Fixed recoverable costs extension – on its way back out of the long grass

The extension of fixed recoverable costs (FRC) is making a welcome return. In his 2017 report Sir Rupert Jackson recommended the extension of the FRC regime to all civil fast track claims and the introduction of an extended fast track for claims valued at £25,000 to £100,000. The government consultation on those recommendations closed on 6 June 2019 and the recommendations subsequently laid dormant…until now.

The government has today published its response to the consultation confirming that it intends to press ahead with the proposed extensions of FRC. You can view their response here.

Of particular interest is the timing of this announcement coming only weeks after the Master of the Rolls confirmed significant increases in the guideline hourly rates. Those increases were likely to result in a 10-20% increase in the costs in those claims that are now likely to fall within the FRC regime.

The re-emergence of FRC extension is likely to come as welcome news to the insurance industry who have seen consistent costs claim escalation in recent years despite the intentions of LASPO.

The benefits to fixed costs are extensive and include ensuring proportionality together with providing each party with visibility as to the costs of litigation. The introduction of an extended fast track for claims worth up to £100,000 will not only provide savings on third party costs but, through a simplified process avoiding the expense associated with case management of multi-track cases.

The new regime will follow the format of the existing FRC regime with the addition of 4 complexity bands. It has been confirmed that credit hire will be in band 1, that being the band for the simplest of cases. As ever, the devil will be in the detail, but there is a clear support for the existing regime so it’s safe to expect many of the rules to be carried over from that regime. Some additional litigation is likely as the parties get to grips with the new rules in practice. The government has expressly declined to provide further guidance on band allocation, instead stating that it will for “the parties and judges to come to sensible conclusions on banding in light of the criteria set out”. The government have taken steps to control the extent of any satellite litigation, the recoverable costs of a dispute on complexity grounds being limited to only £150 is likely to prove something of a deterrent.

The next step is for the government to work with the Civil Procedure Rules Committee to develop a rule set and plan for delivery of these reforms.

Publication Author:

Paul McCarthy
Partner & Head of Costs