What does the extension of fixed recoverable costs mean for data protection claims?

On 20 April 2023, the Ministry of Justice announced that the changes to the fixed recoverable costs regime would come into force on 1 October 2023. The extension of fixed recoverable costs to the majority of data protection claims has fundamental implications – both beneficial and detrimental – for the way such claims are brought, defended and settled.

Allocation under the current rules

As part of case management in civil ligation, cases are allocated to a “track” depending on certain factors including value and complexity. The lowest track is the “small claims track” (used where the financial value is £10,000 or lower, or for specific types of claims), followed by the “fast track" (likely to be appropriate for claims worth between £10,000 and £25,000, which are capable of being tried in one day or less). The highest track is the “multi-track” for more complex cases.

Although parties can provide their views on the appropriate track in directions questionnaires, ultimately track allocation is at the judge’s discretion. The allocated track has a direct impact on the way the case is managed and, crucially, the parties’ ability to recover costs in the litigation. For example, in small claims proceedings, “fixed recoverable costs” apply, meaning that parties can only recover court fees and costs in the proceedings capped at a pre-determined amount set out in Civil Procedure Rule 27.14. Only in exceptional circumstances will a court award a greater sum.

Proposed change

On 20 April 2023, the Ministry of Justice announced that the changes to the fixed recoverable costs regime announced in September 2021 would come into force on 1 October 2023. The key changes from 1 October 2023 are:

  1. Fixed recoverable costs will be extended to most cases allocated to the fast track. The fixed costs amounts can be found in table 12 of the new Practice Direction to Part 45 of the Civil Procedure rules. 
  2. A new “intermediate” track will come into force for claims valued between £25,000 and £100,000, which are capable of being tried in three days or less. The aim is that this track will capture less complex cases, traditionally allocated as multi-track. The fixed costs amounts can be found in table 14 of the new Practice Direction to Part 45 of the Civil Procedure rules. 
  3. The fixed costs amounts apply to different stages in the proceedings and vary depending on the complexity of the claim (as set out in Part 26.15 and 26.16 of the Civil Procedure Rules), claim type and value. These figures account for inflation and are due to be revised in three years.

For a more general overview of the changes and implications for defendants and their insurers, please consult our earlier article

Potential implications on data protection claims

Any fixed fee regime incentivises rapid settlement and inhibits any tendency towards the rapid accumulation of inappropriate or unwarranted costs. A side effect of the courts’ approach to damages in claims for breach of the UK GDPR and connected legislation is a growing recognition that claims should often be allocated to the small claims track. The courts have made clear that many data claims are extremely low value - even going so far as to simply reject the most frivolous as “not worth the candle”. Awards at final judgment in cases that reach that point are low – often failing to reach four figures, with actual damages bearing no relation to the often excessive amounts claimants have demanded. 

Trivial issues and minor disputes can and should be handled without recourse to litigation – and where litigation is needed it should not take up excessive court resources and costs incurred should be proportionate to the magnitude of any likely damages.  

Claims for data breach cases are often be coupled with claims for breach of confidence, misuse of private information and common law negligence. The practice of using of multiple heads of claim in relation to the same facts has arisen for two reasons. First, it creates an impression of complexity, which claimants use to argue that their claim is not suitable for the small claims track. Second, since the entry into force of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), most After-the-Event (ATE) insurance premiums are no longer recoverable from the other side, as part of their costs of litigation, with the exception of “publication and privacy” proceedings (claims in defamation, breach of confidence and misuse of private information).  

Extending the fixed fee regime to the fast track and the new intermediate track means that essentially all UK data protection-based claims (regardless of complexity and/or use of multiple heads of claims) will be subject to fixed recoverable costs. For claims to be financially viable, litigants and their solicitors will need to focus on achieving acceptable resolutions quickly using minimal time and resources. Importantly, where settlement is considered, parties will need to bear in mind the fixed recoverable costs regime – seeking £18,000 in costs for a claim that settles for £1,000 pre-action will be neither appropriate nor realistic.

As the changes are not retrospective, a surge in claims is expected in the run up to October. We also expect to see an increase in claims brought by litigants-in-person following the changes, whose cases and funding situation mean that they are not accepted for representation by solicitors’ firms. Litigants-in-person often have a limited understanding of UK legislation and applicable court rules, meaning that handling these claims requires proactive case management by the courts and increases the burden placed on represented parties. To dissuade claimants from bringing frivolous claims, which are more likely where claimants have not received legal advice, defendants must respond robustly to threats of litigation at the initial stage. Legal advice and representation may be needed. 

Our specialist data protection and reputation management lawyers can help you navigate this new development in a cost-efficient way, including dealing with litigants-in-person. Our team can also provide ad hoc support as required to limit irrecoverable costs incurred in such claims.

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Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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