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Civil Procedure Rules Update

An update regarding the amendments of CPR 45

CPR 45 has been amended, to introduce a ‘fixed costs determination’ procedure from 1st October 2024. Effectively, there are no transitional provisions and any fixed cost case that currently falls within Part 45 and is resolved after 1st October 2024 will be subject to this new regime.
In all fixed costs cases the parties are now required to set out their fixed costs and disbursements in a new format set out in ‘Precedent U’ (available here) and to provide an explanation for any claim of costs in excess of fixed costs under the various gateways including ‘exceptional circumstances’ [CPR 45.9], ‘vulnerability’ [CPR 45.10], ‘unreasonable behaviour’ [CPR 45.13] and/or pre-defence costs in non-PI cases that are merely capped and not fixed [CPR 45.50(3)].

SUMMARY DETERMINATION AFTER HEARING

Pursuant to CPR 45.63, the parties are expected to have filed the new Precedent U at least 24 hours prior to the final hearing. In absence of agreement between the parties, the court will make a summary determination of the entitlement of the receiving party on costs.

On occasions where the court is unable to make a summary determination on costs at the end of such hearing, the court may direct that those costs be determined with or without a further hearing pursuant to CPR 45.63(3). The costs of any separate determination be treated as an interim application and limited under CPR 45.8 (currently, £250 + VAT on the Fast Track bands 1-3, or £333 + VAT on Fast Track Band 4 or any Intermediate Track, together with any appropriate court fee).

WHERE PARTIES AGREE ON ALL ISSUES, ASIDE FROM COSTS

Where the parties have reached a settlement and agree on all issues aside from costs, any disputes arising from such claims should now be dealt with on paper initially, without the necessity for an oral hearing.

If proceedings have been started, an application must be made under CPR 23, and where proceedings have not been started, the party seeking costs must apply under CPR 45.16 for the commencement of costs only proceedings.

In both cases, any evidence supporting the Precedent U must be served at the same time. The party receiving such an application has 21 days to respond, by filing and serving any evidence they rely upon and responding to the Precedent U (within 21 days of service of the application if proceedings have started, or within 21 days of serving the Acknowledgement of Service if proceedings have not been started). Thereafter, the court will determine the appropriate amount of costs on the papers and the costs of this procedure are fixed at £500 + VAT (Table 17, PD 45).

However, after determination on papers, parties are entitled to request an oral reconsideration of the decision on costs within 21 days. This takes place by way of an oral hearing on the fixed costs. The party doing so, however, must recover 20% more than the original determination (CPR 45.64(8)), failing which they will be liable to pay the fixed application costs (between £250 – £333 + VAT and the court fee as set out above). Obviously, in most cases this represents a high hurdle to overcome as even if a party is successful in adjusting the costs anything less than 20% is likely to represent a pyrrhic victory.

PART 36 DOES NOT APPLY TO FIXED COST DETERMINATIONS

Finally, Part 36 offers do not apply to fixed costs determinations pursuant to CPR 45.66. Accordingly, there is little prospect of increasing the costs of the assessment and the limited gateways to escape fixed costs set out above will rarely be of much assistance either. Realistically, therefore, the maximum fixed costs that may be recovered for this assessment process is just £750+VAT (£500 for the paper determination and a further £250 for the oral reconsideration hearing) which, by comparison, represents a significant reduction on the £1,500 cap on the costs of a provisional assessment.

CONCLUSION

Clearly, these reforms represent a further push by the Civil Procedure Rules Committee to crack down on the costs of arguing about costs. They seem to be part of the court’s relentless drive for efficiency, expediency and proportionality in recent years, and represent yet another significant step change in practice in a tumultuous period. Ultimately, they give the overwhelming impression that the Rules committee do not want to take up any of the judiciary’s previous time dealing with costs disputes and, clearly, going forwards in fixed costs cases such work will not be well remunerated.

Shannon Eastwood & Byron Austin

Atlantic Chambers

December 2024

 

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