The change is aimed at updating the costs assessment process and providing greater predictability for parties involved in legal proceedings. Under the fixed recoverable costs regime, certain types of cases will have predetermined cost limits, reducing the scope for disputes over legal costs. However, because more cases will be determined by the fixed recoverable costs, then it may mean that any costs recovered by the winning party do not cover the actual costs of the case.
Until 1st October, civil claims would fall into one of three tracks: the small claims track, the fast track and the multi-track. Each case is allocated to a track depending on its value and complexity. The small claims track would be used for disputes under £10,000, the fast track would cover disputes between £10,000-£25,000 and the multi-track would cover any claim with a value of more than £25,000 or complex in nature.
The new Fixed Recoverable Costs Regime will apply for any claim under the value of £100,000 which is issued on or after 1st October 2023. A new intermediate track has been introduced for claims with the value of £25,000-£100,000. Part 45 of the Civil Procedure Rules has been amended to reflect these changes.
Fixed recoverable costs will not apply for claims in the multi-track which will now be for all cases with a value exceeding £100,000.
Part 36 offers have been an important tool in litigation, encouraging settlement and penalising parties that reject reasonable settlement offers. The new costs regimes will bring changes to the costs consequences of Part 36 offers. Parties who unreasonably reject these offers may face greater financial penalties, while the system aims to promote earlier resolution of disputes.
The new Fixed Recoverable Costs Regime aims to strike a balance between reducing the costs of litigation and maintaining access to justice. While the fixed recoverable costs may make the legal process more predictable, concerns have been raised about potential barriers to justice, especially for more complex cases that may not fit neatly within the fixed cost limits.
If you have any concerns or queries about how the changes may affect you, please do not hesitate to contact us at Litigation@barwells.com