Three Years On: Why Intermediate Track and Complexity Band Disputes Are Only Just Beginning
Written by Nick McDonnell, Director and Costs Lawyer, Kain Knight Manchester.
When the expanded Fixed Recoverable Costs (“FRC”) regime came into force on 1 October 2023, much of the commentary focused on the new rules themselves. We, along with many other legal practitioners and costs specialists, analysed the procedural changes, the new tables of recoverable costs, and the mechanics of the Fast Track and Intermediate Track.
Nearly three years later, however, we are beginning to see what may prove to be the most significant practical battleground of the regime: disputes about allocation to the Intermediate Track and, perhaps even more importantly, disputes about complexity band assignment.
This timing is no coincidence.
The Three Year Delay
The majority of personal injury claims remain subject to a three-year limitation period. Inevitably, many claims that accrued shortly after 1 October 2023 have only recently been issued, often towards the end of that limitation period.
Those claims are now reaching the allocation stage.
It is at allocation that courts must determine not only whether a case belongs on the Fast Track, Intermediate Track or Multi-Track but, where the Intermediate Track applies, which of the four complexity bands is appropriate.
The consequence is that the issues practitioners anticipated in 2023 are only now beginning to arrive in greater numbers and, in many respects, we are only now entering the first real wave of litigation concerning the practical application of the new regime.
Why Banding Matters
Unlike the previous costs landscape, the financial consequences of complexity banding can be substantial.
Moving a claim from one band to another may alter recoverable costs by many thousands of pounds over the lifetime of litigation. The issue is, therefore, far more than an administrative classification exercise.
It directly affects:
- recoverable legal costs;
- litigation strategy;
- proportionality of work undertaken;
- settlement negotiations;
- Part 36 tactics; and
- the commercial viability of pursuing or defending claims.
Given those consequences, it is unsurprising that parties are increasingly willing to contest banding decisions.
The New Tactical Battleground
In many claims, liability and quantum are reasonably predictable. The costs consequences, however, are not. A dispute over whether a claim belongs in Complexity Band 2 or Band 4 can become every bit as valuable as a dispute over damages.
For Claimant representatives, there is an obvious incentive to argue that the litigation justifies a higher band. For Defendants, there is an equally obvious incentive to contend that the case is routine and should remain in a lower band.
Neither position is inherently wrong.
The CPR deliberately requires the court to evaluate the individual characteristics of each case. The result is that allocation hearings increasingly involve detailed submissions regarding complexity, evidence, expert requirements, legal issues and case management.
Expect More Reported Decisions
Whenever a new procedural regime is introduced, uncertainty is inevitable. Initially practitioners rely upon the wording of the rules. Eventually the courts begin interpreting those rules. Only after a body of authority develops does consistency emerge.
The Intermediate Track is only now beginning to follow precisely that pattern.
During the next few years we can expect increasing numbers of reported decisions addressing questions such as:
- what makes a case sufficiently complex to justify Bands 2, 3 or Band 4;
- when multiple experts genuinely increase complexity;
- how allegations of fundamental dishonesty affect banding;
- whether novel legal issues justify higher classification;
- the significance of factual complexity;
- the relevance of multiple parties;
- how vulnerability impacts case management; and
- when claims should properly leave the Intermediate Track altogether.
Each decision will gradually build the framework practitioners need.
Front-Loading the Evidence
One consequence of the new regime is that allocation arguments cannot simply rely upon broad assertions. Practitioners increasingly need to explain, with precision, why the litigation possesses the characteristics of a particular band.
That means considering matters such as:
- the factual matrix;
- the volume of documentary evidence;
- anticipated witness evidence;
- expert disciplines;
- causation issues;
- legal complexity;
- allegations requiring extensive investigation;
- procedural complications; and
- trial management requirements.
The stronger the evidential foundation presented at allocation, the more likely it is that the court will reach the desired conclusion.
Costs Lawyers Have an Increasing Role
Historically, allocation was often viewed primarily as a procedural issue for litigators. Under the FRC regime, it is becoming a significant costs issue. Understanding the interaction between CPR Part 26, CPR Part 28 and CPR Part 45 is becoming increasingly important.
Equally important is appreciating the financial consequences flowing from allocation decisions and ensuring that submissions are properly supported by both the procedural rules and emerging authorities.
Many firms are therefore seeking specialist advice at a much earlier stage than they previously would have done.
Looking Ahead
The first three years of the expanded FRC regime have largely been about preparation. The next three years are likely to be about interpretation.
As more limitation-period claims progress through allocation and towards trial, practitioners can expect increasing judicial guidance on the operation of the Intermediate Track and the complexity bands.
For those practising in civil litigation, these disputes are unlikely to be an occasional procedural point. They are becoming a routine feature of modern litigation.
Those who develop a detailed understanding of the allocation criteria, the band descriptions and the inevitable case law that will emerge, will be well placed to advise clients strategically and maximise costs recovery.
One thing seems clear. The real litigation over the expanded Fixed Recoverable Costs regime is not beginning despite the passage of time, it is beginning because of it.
Here at Kain Knight, we are already seeing a significant increase in referrals relating to Intermediate Track allocation and complexity band disputes. If your firm is facing a contested allocation or wishes to maximise recoverable costs under the FRC regime, obtaining specialist advice at an early stage can make a substantial difference to the outcome.
