Litigation Changes Ahead
From 1 October 2023, the amount that a successful litigant can recover from the unsuccessful one will be limited by the introduction of a new fixed recoverable costs regime which will apply to most claims worth £10,000-100,000.
It is usual in litigation for the loser to pay the winner's costs and expenses as well as their own.
The changes will not be retrospective and we would therefore recommend that schools review their fee ledgers now with a view to protecting their position on the recovery of costs.
What Is the Current Position?
The amount that can be recovered from an opponent following a successful Court claim are governed by the Civil Procedures Rules.
Claims with a value of less than £10,000 (inclusive of costs) are generally allocated to the Small Claims Track, and the successful party will then be awarded fixed costs (a refund of court fees and legal representative costs of up to £200, depending on the value and steps taken), as opposed to an award of the actual legal costs that have been incurred.
Claims with a value of £10,000 to £25,000 are generally allocated to the 'fast track' and censored with reference to court rules and proportionality. Claims with a higher value, which in fee recovery terms we now see rarely, referred to as 'multi track claims' are subject to a rigorous regime of costs budgeting overseen by the Court, and if a costs liability on conclusion cannot be agreed then are subject to assessment by a Court with reference to those budgets.
What Will Change?
In short:
- A new 'intermediate' track will be introduced for claims between £25,000 and £100,000.
- Claims in the fast and intermediate tracks will be allocated a 'complexity band'. The higher the band the more costs that will be awarded to the successful party, but they will be less than can be claimed under the current regime in most cases.
- Each complexity band will be subject to fixed costs for each stage of the litigation process.
- Parties will only be able to claim more than the fixed costs per stage in exceptional circumstances and/or where the other party's conduct has been unreasonable.
- Those who are litigants in person will be entitled to claim up to two thirds of fixed costs.
- The new regime will also limit the cost benefits of beating offers to settle to an uplift of 35% of the relevant fixed costs.
What Does This Mean for School Fee Recovery?
Most cases referred to us are worth less than £10,000. However we do still see some matters that will be impacted by these changes, for example when legacy payment arrangements fall over or when a family has more than one child at a school.
It can be difficult to predict which claims will be contested, as defences can be raised for the first time long after the fees accrued or the child has left. Given the costs involved in dealing with defended cases, we would recommend that any applicable cases are progressed now, to allow sufficient time for compliance with the relevant protocols (which require at least 28 days to be allowed for a response) and take advantage of the current costs rules.
We are currently experiencing backlogs of up to eight weeks for the County Court Money Claims centre to process claim forms for issue. We would therefore recommend the urgent referral of any cases likely to be affected to us, so we can progress them and commence proceedings where necessary before the implementation of the new rules.