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The Civil Procedure Rules Committee has proposed vast changes to the amount of costs a successful party will now be able to recover from the losing party in civil litigation. Starting from 1 October 2023, the new regime will apply to most claims issued on or after that date with a value of up to £100,000 (with some limited exceptions).
Once a civil litigation claim is defended, the court allocates the dispute to either the small claims track, the fast track, or the multi-track, depending on the value and complexity of the claim. As things stand, the amount of the costs you can recover in the fast track and multi-track (solicitors’ fees, expert witness fees, court fees etc.) is determined by the court if the parties cannot agree them. The new proposals introduce a fourth track, the new ‘intermediate track’, and impose fixed fees or Fixed Recoverable Costs (FRC) for all claims valued up to £100,000.
Under the new regime, the fast track will remain for claims worth up to £25,000, the intermediate track will hear claims worth £25,000 to £100,000, and all claims worth more than £100,000 will continue to be dealt with in the multi-track. The court may also allow any disbursements and VAT which have been reasonably incurred, as long as there is no double recovery.
It should also be noted that, in limited circumstances, the court will consider costs which are in excess of the new FRC limits. However, this will only be the case where there are “exceptional circumstances”. Unfortunately, there is currently no guidance on what those exceptional circumstances might be.
The new regime will apply to personal injury claims where the cause of action occurs on or after 1 October 2023, and to civil litigation claims where proceedings are issued on or after 1 October 2023. The changes proposed under the new scheme will not apply to housing claims until at least October 2025.
Since the new regime does not limit what legal practitioners can charge their clients, any shortfall in legal costs must still be covered by the claimant. Courts are likely to see a rush of new civil litigation cases being filed and issued in the final months leading up to 1 October 2023 as those with claims of up to £100,000 in value continue to consider issuing now to maximise the amount of costs they can recover.
We would be more than happy to assist you by providing advice on ongoing or anticipated civil litigation claims in the run up to 1 October 2023 and beyond. If you require assistance in this regard or would like to make an enquiry with one of our expert solicitors, then please do not hesitate to contact our Real Estate Disputes team.
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