Significant reform to costs recovery in the civil justice system is now imminent. With effect from 1 October 2023, new rules regarding fixed recoverable costs will apply, including the introduction of a new ‘intermediate track’. Nick Booth from our dispute resolution team offers a brief update about the change and the implications for litigants.
Allocation and Tracks
At an early stage in the court process, the court allocates a claim to a particular “track”. Existing tracks include the “small claims track”, the “fast track” and the “multi-track”.
Claims are allocated to a specific track having regard to several factors, including the financial value (if any) of the claim, the nature of the remedy sought, the likely complexity of the facts, law or evidence, and the amount of oral evidence which may be required at trial. This allocation process is very important, because the different tracks have different rules about the recoverability of costs.
For example, in multi-track cases (which is currently the appropriate track for claims valued at more than £25,000), in the case of a clear-cut success at trial, as a general rule of thumb a party might expect the court to order that the other side pay around two-thirds to three-quarters of their legal costs; in other words, even where a party wins, they will be left with some degree of costs shortfall which they will need to bear.
In small claims track and fast track cases, the rules are more restrictive and certain fixed costs apply to cases progressing in those tracks. For example, in the small claims track, which ordinarily applies to cases with a value of £10,000 or less, the default position is that you are likely only to recover a very small and fixed amount of costs.
The new Intermediate Track
With effect from 1 October 2023, changes are being introduced to the existing regime, and as part of these changes, a new “intermediate track” will come into force. The intermediate track will be the normal track where:
- The claim is issued on or after 1 October 2023;
- The claim is suitable for neither the small claims track nor the fast track;
- The claim is for “monetary relief” with a value of more than £25,000 but not more than £100,000;
- The trial will last no longer than 3 days;
- Oral expert evidence is likely to be limited to two experts per party;
- The claim is brought by one claimant against no more than two defendants or by no more than two claimants against one defendant;
- There are no additional factors which would make the claim inappropriate for the intermediate track.
If your claim includes a claim for a non-monetary remedy, such as an injunction, the claim will not be allocated to the intermediate track unless the court also considers it to be in the “interests of justice”.
Fixed costs under the Intermediate Track
Allocation to the intermediate track will mean that the costs (and disbursements) which the court may order to be paid will be fixed. The level at which costs will be fixed will depend on the complexity of the claim, the phase of the litigation reached and the particular work carried out. A copy of the content of ‘Table 14’, which is contained within the new rules and which sets out the amount of fixed costs recoverable in the intermediate track, can be found here.
The risk for litigants in cases issued on or after 1 October 2023, in relation to cases allocated to the new intermediate track, is that the overall level of costs which are ordered to be paid by an unsuccessful opponent may well be lower than the amount which would be ordered under the existing multi-track regime; thus potentially leaving successful parties with a greater shortfall in what can be recovered from opponents.
One possible way to avoid the potential consequences set out above may be to issue proceedings before 1 October 2023, although time is fast running out and litigants should be mindful of the requirements of any applicable pre-action protocol, which sets out steps that should ordinarily be taken before issuing a claim, and the potential consequences of failing to comply with it.