by Kerryn Woollett, Senior Solicitor
Changes to costs are being introduce from 1 October 2023. Part of this reform, is the creation of a new fourth litigation track, the intermediate track, which will deal with claims worth between £25,000 and £100,000.
The changes are being introduced by the Civil Procedure (Amendment No.2) Rules 2023.
Generally, the new regime will apply where proceedings are issued on or after 1 October 2023, regardless of when the cause of action occurred.
CPR 26.9 will provide that cases will be allocated to the intermedial track where:
-the claim is suitable for neither the small claims track nor the fast track;
-the claim includes a claim for monetary relief, the value of which is not more than £100,000;
-the court considers that—
-if the case is managed proportionately, the trial will not last longer than three days;
-oral expert evidence at trial is likely to be limited to two experts per party;
-the claim may be justly and proportionately managed under the procedure set out in Section IV of Part 28; and
-there are no additional factors, which would make the claim inappropriate for the intermediate track; and
-the claim is brought by one claimant against either one or two defendants or is brought by two claimants against one defendant.
There is no definition of “additional factors” though, as an example, this might apply to test cases where the monetary value is low but the ramifications for others not directly involved in the litigation is high.
Claims for non-monetary relief, will not be allocated to the intermediate track unless the court considers it to be in the interests of justice to do so.
CPR 26.13 provides that when deciding the track for a claim, matters the court will have regard to will include:
-the financial value, if any, of the claim;
-the nature of the remedy sought;
-the likely complexity of the facts, law or evidence;
-the number of parties or likely parties;
How a claim is valued
The court determines the financial value of a claim, not the parties. In doing so, the court will disregard:
-any amount not in dispute;
-any claim for interest;
-any contributory negligence; and
-where the claim is, or includes a claim for non-monetary relief, any amount prescribed by rule 45.45(1)(a)(ii) and rule 45.50(2)(b)(ii).
A tactic for a defendant could. Therefore, be to admit part of a claim, for example, if the claimant is claiming the claim is worth £120,000 so that it wouldn’t fall within the intermediate track or be subject to fixed costs, the defendant could admit to part of the claim worth £40,000 which would then bring the amount in dispute to only £80,000 which would then cause the claim to fall within the intermediate track and be subject to fixed costs.
The new regime sets out four bands of complexity for cases allocated to the intermediate track. The higher the banding, the higher the fixed recoverable costs.
Table 2 in CPR 26.16 sets out the complexity band to which a claim will normally be assigned in the intermediate track.
|Complexity band 1||Complexity band 2||Complexity band 3||Complexity 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 Ministry of Justice has refrained from giving further guidance on the bands and instead is leaving this for judges to decide.
The parties must state on the directions questionnaire the complexity band, and if the parties don’t agree as to the band, then they each have to set out which band they say is appropriate and why.
CPR 28.2 will provide that when the court allocates a case to the fast track or intermediate track, the court shall give directions for the management of the case and set a timetable for the steps to be taken between the giving of the directions and the trial.
CPR 28.14(2) sets out the provisions that apply in respect of directions in the intermediate track:
-oral expert evidence is limited to one witness per party, save where the oral evidence of a second expert for any party is reasonably required and is proportionate; and
-the trial time estimate must not exceed 3 days.
And CPR28.14(3) provides that the following provisions apply in respect of directions in the intermediate track, unless the court orders otherwise:
-rules 28.2(3) and (4) apply in respect of disclosure;
-the total length of all the permitted witness statements and witness summaries of a party shall not exceed 30 pages; and
-any expert report shall not exceed 20 pages, excluding any necessary photographs, plans and academic or technical articles attached to the report.
The amount of fixed costs will be set out in Table 14 in CPR 45.50.
The idea behind the fixed costs was to incentivise settlement.
Vulnerability – CPR 45.10 recognises the need for the court to have regard to vulnerability.
The court may consider a claim for an amount of costs (excluding disbursements) which is greater than the fixed recoverable costs where:
-a party or witness for the party is vulnerable;
-that vulnerability has required additional work to be undertaken; and
-by reason of that additional work alone, the claim is for an amount that is at least 20% greater than the amount of fixed recoverable costs.
Unreasonable Behaviour – the biggest potential financial adjustment is for unreasonable behaviour (CPR 45.13) – there will be a 50% adjustment in costs – if the unreasonable party is the paying party e.g. the defendant, they will have to pay the claimant an extra 50% of the recoverable costs amount. If the receiving party is the unreasonable party, then they will only be able to recover half their costs, so they lose 50% of their costs.
Definition unreasonableness is “conduct for which no reasonable explanation”.
London weighting – this is contained in CPR 45.3
Where fixed costs are payable and the receiving party:
-lives, works or carries on business in any area set out in Section II of Practice Direction 45; and
-instructs a legal representative with conduct of the litigation who practises in any of those areas, the fixed costs shall include, in addition to the costs allowable in the relevant Section, an amount equal to 12.5% of those fixed costs (‘London weighting’).
This does not apply to disbursements.
Part 36 – Currently, if a receiving party (e.g. the claimant) makes a good Part 36 offer that goes unaccepted, then they get a 10% uplift and indemnity costs calculated from end of the relevant period.
Under the new regime, the court will not award a 10% uplift or order detailed assessment. What it will do is add a 35% uplift that applies to fixed costs from the stage applicable when the relevant period expired and the stage applicable at the date of judgment (CPR 36.24).
Recovering costs from clients
It is possible to deduct a contribution towards costs from the damages recovered by clients. However, it’s important that clients know, from the outset, what fixed costs are recoverable. They should be informed of what funding is reasonably available even if you don’t provide that.
No client should ever be surprised by a bill they are being asked to pay.
Housing claims are excluded from the new regime.
CPR 45.1(4) Section VI and Section VII of this Part do not apply to a claim or counterclaim which relates, in whole or in part, to a residential property or dwelling and which, in respect of that property, includes a claim or counterclaim for—
save where the claim or counterclaim in respect of the residential property or dwelling arises from a boundary dispute.
The Ministry of Justice have announced that nothing will change in respect of costs for housing claims before October 2025.