The recent publication the minutes of the Civil Procedure Rule Committee’s (CPRC) March 2023 meeting reports important progress towards extending fixed recoverable costs or FRC to (a) all fast track claims and (b) all civil claims (bar some defined exclusions) valued at less than £100,000.
There has been limited evolution of FRC regimes following their introduction in 2013 for personal injury claims in the fast track but the (re)confirmation from the CPRC that extended FRC will be introduced from 1 October 2023 is important - described in the minutes as “an exciting development in civil litigation” - and brings widespread ramifications for those claims in scope. Neither the draft rules nor the final costs figures have yet been published, but on close reading of the CPRC minutes several issues stand out.
- Differing transitional arrangements – ie the mechanics of introducing FRC – will not be the same for all claims despite the shared implementation date of 1 October. The arrangements proposed are summarised below. The first of these could precipitate a rush to issue over the next five and a half months in order to preserve costs recovery on hourly rates. The second looks to be the slowest of ‘slow burn’ introductions for injury claims, suggesting that it is unlikely to be until late 2024 or early 2025 before FRC are being sought and paid to any great extent in accident claims. A knock-on effect will be that parties, practitioners and the courts will be dealing with two costs regimes operating in parallel for quite some time, with potentially confusing outcomes.
|Type of claim valued at less than £100,000||Extended FRC scheme will apply when the aspect below is or on after 1 October 2023|
|All civil claims within the general extended FRC scheme||The proceedings are issued|
|‘Mainstream’ personal injury claims (ie accident cases in the main)||The cause of action accrues (effectively accidents after)|
|Disease claims||The letter of claim has not been sent before|
- Excluded claims will be perceived as more valuable. It is likely that the exclusions introduced later in the year will reflect those set out in 2017. Notable types of claims proposed as not suitable for FRC were: mesothelioma cases, clinical negligence claims (which may have a separate FRC regime in the fast track only), cases involving child sexual abuse, housing claims, and “complex” injury and professional negligence claims. It is easy to foresee that retaining an hourly rate costs regime for these claims will make then highly attractive to claimant solicitors.
- Adjusting for inflation by uprating the indicative FRC figures first published in 2017 will be required, with the measure proposed being Services Producer Price Inflation. Our estimate is that the necessary adjustment to 2023 prices looks of the order of at least 14%.
- Rules and Protocols are also key. It is all very well adopting FRC more widely, but the experience of FRC in fast track claims points to the need for clear and rigorous Pre-Action Protocols and standardised Directions to sit alongside the cost figures. The ongoing delay in the publication of these provisions continues to shorten the time available to all stakeholders to plan and adapt to the new regime.
- The new FRC scheme will not be perfect. The minutes take note of “the necessary compromises required as part of the drafting process in order to achieve workable solutions to what are complex issues” and add that “it was not possible to cover all eventualities.” Both remarks may well be understatements. The last wave of costs reforms in 2013 lead to significant litigation to iron out technical points (aka ‘satellite litigation’, generally a pejorative term) and the 2023 FRC changes may follow suit.
- Silence about FRCs for the fast track. Although the CPRC minutes address the extended FRC scheme for those claims valued between £25,000 and £100,000, they provide no indication we could discern about fast track cases, either in (a) revisions, if any, to existing injury FRC figures or (b) the proposed new FRC figures for non-injury fast track claims.
The critical next step will be the publication of the proposed figures for FRC and of the accompanying rules, protocols, and practice directions. Those will allow us to build solutions such as cost/benefit models and FRC calculator tools that will assist our clients and teams in getting to grips with the new regime and in predicting and understanding what will be a new and very different litigation environment.