Following the 2019 consultation on Fixed Recoverable Costs (FRC), the government has published its intended approach in response, which generally though not entirely, follows the recommendations made by Jackson LJ.
It is intended for this new regime to be introduced at some point in the year 2022.
It will apply to all qualifying cases where the accident date/cause of action is post the date of implementation, save for in disease cases where the letter of claim/notification of claim is the effective date.
FRC will be extended to apply to the majority of fast track cases (i.e. those cases presently with a value of up to £25,000 damages).
The Government has rejected the idea of a separate “intermediate” track and instead intends to simply expand the scope of the existing Fast Track to include claims with a value of up to £100,000 damages.
There are some types of cases that are proposed to be exempt. Namely, Asbestos lung disease cases (not limited to Mesothelioma), complex personal injury, professional negligence, actions against the Police, child sex abuse claims and intellectual property cases.
Judicial Review in immigration/asylum matters are outside the scope of this consultation, though the Home Office is said to be considering some form of FRC for those matters.
The qualifying Fast Track claims will be further allocated to one of four bands based on complexity and/or value. Band One providing the lowest FRC for the simplest lowest value claims and Band Four providing the greatest FRC for the more complex and high value case.
The appropriate allocation to band will be at Judicial discretion on a case by case basis. It is anticipated that a new Practice Direction, similar to CPR 26.8, will be introduced to (i) give guidance on allocation, and (ii) indicate the information the court needs in order to make an appropriate band allocation.
Some guidance is however offered on Banding, such that Credit Hire will fall in to Band One and Package Holiday Sickness claims will fall in to Band Two.
The FRC regime will also include Noise Induced Hearing Loss (NIHL) claims valued at below £25,000 in damages, but with a new process and separate grid of FRC to be introduced for such claims.
It is proposed that there will be certain mandatory actions to be taken by both claimants and defendants in NIHL matters when notifying of a claim and responding to it.
It is proposed that there will be an escape clause from FRC, likely adopting the present “exceptional circumstances” provision to be found at CPR 45.29J.
Counsels’ fees will only be ring-fenced in Band 4 and in NIHL cases.
There are several potential uplifts to the proposed FRC as follows:
- It is proposed to give Part 36 offers greater teeth to drive early settlements and good behaviours. Specifically, where a Part 36 offer is beaten, an uplift of 35% of FRC will apply to the stage during which and those after the relevant period expires.
- It is proposed that the appropriate penalty to be imposed for unreasonable behaviour during litigation will be a percentage uplift on FRC of 50%.
- Where there is more than one Claimant in a case arising from the same set of facts it is proposed to uplift FRC by 25% for each additional claimant.
- The existing provisions for London weighting in FRC regimes, which ‘provide for a 12.5% uplift on fixed costs payable to a party who lives in the London area and instructs a legal representative who practices in the London area’, will apply to the new FRC regime also.
- As to claims brought by vulnerable parties it is proposed that the new FRC regime could cover the specific vulnerabilities set out in the guidance to the legal aid Family Advocacy Scheme, and that a specified, percentage uplift of FRC (25%, in keeping with the 25% bolt-on that is currently available under the Family Advocacy Scheme to those who ‘[have] difficulty giving instructions’ as a result of a verified mental impairment) could be available in respect of parties who meet these criteria, upon judicial certification. Consideration will be given as to how the Directions Questionnaire could be amended to incorporate this percentage uplift.
- In addition the Government recognises that additional disbursements may be needed for specific vulnerabilities (such as where a sign language interpreter may be required).
- An unsuccessful challenge to allocation is proposed to incur a costs liability of £300. However, it is the government’s view that challenging band allocation (or resisting a challenge) without sufficient basis could amount to unreasonable behaviour, incurring further costs penalties as above.
- An unsuccessful band challenge is proposed to incur a costs liability of £150.
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