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Arguments on ‘assignment’ a sign of things to come?
We are now a few days into the world of the new fixed recoverable costs (FRC) regime – and whilst it may be a couple of months before legal practitioners need to put pen to paper on proceedings issued post-1 October 2023, we can see the battles that lie ahead.
Whilst we do not anticipate track allocation itself as being too much of a battleground, we would be naïve to think that assignment to a complexity band will be quite as straightforward.
Inflated quantum and the astute defendant
It is envisaged that a claimant may tactically seek to inflate the quantum of their claim so as to tip their claim out of the fast track and into the intermediate track or out of the intermediate track and into the multi-track, the latter tactic being to contrive to avoid fixed recoverable costs altogether. Likewise, a commercially astute defendant may take matters into its own hands to ensure an allocation into a lower track.
First, when considering allocation, whilst the court is to have regard to the financial value of the claim (CPR 26.13(1)(a)), in doing so, the court ‘shall disregard any amount not in dispute’ (CPR26.13(2)(1)). The opportunity is therefore there for a defendant to, should it wish, admit a sum in its defence which is just enough to have the effect of pulling the claim out of the multi-track and into the intermediate track, or even pulling a claim out of the intermediate track and into the fast track. An early costs v benefit analysis is therefore advised.
If admitting a sum of monies is not, for whatever reason, an option open to a defendant, that does not mean that all is lost where a claimant has inflated quantum. Adopting the premise of the Court of Appeal in Williams v The Secretary of State for Business, Energy & Industrial Strategy  EWCA Civ 852, a defendant could seek to argue that, notwithstanding the claim having been allocated to the multitrack , the claimant’s claim should only attract fixed recoverable costs.
The inherent risk to a claimant in inflating its claim in an effort to manipulate track allocation is that such behaviour may be deemed an abuse of process. A fundamental principle that the court will not allow is its process being abused. There are a string of authorities which support the proposition that it is an abuse of process to deliberately understate the value of the claim on a claim form in order to avoid paying a higher issue fee (Lewis v Ward Hadaway  W.L.R.6 Atha & Co Solicitors v Zoe Liddle  EWHC 1751 (QB)) - so it is not incomprehensible that the same line of thinking will apply to an overstatement of value in order to attempt to manipulate track allocation for the purpose of costs recovery. Whilst striking out a claim for an abuse of process is seen as an absolute last resort, the courts are seemingly more willing to sanction an indecorous party by way of costs perhaps by ordering that a claimant’s claim ought to be subject to the very fixed recoverable costs that it was seeking to avoid?
We foresee these arguments being pulled out of the savvy litigator’s armoury more than we have ever seen before.
Is ‘more complex’ making allocation less complex? We think not.
CPR 26.16 Table 2 seemingly ‘helpfully’ sets out how claims in the intermediate track ought to be assigned. We say ‘seemingly’ as, save as for examples in relation to personal injury, NIHL and employers’ liability claims, there is little by way of other guidance other than whether a claim is more complex than the previous band, the previous band being simply more complex than the one before it.
Whilst we anticipate that the majority of claims are likely to be assigned to band 2 or 3 in the intermediate track – a claim which, prima facie, may look like it is ripe for assignment to band 1, say for example a defended debt claim or a personal injury claim where only liability is in dispute (both of which are unlikely to require more than a one day trial), may find itself unwittingly (but quite rightly) assigned to band 4. Such a scenario may arise where there are allegations of fundamental dishonesty or fraud – such averment is undeniably going to result in the court having to determine ‘serious issues of fact or law.’
In the absence of agreement, the same is going to fall to be determined by the court. Will there be consensus? How long will it take for us to get there?
There has been very little in terms of guidance since Sir Rupert Jackson’s initial proposals in July 2017 – what will the lie of the land be in another five years’ time?
Weightmans is ready for FRC - are you? We have a wealth of materials available to help you navigate the new regime and if you need advice in this area, please get in touch.
