Fixed Recoverable Costs

The Expanded FRC Regime

Fixed recoverable costs have existed in some form for many years, primarily in low-value personal injury claims processed through the MOJ Portal and in fast track cases. However, the regime was dramatically expanded on 1 October 2023 following Sir Rupert Jackson's recommendations. The new rules introduced the intermediate track for claims valued between 25,000 and 100,000 pounds and brought a much larger proportion of civil litigation within the FRC framework.

The policy objective behind FRC is costs certainty. By fixing the amount of costs that can be recovered between the parties, the regime aims to make litigation more predictable and to reduce the satellite litigation that often arises over costs. For parties and their solicitors, however, the practical effect is that the amount recoverable from an opponent is now capped at prescribed levels, which may be less than the costs actually incurred.

Which Claims Are Covered?

The FRC regime applies to civil claims allocated to the fast track (generally cases valued up to 25,000 pounds) and the intermediate track (cases valued between 25,000 and 100,000 pounds). The rules are found in CPR Part 45.

There are important exclusions. FRC does not apply to:

• Claims allocated to the multi-track (generally over 100,000 pounds or of particular complexity)
• Mesothelioma claims
• Claims under the Human Rights Act 1998
• Proceedings under Part 8 of the CPR
• Certain intellectual property claims
• Claims where the court makes an order for indemnity costs

The transitional provisions are also important. Generally, the expanded FRC regime applies to cases issued on or after 1 October 2023. Cases issued before that date continue to be governed by the previous costs rules, even if they are ongoing.

The Four Complexity Bands

Within the FRC regime, cases are allocated to one of four complexity bands, which determine the level of fixed costs recoverable. The bands are:

Band 1: Simplest Cases

This covers the most straightforward claims, such as road traffic accident personal injury claims where there is no contributory negligence dispute and no counterclaim. Debt claims and other simple money claims also fall within this band. The fixed costs are the lowest of the four bands.

Band 2: Moderate Complexity

This includes employer's liability claims, public liability claims, occupiers' liability claims, and other personal injury claims that do not fall within Band 1. It also covers property damage claims and other money claims of moderate complexity.

Band 3: Higher Complexity

Band 3 covers cases involving more complex issues, such as claims involving allegations of dishonesty, claims requiring oral expert evidence at trial, and cases where there are multiple issues in dispute.

Band 4: Most Complex

This is reserved for the most complex cases within the FRC regime, such as clinical negligence claims within the intermediate track, cases involving multiple parties, and cases raising novel or complex legal issues. The fixed costs for Band 4 are the highest within the regime.

The Intermediate Track

One of the most significant changes introduced in October 2023 was the creation of the intermediate track. This new track sits between the fast track and the multi-track and covers claims valued between 25,000 and 100,000 pounds. Previously, many of these cases would have been allocated to the multi-track, where costs were assessed on an item-by-item basis without fixed limits.

The intermediate track is designed for cases that are more complex than fast track cases but do not require the full case management of the multi-track. Trial length is generally limited to three days, and the number of expert witnesses is restricted. Costs are fixed according to the relevant complexity band and the stage of proceedings reached.

Escaping Fixed Recoverable Costs

The rules include an escape clause under CPR 45.24 that allows a party to recover costs in excess of FRC in exceptional circumstances. To invoke the escape clause, a party must show that the fixed costs would be an unreasonable amount to allow, having regard to the particular circumstances of the case. The court must be satisfied that the case is genuinely outside the norm for cases within the relevant band.

This is not an easy threshold to meet. The mere fact that actual costs significantly exceed the fixed amounts is not sufficient. The court will look for features that distinguish the case from the ordinary run of cases in that band, such as particularly complex factual or legal issues, the conduct of the other party in increasing costs unnecessarily, or unusual procedural complications.

Where indemnity costs are awarded, the case falls outside the FRC regime entirely, and costs are assessed on the standard detailed assessment basis. This can be relevant where the court disapproves of a party's conduct or where Part 36 consequences apply.

Why You Might Need Advice

The FRC regime is complex and its application to any given case depends on multiple factors: the date of issue, the value and nature of the claim, the track allocation, and the complexity band. Getting any of these wrong can have significant financial consequences. A costs lawyer can advise on whether FRC applies, which band is appropriate, and whether there are grounds to argue for escape from the regime. They can also help solicitors understand the costs implications at the outset of a case, so that clients can be properly advised on their potential costs recovery and exposure.

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