Will I still get my costs back if I win: The Final Countdown to 1 October

Andrew Koffman

This is our latest update as the introduction of a “fixed costs” regime for most civil court disputes, where the disputed amount is over £10,000 up to £100,000, draws ever nearer.

The implementation date is Sunday 1 October.

Our most recent article on this subject was in July 2023, which summarises the new rules as they will be implemented:

What are the main changes?

To recap, the court “fast track” currently covers claims of over £10,000 and up to £25,000.  Anything less than that is usually a “small claim” with limited exceptions.  Anything higher generally goes into the “multi-track” with the winner’s costs being assessed by the court at the end of the case.

The current general rule in the fast track (also with limited exceptions) is that a party that wins at trial can recover costs from their opponent, to be assessed by the court.  The costs awarded generally have to be reasonable and proportionate, so not all costs will be recoverable; and the costs of the trial itself are fixed.

There will be a new “intermediate track” for cases valued at over £25,000 and up to £100,000, but both this and the fast track will be subject to the fixed costs regime.

What about cost recovery?

In both the fast track and intermediate track, issued claims will be allocated to one of 4 bands based on their complexity.  Each of these tracks has a “costs grid” so that for each band of claim there will be a set of costs figures which the winning party in a case can recover for each phase of the case up to trial.

The amount of the claim will also be a relevant factor.  A percentage of the claim can be recovered, in addition to fixed amounts, in all but the simplest fast track cases.

However, as a general rule the amount of work carried out by the lawyers on the case will no longer be a relevant factor in awarding costs as between the winning and the losing party.

The grid will only determine how much the winning party can recover – not the amount they will have to pay their own legal team, which remains a matter to be agreed between the client and the lawyer.  This is likely to leave successful clients with a larger shortfall than before.

Will it be cost effective to take legal action?

On the whole the changes will work to the disadvantage of a business with a seemingly strong case, who will stand to recover less by way of costs than previously.

Can I still take action before the rules change?

The new regime is set to cover cases where the court proceedings are issued on or after 1 October 2023.

In the short term it may still be possible to issue certain types of money claim before that date.  If you are considering issuing a claim for between £10,000 and £100,000 by the end of September we recommend that you seek legal advice urgently and without delay!

There may also be other steps businesses can take to protect or enhance their position, whether in the short or the long term or both, and whether generally or in specific cases or both.

Does the fixed costs regime apply even where there is a different contractual arrangement?

Good question!  It has long been assumed that the fixed costs regime will be overridden where the parties have come to a different arrangement (e.g. in a guarantee contract or a commercial lease it is common for there to be a provision for a party in default to pay “indemnity costs”).  Most commentators have assumed that would be allowed but there is some uncertainty due to the drafting of the new rules.  It seems likely that parties to a contract will still be free to agree different arrangements, but in any event it is hoped that this issue is quickly clarified.

Conclusions

If a business has a claim that would be affected by the change, it may be important to issue (if possible) before the 1 October deadline but there may need to be preparatory steps taken before this is done, so any decisions should be taken without delay.

We will issue a further update once the new regime has come in, as to how it is affecting business disputes in practice.

For further information regarding the changes, please contact Andrew Koffman or a member of our Litigation and Dispute Resolution team.