Published 29 September 2023
As 1 October 2023 approaches, with legal practitioners and their clients’ conducting war games in anticipation of the likely battles to be had arising from the introduction of the long-awaited extension to the fixed recoverable costs (‘FRC’) regime, it is clear that subtle changes in language will be one such battleground.
The newly constructed Rule 45.13 enabling a party to apply for costs to be reduced/increased by an amount equivalent to 50% of the fixed recoverable costs which would otherwise be payable, where the court ‘considers’ a party has behaved ‘unreasonably’, is ripe for such a battle.
The Rule defines unreasonable behaviour as ‘conduct for which there is no reasonable explanation’. What we find interesting is the use of the word ‘behaviour’ in the Rule and not, as we have come to expect, the word ‘conduct’.
If one considers CPR 44.3(5): costs incurred are proportionate if they bear a reasonable relationship to any additional work generated by the ‘conduct’ of the paying party, amongst other factors; or CPR 44.4(3) in that a court will have regard to the ‘conduct’ of all parties, in particular conduct before, as well as during the proceedings; and the efforts made, if any, before and during the proceedings in order to try and resolve the dispute.
General principles deployed by the court in terms of conduct to date include, for illustrative purposes and not exclusively: -
- Indemnity basis costs as per Excelsior Commercial and Industrial Holdings Ltd , which ultimately became the foundation. Again this defers to (1) the ‘conduct’ of the parties, or (2) other particular circumstances of the case (or both) such as to take the situation out of the norm in a way that justifies an order for indemnity costs.
- Further refined as per Esure Services Ltd v Quarcoo ; defining the use of the word ‘norm’ intended to reflect something outside the ordinary and reasonable ‘conduct’ of the proceedings.
- Wasted costs as per Ridehaugh v Horsefield  established a three stage test: (1) Had the legal representative of whom complaint was made acted improperly, unreasonably or negligently? (2) If so, did such ‘conduct’ cause the applicant to incur unnecessary costs? (3) If so, was it, in all the circumstances, just to order the legal representative to compensate the applicant for the whole or part of the relevant costs.
Having searched various online dictionaries for a common definition of the word ‘conduct’ the consensus of results supported ‘to behave in a particular way’ whereas the consensus of results relating to the word ‘behaviour’ reflected ‘the way that someone behaves, good or bad.’
Have we arrived at a position where the behaviour of an individual is the test and if so, are we entering a the world of Denton and the three-stage test: (1) identify and assess the seriousness of the non-compliance and, if it is a serious or significant breach; (2) consider why the default occurred; and (3) consider all the circumstances of the case, to deal with the application justly?
Is behaviour a pattern of events or a single incident? Who knows?
Whilst change is necessary to evolve, change brings with it inevitable conflict, arguably mitigated when change is complemented with continuity in language.
Nobody wishes to see another raft of litigation akin to the costs wars surrounding the CFA’s. However, it seems almost inevitable that it will not be too long before the Court of Appeal is called upon in one form or another to interpret the new Rules, even if simply to endorse the intention of subtle changes in language.
This insight was written by Principal Associate, Louise Hawkfield: email@example.com, +44 (0)132 228 3155
FRC - the inside track
Published 20 September 2023
On 20 September 2023 we held our virtual Question Time panel event taking a “deeper dive” into the new FRC regime.
Through the knowledge and insights of an experienced panel and with the benefit of continuous interaction from our audience, we were able to get “under the skin” of a new regime that, as of 1 October 2023, is going to be the most significant change to our civil justice system for many years. We asked whether FRC would provide “more costs certainty” or “more questions than answers”?
If you missed it watch the recording of the event on demand below.
Following the event we have prepared a briefing note, and we share our conclusions, which we hope you enjoy reading.
As we made clear, for Weightmans, this is very much the start of FRC, not the end, so keep a look out for future insights and events as we make the FRC journey together.
If you would like us to assist you with any FRC-related queries, please get in touch with the panel and we would be delighted to help.
