Extension of Fixed Recoverable Costs and the new intermediate track: Predictions for credit hire claims

Published 4 julio 2023

High level overview

From 1 October 2023 fixed recoverable costs (FRC) will be extended for claims up to £100,000. For credit hire this means that FRC will apply to all claims where proceedings are issued on or after 1 October 2023.

There will also be the introduction of the intermediate track for cases valued at over £25,000, up to £100,000.  The procedure for the intermediate track is a hybrid of those for the fast track and the multi-track, with more active case management by the courts but with directions still likely to follow a standard pattern.

The intermediate track has four bands for complexity (Existing fast track claims will also be assigned to one of four bands for complexity, but with different criteria).

View the Fixed Recoverable Costs collection here. 

Impact on credit hire claims

• The impact of FRC will be fairly limited as the vast majority of credit hire claims are allocated to the small claims track. Since January 2021, Only 17% of DAC Beachcroft's concluded claims would have been impacted by the FRC costs rules.
• Of the claims that would have been impacted, 89% of claims would have been allocated into the fast track as opposed to the new intermediate track.
• Of those claims that would have been impacted by FRC, the majority were settled post listing or at trial.
• As most credit hire cases impacted by FRC should fall into fast track band one, our data shows that many (but not all) of the most frequent claimant solicitors will recover more under the FRC regime than they do at present.

Predicated behaviours

• Although our data suggests some Claimant solicitors will recover more costs under FRC, we anticipate when looking at their work in progress that they will expect to recover less under FRC. As such we expect that they will try and avoid FRC by litigating ahead of 1 October 2023. We are already seeing increased litigation volumes especially in respect of fast and multi-track cases and we expect this to continue up until 31 September 2023. 
• Whilst the majority of credit hire claims should fall within fast track band one, the costs awarded in band four are approximately four times higher so we could see claimant solicitors advancing arguments that their claim should be allocated into band 4 on the basis of complexity. Expect satellite litigation on this point. 
• We are likely to see claims inflation to increase the value of claims from small claims track to fast track and fast track to intermediate track to maximise cost recovery.
• We are likely to see claimant solicitors not looking to settle claims in early stages as costs increase with the later stages.
• There will be arguments around costs when claims settle pre-litigation. At present standard basis costs are awarded on non-injury claims over £10,000.  After 1 October 2023 offers should be made as damages and FRC.  If this is not accepted, litigation will be needed to resolve the issue so offers should not allow for the damages to be agreed without an agreement on application of FRC.

Solutions

• Protective offers to be made at the earliest stage, by way of Part 36, and preferably pre-litigation (note current Part 36 letters will need to be amended).
• Admissions to limit the sums in dispute on the claim to counter attempts to get into a higher track and achieve a more favourable costs outcome.
• Streamlined and focused arguments to avoid any complexity arguments and claims being allocated into band four in the fast track.
• Any pre-litigation damages settlement on a costs bearing claim between now and 1 October 2023 to be made by a costs inclusive offer or an offer dependant on costs as per current rules and post 1 October 2023 based on the new rules. If not agreed, the only recourse is to litigate and then the costs position is crystalised.
• Ongoing monitoring of behaviours and developing strategies to deal with them.

 
We have compiled FAQs which may be of assistance.

Credit hire fraud

• It isn’t clear from the rules exactly where credit hire fraud cases will fit under the new rules.
• We expect that the claimant community will argue where the matter is of fast track value the matter should sit in band four and attract the most generous costs.
• The majority of credit hire fraud cases are high value, so over the £25,000 threshold but aren't particularly complex as generally these involve exaggeration. Expert evidence is usually limited and cases have often been allocated into the fast track as opposed to the multi-track, but it is not known whether this strategy will be successful post 1 October 2023.   
• We are likely to see increased injury layering to boost the value of the claim.
• Expect more of the same with an extension of the behaviours we are already seeing.

We are hosting a non-injury fixed costs workshop on 26th July, featuring a range of our legal experts including Andrew Parker. Invites will be sent shortly.

For more information or advice, please contact a member of our Vehicle Hire and Damage Team.