A new era in litigation started on 1 October 2023 which dictates that claims up to £100,000 are now subject to fixed costs. This means that a successful party will only be able to claim a fixed amount of costs from the unsuccessful party, irrespective of what their own legal bill will be.
If a case was started and proceedings were issued before this date, the old rules will still apply and there are a few excluded matters including, complex claims, fraud, residential housing claims or if any party is a protected person.
The aim of the new regime is to create certainty, prevent costs from spiralling and will ensure parties are aware of their own liability and recoverability at each stage of the litigation process.
Specific cost strategies will be developed right from the start of the litigation process, given fixed costs are now applicable to pre-action costs as well, to ensure the maximum cost recoverability is achieved, yet simultaneously minimising your own cost exposure.
The way forward will be to refer to various tables which contain fixed costs by reference to differing rules. A link to the tables is here: Fixed Costs Tables.
One of the major changes is the creation of a new intermediate track which relates to claims that are not excluded between £25,000 and £100,000. In order to be suitable for this track the trial should also not last more than three days, there should be no more than two experts giving oral evidence per party and there should not be more than three parties in total.
In addition to the Fixed Costs Tables referred to above there will be complexity bands. Once a claim is allocated to either the Fast Track or the Intermediate track it will be assigned a complexity band which then in turn determines what costs are applicable. A link to the complexity bands is here: Complexity Bands.
The parties can agree the complexity bands and no doubt there will be associated arguments depending on which side you are on, but the Court could ultimately disagree and will make the decision considering amongst other things the value (excluding costs and interest), the claim itself, the complexity, and the number of parties.
What costs are payable also depend on the stage the case is at and whether a specialist legal representative has been involved. Therefore there will be an intrinsic link to what specific stage of the litigation you may be advised to settle at and when or if any potential settlement may in fact be able to be reached because of the stage.
In damages claims, there will be the fixed recoverable costs plus a % uplift for the amount of damages. There is a 12.5% London weighting if the receiving party or their solicitor are serviced by specific Courts examples including Barnet or Gravesend, plus a reduction in respect of the costs awarded to litigants in person. Vulnerable litigants also give rise to an increase as do the costs if someone has been acting unreasonably. Exceptional circumstances could also result in an award outside of the fixed cost regime but it remains to be seen on what basis.
The changes are widespread and case law will determine in due course more certainty.
We would recommend checking your terms and conditions now to ensure the maximum costs recoverability is possible potentially together with mandatory alternative dispute resolution. Advice should be sought from our litigation specialists in this new, evolving landscape.