Request a copy of our Weightmans briefing
Fixed Recoverable Costs - a first review and commentary
Watch our introductory short webinar which deals with the foundations of the new FRC regime.
Further consultation on fixed recoverable costs issues
Published 28 July 2023
With a little over nine weeks until implementation of the new Fixed Recoverable Costs (FRC) regime (previous article below) the Ministry of Justice (MoJ) has added an extra – and unexpected - layer of interest for those of us preparing for the new rules by publishing a consultation on a number of discrete issues relating to the new regime. The consultation, which opened on Friday 21 July will close on Friday 8 September 2023.
The consultation deals with the following specific issues:
- whether to fix the costs of costs assessment – this is not covered by the current Rules and the MoJ proposes allowing a fixed sum of £500 where there is a shortened form of assessment in FRC cases. This figure mirrors that proposed by Lord Justice Jackson as long ago as in his July 2017 report on the extension of FRCs ‘Review of Civil Litigation Costs: Supplemental Report Fixed Recoverable Costs’.
- whether to fix the costs for CPR 8 (costs only) proceedings – as with assessment proceedings, there is currently no provision for fixing the costs of costs only proceedings and the MoJ has proposed allowing sums of either £300 for claimants or £150 for defendants (again, the figures from Jackson’s 2017 report), or the sums allowed for interim applications, as set out in the new Rule 46.14.
- the recoverability of, on a separate basis, inquest costs and restoration proceedings, and how the CPR should deal with this. Again, to deal with a lacuna in the new Rules, it is proposed that the costs of representation at inquests be recoverable separately from the FRCs applicable to any related civil claim arising from a death. The costs should also be recoverable of applying to restore a company to the register within the new intermediate track.
- the recoverability of advocates’ preparation costs where cases are settled late (within two working days of the trial) or are vacated by the court. The MoJ’s initial view here is that such fees should be recoverable, but only in cases on the new intermediate track.
- whether the fixed trial advocacy fees, set out in CPR PD 45, should be further uprated for inflation, and by how much. The MoJ accepts the proposal by Bar groups for a 4% increase to reflect inflation in complexity bands 1-3 of the fast track but is not persuaded by arguments for a 20% increase for band 4 of the fast track, the intermediate track or noise-induced hearing loss claims.
- whether to make it explicit in CPR 26.9(10)(b) in respect of clinical negligence claims, that an early admission of liability must be made in the pre-action protocol letter of response. The new |Rules provide that such claims could only be admitted to the intermediate track in the event of an admission of both breach of duty and causation and the MoJ proposes that the Rules be clarified to reflect the fact that such an admission has to be made in the Pre-Action Protocol Letter of Response.
When the CPRC signed off and published the draft Rules and Practice Direction back in March, they noted that publication at that stage was intended to give the profession – and other stakeholders affected by the changes – as much time as possible to prepare for the new regime, arguably the most significant procedural change in civil litigation since the introduction of the CPR back in April 1999.
The issues which are the subject of this consultation are either not covered by the new Rules/PD or have arisen during the course of the widespread discussion and debate which has taken place across the profession in the four months since publication of the details of the new regime. It was inevitable that there would be areas which had not been covered by the new Rules, but what the MoJ appears to be doing in launching this consultation on the issues identified at this stage is to prevent an explosion of satellite litigation (and potentially, the associated paralysis while ‘test cases’ were pursued) around the areas of uncertainty, or where there are (agreed) gaps in the new Rules. Following the consultation, the suggestion is that any amendments could be made to the CPR in April 2024, without jeopardising the implementation date of 1 October 2023. There does not seem to be any appetite for delay, at least on the part of the Government.
We will be continuing to monitor developments with the consultation and the wider FRC initiative as the implementation date approaches and will provide further analysis and insight.
