One of the likely future battlegrounds arising from the extension of Fixed Recoverable Costs is the issue of what complexity band a matter should be assigned to.
The natural assumption is that claimants will seek to have matters assigned to higher complexity bands (where the recoverable costs will be higher), whereas defendants will seek to have them allocated to lower complexity bands so as to reduce their potential adverse costs liability. This may well be true in personal injury claims, due to Qualified One-Way Costs Shifting (QOCS). However, this may not be the case in non-personal injury matters, at least if the claimant has been properly advised.
Fixed Recoverable Costs cuts both ways. Although a claimant may want to maximise their costs recovery if they are successful, they will equally want to minimise their potential costs exposure if the claim fails. As such, claimants may have just as much interest as defendants in having a claim assigned to a lower complexity band.
Unfortunately, there is virtually nothing within the new rules in terms of guidance as to which complexity band should apply for the new Intermediate Track for non-personal injury matters.
CPR 26.16 sets out the relevant criteria for assignment.
Complexity Band 1 is straightforward. Ignoring claims involving personal injury, it covers:
“Any claim where – (a) only one issue is in dispute; and (b) the trial is not expected to last longer than one day, including – (i) … (ii) road traffic accident related, non-personal injury claims; and (iii) defended debt claims”
So far, so good.
Complexity Band 2, ignoring claims involving personal injury, is then defined as:
“Any less complex claim where more than one issue is in dispute”
The requirement that there is more than one issue in dispute is easy to understand. Less obvious is the reference to “less complex”. Less complex than what?
This appears to be in comparison to claims that are suitable to Complexity Band 3.
However, Complexity Band 3, ignoring claims involving personal injury, is defined as:
“Any more complex claim where more than one issue is in dispute, but which is unsuitable for assignment to complexity band 2”
As with Complexity Band 2, there needs to be more than one issue in dispute. However, the relative complexity is simply defined by reference to Complexity Band 2: “which is unsuitable for assignment to complexity band 2”.
Complexity Band 4, ignoring claims involving personal injury, is no more helpful, being defined as:
“Any claim which would normally be allocated to the intermediate track, but which is unsuitable for assignment to complexity bands 1 to 3”
Therefore, although Bands 2, 3 and 4 are meant to be of increasing complexity, that complexity is simply by reference to the other bands without any objective starting point. This will inevitably generate much judicial inconsistency and satellite litigation.
The Fixed Recoverable Costs increase as you move up the Complexity Bands. The intention was clearly that more complex cases would attract higher Fixed Recoverable Costs. Unfortunately, due to poor drafting this will not always be the case.
Let us say you have two cases of similar complexity where the trials are each estimated to take two days. Both claims are relatively straightforward. In the first case, both liability and quantum are in dispute. In the second case, only liability is in issue.
Neither case will be assigned to Complexity Band 1 as that is limited to cases where “the trial is not expected to last longer than one day”.
The first case will probably be allocated to Complexity Band 2 (“Any less complex claim where more than one issue is in dispute”) or possibly Complexity Band 3 (“Any more complex claim where more than one issue is in dispute, but which is unsuitable for assignment to Complexity Band 2”)
The second case cannot be allocated to Band 2 or 3 as those two bands are restricted to cases where “where more than one issue is in dispute”. The only Band it can therefore go into is Band 4, despite being no more (or perhaps even less) complex than the first case and despite there being only one issue in dispute.
You couldn’t make it up.
Sir Rupert Jackson’s Review of Civil Litigation Costs: Supplemental Report Fixed Recoverable Costs suggested:
“What about non-personal injury cases? Straightforward cases, where only one issue is in dispute (e.g. proving a debt), will generally go into Band 1. Most intermediate track cases will go into Band 2 or Band 3. Complex cases falling within the intermediate track will go into Band 4.”
What made the rule drafters introduce the words “where more than one issue is in dispute” into Bands 2 and 3?