Intermediate Track and Fixed Costs - a brave new world?

New rules are set to take effect on 1 October 2023, which will include the establishment of an intermediate track for claims ranging from £25,000 to £100,000. Prior to the new rules coming into effect, such cases would have been allocated to the multi-track. Mari Roberts and Christopher Watkins report.

Introduction

The new rules are being introduced under The Civil Procedure (Amendment No.2) Rules 2023 and the accompanying update of Practice Directions (the 156th update since the CPR came into existence!). The new regime will apply to where proceedings are issued after 1 October 2023, save for personal injury cases, where the new rules only apply where the cause of action accrued after 1 October 2023.

The procedure for the intermediate track is a hybrid of those for the fast track and the multi-track, involving more active case management by the courts, but with directions still likely to follow a standard pattern. A crucial part of the change is that the new fixed recoverable costs regime is being put in place to cover cases allocated to the fast track and the intermediate track.

The intention behind the changes

The reforms aim to ensure greater certainty and proportionality in legal costs across a broader range of civil claims. They seek to enhance access to justice and facilitate informed decision-making throughout the litigation process, with a particular focus on cost reduction.

What does it apply to?

Intermediate track cases will encompass civil cases that meet the following criteria:

– The claim is valued between £25,000 and £100,000.

– The trial is expected to last no more than three days.

– The use of oral expert evidence is likely to be limited to two experts per party.

Cases of greater complexity will be directed to the multi-track regime, where the extended fixed costs scheme will not be applicable. Additionally, the new intermediate track will introduce new standard directions.

The intermediate track will sit between fast track and multi-track cases, applying to claims for both monetary relief, non-monetary relief, and mixed claims. However, a claim containing a non-monetary relief component will only be allocated to the intermediate track if the court deems it to be in the interests of justice.

Exclusions

The following cases are excluded from the intermediate track:

– Claims for mesothelioma or other asbestos lung diseases.

– Claims for clinical negligence, unless both breach of duty and causation have been admitted.

– Claims for damages related to harm, abuse, or neglect of or by children or vulnerable adults.

– Claims that the court could order to be tried by a jury.

– Claims against the police involving an intentional or reckless tort or relief or remedy related to the Human Rights Act 1998.

Note that this exclusion does not apply to road accident claims, employer’s liability claims, or accidental falls on police premises.

Fixed Recoverable Costs

The fixed recoverable costs regime will apply to all cases in the fast track and the new intermediate track, with limited exceptions. However, specific provisions will be in place for vulnerable parties and witnesses. Claims for possession, disrepair, and unlawful eviction concerning residential properties are excluded from the fixed recoverable costs regime for the time being. In most cases, the recoverable costs will be lower than what could have been recovered under the standard basis time costs regime.

The fixed costs regime figures will usually be reviewed every three years, and the Ministry of Justice is proposing to increase the figures in April 2024 to cover inflation. There is also a ‘London weighting’ provision where the receiving party will be entitled to recover an additional 12.5%.

Complexity Bands

Both the fast track and intermediate track will consist of four complexity bands (with some exceptions), and each case must be assigned to both a track and a complexity band. While the parties may agree on a complexity band, the court retains discretion to assign a case to the band it deems appropriate. In addition to allocation hearings, a claim may also require an assignment hearing to determine the relevant complexity band. The complexity bands are defined in a way that is not overly prescriptive, allowing room for disagreement.

The assigned complexity band and the stage the claim has reached will determine the level of fixed recoverable costs allowed. The more complex the claim, the higher the fixed costs, starting with band 1.

Complexity Bands and Fixed Costs in the Intermediate Track

Complexity Band 1

This band covers any claim where only one issue is in dispute, and the trial is not expected to last longer than one day. It includes:

– Personal injury claims where liability or quantum is in dispute.

– Non-personal injury road traffic claims.

– Defended debt claims.

The fixed costs in complexity band 1 are the lowest available under the new fixed costs regime. For example, in band 1 the cost for the attendance of a trial advocate on the first day of trial is £3,200.

Similarly, the costs recoverable from pre-issue up to and including the date of service of the defence is just £1,600 + an amount equivalent to 3% of the damages.

Complexity Band 2

This band encompasses less complex claims where more than one issue is in dispute, including personal injury accident claims where both liability and quantum are in dispute.

In band 2 the fixed cost for the attendance of a trial advocate on the first day of trial rises to £3,500.

The fixed cost from pre-issue up to and including the date of service of the defence is £5,000 + an amount equivalent to 6% of the damages.

Complexity Band 3

This band comprises more complex claims with multiple disputed issues, unsuitable for assignment to complexity band 2. It includes noise-induced hearing loss and other employer’s liability disease claims.

In band 3 the cost for the attendance of a trial advocate on the first day of trial is £4,000.

The fixed cost from pre-issue up to and including the date of service of the defence is £6,400 + an amount equivalent to 6% of the damages.

Complexity Band 4

This band includes any claim that would typically be allocated to the intermediate track but is unsuitable for assignment to complexity bands 1 to 3, such as any personal injury claim with serious issues of fact or law.

In band 4, the fixed costs are the highest available under the new fixed costs regime.

The cost for the attendance of a trial advocate on the first day of trial is £5,800.

The fixed cost from pre-issue up to and including the date of service of the defence is £9,300 + an amount equivalent to 8% of the damages.

Satellite litigation

Fixed costs can vary greatly depending on the complexity band that you are placed in by the Court. This could well lead to disputes between the parties as the financial implications of the allocation decisions are significant.

There is going to be uncertainty for parties during litigation as to what the recoverable costs will look like, as under Part 26 allocation will be at the discretion of the Court. The difference is significant, a multi-track case is not covered by the new fixed costs regime whereas an intermediate track case is. A Claimant may therefore “over-egg the pudding” and seek to inflate the value of their claim in order to fall into the multi-track and avoid fixed costs.

This uncertainty raises the prospect of satellite litigation, with parties disputing track allocation and complexity bands within the intermediary track.

Conclusion

It has been stated that the introduction of the intermediate track aims to strike a balance between efficient case management and standard procedures, with a focus on providing greater cost certainty and proportionality to improve access to justice. However, the implementation of these changes and the potential ambiguity surrounding track allocation and complexity bands, in particular, may well have the opposite effect and lead to an increase in costs for the parties (which may well not be recovered) because of disputes and an increase in satellite litigation.

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