Increased certainty from October 2023 — the extension of the fixed recoverable costs regime
Published 27 April 2023
On 20 April 2023, the Civil Procedure Rule Committee published the draft rules that will govern the extension of the fixed recoverable costs (FRC) regime from October this year. This extension is long-awaited, having been confirmed by the Government in September 2021 in its response to Lord Justice Jackson’s 2017 report on Fixed Recoverable Costs and confirmation that implementation was postponed until October was provided in November 2022. However — it’s happening and it is anticipated that the final version of the rules should be published at the end of May, the CPRC having previously committed to providing practitioners with as much notice of the detail of the new regime as possible.
It was confirmed earlier this month that the new FRC regime — for most money cases worth up to £100,000 — would apply in cases where proceedings are issued on or after 1 October, although, crucially, for personal injury claims, the new rules will apply only where the cause of action accrues on or after 1 October 2023, and will only apply to disease claims where the letter of claim has not been sent to the defendant before that date. Disease practitioners should note that, in respect of noise-induced hearing loss claims, the new rules implement the recommendations of the Civil Justice Council working group on fixed costs for these claims — full details can be found in Section VIII of Part 45 of the Civil Procedure Rules.
The Ministry of Justice had previously proposed that some claims, due to their complexity, should be excluded from FRC. These are set out in rule 26.9(10) of the new draft rules and include mesothelioma or asbestos lung disease claim, a claim for damages in relation to harm, abuse or neglect of or by children or vulnerable adults, a claim that the court could order to be tried by jury if satisfied there is in issue a matter set out in section 66(3) of the County Courts Act 1984 or section 69(1) of the Senior Courts Act 1981 and claims against the police involving an intentional or reckless tort, or relief or remedy in relation to the Human Rights Act 1998. Note however that this exclusion does not apply to a road accident claim arising from negligent police driving, an employer’s liability claim, or any claim for an accidental fall on police premises.
In addition, the Ministry of Justice has delayed the application of FRCs to housing cases for two more years from October 2023.
The new fast track for claims with a value of up £25,000 will have four complexity bands (one to four in ascending order of complexity) with corresponding grids of costs for the various stages of a claim. Table 1 in the new Part 26.15 of the Civil Procedure Rules sets out the complexity band to which fast track claims will normally be assigned and whilst the parties are encouraged to agree the complexity band and have to state the agreed or claimed for band in their directions questionnaire, nevertheless 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 four new bands.
(a) road traffic accident related, non-personal
(b) defended debt claims
(a) road traffic accident related, personal injury
(b) personal injury claims to which the Preaction Protocol for Resolution of
(a) road traffic accident related, personal injury
(b) employer’s liability
(c) possession claims;
(d) housing disrepair claims; and
(e) other money claims
(a) employer’s liability disease claims (other
(b) complex possession and housing disrepair claims;
(c) property and building
(d) professional negligence claims; and
(e) any claim which would
There will also be a new, intermediate track to which simpler multi-track cases valued at up to £100,000 will be allocated. Procedurally, something of a mix of the fast and multi-tracks, this too will consist of four complexity bands (again, one to four in ascending order of complexity with the corresponding grids of costs) and as with the new fast track, the complexity band to which these claims will normally be assigned is provided, this time in Table 2 in the new Part 26.16 of the CPR. The same rules apply in respect of the parties being encouraged to agree the band but again, with the court having the final say.
(b) the trial is not expected to last longer than one day, including:
(i) personal injury claims
(iii) defended debt claims
Any less complex claim
Any more complex claim
Any claim which would normally be allocated to
Healthcare practitioners should note that the introduction of FRC to clinical negligence claims worth up to £25,000 will not happen at this time, unless both breach of duty and causation have been admitted. All other cases will be dealt with through a separate process run by the Department for Health and Social Care, with its response to a consultation that closed a year ago still awaited.
Also worthy of note is that the FRC costs figures themselves set out in the 2017 Jackson report have been uprated for inflation. However, this has been done 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 three years. In addition, the table of HMRC fixed commencement costs which were previously located in Table 7 of Part 45 has been simplified and is now at Table 11 in Part 45.
Further information about the Civil Procedure Rule Committee and the draft rules can be found on the Civil Procedure Rules Committee website and we will be commenting further on the implications of the new rules in due course.