and set out in each party’s directions questionnaire.  The parties may agree the complexity band to which a claim should be assigned, but the court still has the power to assign a different complexity band if it thinks it appropriate to do so.
 
If the parties disagree as to the complexity band, then they must explain why in the directions questionnaire and provide relevant information in support.  The court will then determine the complexity band and serve a notice of assignment of the complexity band at the same time as it serves a notice of allocation to track.
 
The complexity band can subsequently be changed if a change in circumstances which justifies re-assigning the claim to a different complexity band such as an increase in the complexity of the claim as a result of further expert evidence.

Level of costs
 
There are now 15 fixed costs tables with table 1 dealing with pre-action and interim applications, table 11 fixed costs on the EL/PL protocol, table 12 fixed costs in the fast track, table 14 fixed costs in the intermediate track and table 15 fixed costs in noise induced hearing loss claims.
 
I have set out below a few examples on the basis that a standard employer’s liability accident will fall within complexity band 3 within the fast track. I have set out examples for both complexity bands 2 and 3 in the intermediate track, as depending upon complexity accident claims could fall within either band and disease claims will fall within complexity band 3.  I have also set out one example for complexity band 4 as claimant’s solicitors will no doubt argue that higher value cases contain serious issues of fact and law so should be assigned to this band.

Table 1 -Pre-action and interim applications

• Pre-action disclosure application – fast track – complexity band 3 – £250 plus court fee.
• Pre-action disclosure application – intermediate track or noise induced hearing loss claim –£333 plus court fee.
• Interim payment application - £750 plus court fee.

Table 11 – EL/PL protocol

• If claim settles before trial for not more than £10,000 – fixed costs of £900 plus VAT and disbursements.  
• If it proceeds to trial, then fixed costs increase to £1,150 plus VAT and disbursements.
• If claim settles for more than £10,000 before trial – fixed costs of £1,600 plus VAT and disbursements.
• If it proceeds to trial and the judgment is for more than £10,000, then fixed costs of £1,850 plus VAT and disbursements.

Table 12 –Fast track

• Example 1 – complexity band 3 and settles for £10,000 prior to proceedings being issued.
  • Claimant’s profit costs are nil.  This is likely to lead to complaints from claimant’s solicitors who have previously tried to avoid putting claims into the EL/PL protocol so that they are not limited by fixed costs.  
• Example 2 – complexity band 3 and settles for £20,000 prior to proceedings being issued.
  • Claimant recovers profit costs of £4,000 plus VAT and disbursements.
• Example 3 – complexity band 3 and damages of £20,000 are awarded at trial.
  • Claimant recovers profit costs of £11,100, trial advocacy fees of £2,000 plus VAT and disbursements.

Table 14 – Intermediate track

• Example 4 – complexity band 2 and settles for £30,000 after service of defence but before CMC.
  • Claimant recovers profit costs of £11,300 plus £2,000 if a specialist legal representative drafts a statement of case or provides a post-issue advice, plus VAT and disbursements.
• Example 5 – complexity band 3 and settles for £30,000 after service of defence but before CMC.
  • Claimant recovers profit costs of £12,700 plus £2,000 if a specialist legal representative drafts a statement of case or provides a post-issue advice, plus VAT and disbursements.
• Example 6 – complexity band 2 and settles for £30,000 after pre-trial review but before trial.
  • Claimant recovers profit costs of £23,000 plus £3,700 if specialist legal representative drafts a statement of the case/provides post-issue advice and advises in writing/conference following the filing of defence, plus VAT and disbursements.
• Example 7 – complexity band 4 and settles for £90,000 after exchange of evidence but prior to the pre-trial review 
  • Claimant recovers profit costs of £40,200 plus £5,200 if specialist legal representative drafts statement of case/provides post-issue advice and advises in writing/conference following the filing of defence, plus VAT and disbursements.

Table 15 – Noise induced hearing loss

• Example 8 – pre-proceedings liability admitted, papers not prepared to start proceedings and one defendant.
  • Claimant receives profit costs of £2,900 plus VAT and disbursements.
• Example 9 – post-litigation – after the court lists the claim for trial but before trial with two defendants and liability disputed.
  • Claimant receives profit costs of £12,400 plus VAT and disbursements.

London weighting
 
This is an additional 12.5 percent of the payable fixed costs awarded where the claimant lives, works or carries out a business within London or an area served by a county court hearing centre at Bromley, Croydon, Dartford, Gravesend or Uxbridge and instructs a legal representative who practices in any of those areas.
 
Vulnerable party or witness
 
If a party or witness is vulnerable which includes age, physical disability or mental health that has required additional work undertaken and by reason of that additional work alone, the claim for costs is at least 20 percent greater than the amount of fixed recoverable costs, then the court may instead summarily assess the costs or make an order for the costs to be subject to detailed assessment.

Part 36
 
When a claimant accepts a defendant’s part 36 offer within the relevant 21 day period the claimant is entitled to fixed costs in either table 12, 14 or 15 depending upon the value/track to which the claim has been allocated for the stage applicable at the date on which notice of acceptance was served on the defendant together with VAT, appropriate disbursements and fees for specialist legal advice.

Unfortunately, the court rules at present do not explain which track or complexity band will apply if the claim settles before allocation and assignment of complexity band. It is likely that the parties will agree that the value of the claim can be used to assess the appropriate track, but if the parties do not agree the complexity band, an application will have to be made asking the court to determine the appropriate complexity band.
 
If the claimant accepts the defendant’s part 36 offer after the relevant 21 day period has expired, then the claimant will be entitled to fixed costs as above for the stage applicable at the date on which the relevant 21 day period expired, as well as VAT and any recoverable disbursements and specialist legal advice fees.

However, the claimant will be liable for the defendant’s fixed costs for the period between expiry of the 21 day acceptance period and the date on which the offer was accepted. These costs are calculated by taking the amount for costs as set out in either table 12, 14 or 15 for the stage applicable at the date on which notice of acceptance was served on the defendant together with VAT, any applicable disbursements and specialist legal advice fees, and then subtracting from this figure the amount of fixed costs for the stage applicable at the date when the relevant 21 day period expired.
 
If the stage applicable on the date when the relevant 21 day period expires and the stage applicable at the date of acceptance are the same, then the defendant will not be entitled to recover any costs.

Worked example

For the sake of simplicity only dealing with profit costs, if we have a table 14 intermediate track claim complexity band 2, which settles for £90,000 and the relevant 21 day period expired after service of the defence but before the CMC (S3) the claimant would be entitled to profit costs of £18,500 (£7,700 plus 12% of £90,000).  However, if the defendant’s offer is accepted out of time at the stage after inspection of documents but before the later of the dates for service of witness statements or experts’ reports (S5) the defendant would be entitled to fixed costs of £25,400 (£11,000 plus 16% of £90,000).  However, the defendant’s costs would then be reduced by the level of costs at the stage at the stage after inspection of documents but before the CMC (S3)  of £18,500, so it would receive £6,900. The claimant would still recover his costs of £18,500 and so in total the claimant would recover damages and costs of £108,500 less £6,900 which is £101,600.

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