CPRC has first sight of practice direction to pilot costs budgeting changes

Rule committee also highlights progress on fixed costs determinations and will look at provisional assessment costs cap

A draft pilot practice direction which makes costs budgeting the default in claims worth more than £10m, as well as the new costs budgeting ‘light’ procedure, has gone before the Civil Procedure Rule Committee (CPRC).

It is the first sign of the changes to budgeting that will be introduced following the Civil Justice Council’s costs review, published in May 2023. Its recommendations were accepted by the Master of the Rolls, Sir Geoffrey Vos.

The review said “it should be possible to permit a more tailored approach to costs management, to suit different work types and/or venues where the litigation is conducted”, and should be piloted in different court centres.

It “tentatively identified” some areas where the costs management regime could be more bespoke: personal injury and clinical negligence work (covered by qualified one-way costs shifting (QOCS)), claims progressing in the Business and Property Courts (BPC), and “other specialist work”.

It also introduced the concept of ‘costs budgeting light’ for part 7 cases in the multi-track valued up to £1m. The pilot would test whether this would save both court time and the parties money.

The minutes of the CPRC’s June meeting said the discussion focused on the recommendations for “a more flexible approach to costs budgeting”, rather than other aspects of the review’s recommendations that have not yet been actioned.

His Honour Judge Bird explained that a sub-committee has prepared a new draft practice direction that included claims with a value of over £10m, unless the court decided to exclude them, the reverse of the current position.

The draft provided that litigants in person and claims brought by or on behalf of children would be excluded unless the court otherwise ordered.

The minutes said the PD provided for five categories of case, each limited in certain courts and court centres: BPC claims worth £1m or more; BPC claims worth less than £1m; QOCS claims; non-QOCS claims; and “certain other” non-BPC claims.

A new precedent costs form is also being proposed, modelled on the existing Precedent H.

The minutes said: “A discussion followed, which raised a number of points regarding scope and application, particularly for non-QOCS matters and evaluation.

“It was agreed in principle: to separate out the categories currently incorporated into the one draft PD and cast a collection of draft PDs in response to the feedback and further discussion out-of committee; implementation dates do not need to be the same for each PD.”

The sub-committee – whose other members are District Judge Johnson, Master Kaye and Nick Bacon KC – were charged with reconsidering and producing revised drafting proposals.

CPRC pilots are usually for two years.

Separately, the minutes of the committee’s May meeting were also published this week. These revealed that the new procedure for fixed costs determination has been agreed and, subject to ministerial approval, will be included in the summer CPR update, to come into effect in October 2024.

The sub-committee that drafted it “is very keen to ensure the rules are clear on the difference in concept between assessment and determination and when they can be done together”.

Further, the costs sub-committee has been asked to consider whether the £1,500 + VAT cap on the costs of provisional assessment should be increased in line with inflation, having been the same since its inception in 2012.

The meeting also included questions asked during the CPRC’s annual public session.

One was this: “Some confusion has arisen over the wording with part 36.23(9). This provides that if a part 36 offer was accepted late within the same stage then ‘the defendant is entitled to the fixed costs applicable at that stage’. This suggests that late acceptance within the same stage would nullify any claimant costs entitlement. This appears to be extremely punitive.

“Confusion arises, however, as 36.24(9) provides that where a part 36 offer is accepted late by a claimant, then the defendant would be entitled to ‘applicable fixed costs… less the fixed costs to which the claimant is entitled…’

“This would suggest that a defendant would receive nothing as their entitlement would be the same as the claimant, so the defendant’s entitlement would be nullified. Given the defendant would be responsible for the same level of FRC irrespective of when an offer was accepted within the same stage, then this appears to be logical. Can the committee clarify which interpretation of the rules is intended?”

The minutes recorded this reply: “Mr Justice Trower drew attention to the text in the rule, which reads, ‘to’ [that stage], not ‘at. This point has been considered by the committee and it was confirmed that the use of the word ‘to’ is intentional.

“The inclusion of rule 36.23(9) arose from a query as to who should be entitled to the costs of a stage where both the relevant period had expired and the offer was subsequently accepted within that stage (including whether, and if so how, the costs of that stage should be divided between the parties).

“The decision was that, in these likely rare circumstances, the claimant should be entitled to the costs for the stages up to, but not including, the stage when the relevant period expired, and the defendant should be entitled to the costs for the stage when the relevant period expired and the offer accepted.

“Without this provision, in these circumstances, paragraphs (3)(a)(i) and the full-out in paragraph (8) would likely mean that the defendant would receive no costs notwithstanding the claimant’s late acceptance of the offer.

“The costs for each stage being inclusive of the costs for the preceding stage(s), the defendant’s entitlement to the costs of that stage must be calculated by subtracting the FRC that have accrued in the preceding stages.”

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Published date
10 Jul 2024

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