Extension of fixed recoverable costs in employer and public liability claims from October 2023
The FRC regime currently applies to RTA, employer liability and public liability claims for damages valued up to £25,000.
The new regime
From 1 October 2023, FRC will be extended across the Fast Track for all civil claims (save for specified exempt claims) and an Intermediate Track will be created for simpler civil claims valued up to £100,000. The extension of FRC is as a result of the government’s response to Sir Rupert Jackson’s supplementary report (published on 31 July 2017) which set out how FRC could apply to different types of claims that are also of higher value.
What personal injury claims are covered and exempt from FRC ?
In relation to personal injury claims, the new rules will apply to accident claims where the cause of action accrues on or after 1 October 2023 and to disease claims only where the letter of claim is sent to the defendant on or after that date.
Some claims are to be excluded from FRC due to their complexity and these claims must be allocated to the Multi Track to which FRCs do not apply. These include claims:
- for mesothelioma or asbestos lung disease
- for clinical negligence unless breach of duty and causation have been admitted
- for harm, abuse or neglect involving children or vulnerable adults
- for which the court could order be tried by jury if satisfied that there is in issue a matter set out under section 66(3) of the County Courts Act 1984 or section 69(1) of the Senior Courts Act 1981
- against the police including a claim for an intentional or reckless tort or relief or remedy in respect of a breach of the Human Rights Act 1998. NB – this exclusion does not apply to an RTA claim arising from negligent police driving, an EL claim, or any claim for an accidental fall on police premises.
Monetary claims less than £100,000 in value will be allocated to the Multi Track rather than the new Intermediate Track where the court considers that:
- the length of trial is more than 3 days
- oral expert evidence at trial is likely to exceed 2 experts per party
- the claim will not be justly and proportionately managed under the regime
- there are additional factors which would make the claim inappropriate for the Intermediate Track.
Complexity bands
The new Fast Track for claims with a value of up £25,000 will have 4 complexity bands in ascending order of complexity with corresponding grids of costs for the various stages of a claim. The parties are encouraged to agree the complexity band and must state the agreed or claimed band in their directions questionnaire but the claim can be assigned to a different band if the court deems it appropriate. Existing Fast Track claims will be assigned to one of the 4 new bands.
Band 1 |
Band 2 |
Band 3 |
Band 4 |
| (a) road traffic accident related, non-personal injury claims; and(b) defended debt claims |
(a) road traffic accident related, personal injury claims which are or should have been started under the RTA Protocol; and(b) personal injury claims to which the Pre Action Protocol for Resolution of Package Travel Claims apply |
(a) road traffic accident related, personal injury claims to which the RTA Protocol does not apply;(b) employer’s liability (accident) and public liability personal injury claims;(c) possession claims;(d) housing disrepair claims; and(e) other money claims |
(a) employer’s liability disease claims (other than a claim for noise induced hearing loss);(b)complex possession and housing disrepair claims;(c) property and building disputes;(d)professional negligence claims; and(e) any claim which would normally be allocated to the fast track, but is nonetheless complex |
The Intermediate Track will also consist of 4 complexity bands. Noise induced hearing loss and other occupational disease claims will typically allocated to Band 3 of the Intermediate Track.
Band 1 |
Band 2 |
Band 3 |
Band 4 |
| Any claim where(a) only one issue is in dispute; and(b) the trial is not expected to last longer than one day, including:(i) personal injury claims where liability or quantum is in dispute; (ii) non-personal injury road traffic claims; and(iii) defended debt claims |
Any less complex claim where more than one issue is in dispute, including personal injury accident claims where liability and quantum are in dispute. |
Any more complex claim where more than one issue is in dispute, but which is unsuitable for assignment to complexity band 2, including noise induced hearing loss and other employer’s liability disease claims. |
Any claim which would normally be allocated to the intermediate track, but which is unsuitable for assignment to complexity bands 1 to 3, including any personal injury claim where there are serious issues of fact or law |
The new CPR 45.1 confirms that the court will have more flexibility to vary the fixed costs that are awarded in each case to ensure that the FRC regime is fair and proportionate in each case. For example, the court may vary the fixed costs if there are exceptional circumstances, such as the complexity of the case or the resources of the parties.
Inflation
The new CPR PD 45 sets out the FRC in FT cases at Table 12 and Table 13. The FRC costs figures set out in the 2017 Jackson report have been uprated for inflation using the January 2023 Services Producer Price Index (SPPI) which is a lower measure of inflation than the retail prices index (RPI). The Ministry of Justice proposes to review the tables of costs and the extended FRC regime more generally in 3 years’ time.
FRC and Part 36
The proposed changes to Part 36 include a new 35% additional amount to be awarded (from the stage applicable when the relevant period expired to the stage applicable at the date of judgment) where the claimant obtains judgment against the defendant which is at least as advantageous to the claimant as the proposals contained in their Part 36 offer. Thus, if a claimant makes a Part 36 offer and the defendant does not accept it, and the claimant is awarded damages equal to or better than its Part 36 offer at trial, the claimant will be entitled to recover its FRC from the defendant, plus an additional 35% from the stage applicable when the relevant period expired to the stage applicable at the date of judgment. The purpose of this new 35% additional amount is therefore to encourage defendants to consider accepting Part 36 offers.
Defendants will not benefit from the new 35% additional amount to be awarded in the event that a claimant fails to beat a Defendant’s Part 36 offer.
Potential of the new regime
Whilst the new regime provides greater certainty about potential legal costs for compensators, it is expected to give rise to the following less advantageous consequences :
- Costs shortfall for the successful party – a successful party is likely to face a shortfall in the costs it can recover compared to the actual costs is has incurred in pursuing the claim. Consequently, this could lead to more solicitor/own client costs assessments due to clients having to pay the balance between what they can recover from their opponent under the FRC regime and what they are liable to pay their solicitor. Solicitors’ bills of costs are therefore likely to attract more scrutiny from clients. QOCS will continue to apply in personal injury claims and successful defendant will be unable to recover their costs under the FRC or at all.
- Satellite litigation – arguments are likely to take place over track allocation and complexity bands.
- Avoidance behaviour – parties may try to prevent a claim from falling within the FRC regime by inflating the value of the claim/arguing the trial will last longer than 3 days/that more than 2 expert witnesses will be required or by trying to contract out of the FRC regime.