Fraser Barnstaple considers the technical issues around cases that started before the new procedure came into force
Old being ushered out for the new is a recurring theme in the procedural law governing costs, which is carefully and constantly navigated by those in the profession. With these changes comes uncertainty, particularly when there exist no transitional provisions.
This is no less true than for the relatively new fixed costs determination (FCD) procedure. The uncertainty this article seeks to explore is in relation to the following question: to what extent does the FCD procedure operate respectively?
Context
The FCD procedure was introduced on 1 October 2024 and is set out in section X of CPR 45. It is the procedure by which the quantification of costs inter partes is undertaken in cases to which fixed costs apply. The procedure is more arithmetical in nature than an assessment, and the fixed costs for the FCD procedure itself £500 + VAT. Should any hearing be required in relation to the FCD, costs are limited to those in table 1: £250 or £333 (CPR 45.63).
Before the introduction of the FCD procedure, the way of assessing costs in fixed costs cases was the method prescribed by Costs Judge Leonard in Nema v Kirkland (endorsed by the Court of Appeal in Doyle v M & D Foundations & Building Services Ltd [2022] EWCA Civ 927).
This process is a standalone application, something akin to but distinct from a summary assessment. Importantly, the costs of the application itself are not fixed to £500. Those are ordinarily assessed on the standard basis.
The focus of this article is on two specific questions:
- Does the FCD procedure apply to cases which were commenced before its introduction on 1 October 2024, but on or after 1 October 2023?
- Does the FCD procedure apply to cases which were commenced before 1 October 2023?
There is not, at the time of writing, a definitive answer to these two questions. In my experience, these very questions have arisen in the course of litigation. Therefore, the analysis below considers the balance of the arguments each side could raise.
Question 1
Consider the following scenario. A fixed costs case is commenced on or after 1 October 2023 but before 1 October 2024 (or in the case of a personal injury claim, the date of the accrual of action begins on or after 1 October 2023 but before 1 October 2024). The case settles after 1 October 2024, after the introduction of the FCD procedure.
The claimant, entitled to its fixed costs, makes an application pursuant to Nema v Kirkland, rather than initiating the FCD procedure. The paying party takes issue with this, primarily because of the more lucrative costs available to receiving parties when making a Nema v Kirkland application.
A paying party could first go to CPR 45.64, which provides the main rules for the FCD procedure. CPR 45.64(1) begins: “Where, in a claim to which this Part applies…” The argument follows that the new CPR 45 applies to post 1 October 2023 cases, and thus the FCD determination rules explicitly apply.
A receiving party may be hard pressed to counter such an argument.
Question 2
The more finely balanced question is Question 2. The difference between the previous scenario is that it applies to cases that are commenced before 1 October 2023 but settled after 1 October 2024.
Paying parties in this situation have raised the argument that receiving parties incorrectly made a Nema v Kirkland application and therefore the application should be withdrawn, or the costs of the application should be limited to the FCD fixed costs of £500 + VAT.
An argument for the receiving party would be the reverse of the proposition given for Question 1. Namely, the scope of CPR 45.64 encompasses post-1 October 2023 claims. A receiving party could make the point that, if the drafters of the FCD procedure rules intended for the procedure to apply to pre-October 2023 cases, they could have explicitly provided for that.
A relatively simple yet effective thought is that, if one simply looks at the White Book of either 2025 or 2024, the new CPR 45 in which section X can be found states at the top of each page: “Part 45 [From 1 October 2023] Fixed Costs.”
Whilst this does little more than illuminate the wording of CPR 45.64(1) in a more eye-catching way, it still reaffirms the point that this part, including section X, does not apply to pre-October 2023 cases.
The argument would not necessarily end there. A paying party could also have some convincing points to raise.
There is a general presumption against statute being retrospectively interpreted. However, there is a line of authority to suggest that procedural changes are an exception to the general presumption. Therefore, there is no presumption that the procedural changes made in respect of FCD apply only to cases commenced on or after 1 October 2023.
Furthermore, the new fixed costs regime which came into force on 1 October 2023 was subject to transitional provisions, which made clear that the amendments only applied to post 1 October 2023 cases. No such transitional provisions were made in The Civil Procedure (Amendment No 3) Rules 2024, which introduced the FCD amendments into the CPR.
When the technical arguments are put to one side, is there any prejudice to a receiving party if they are restricted to using the FCD procedure?
The change in approach as a result of a new way of quantifying costs only truly affects a party upon conclusion of the substantive litigation. At the point at which the case concludes, the FCD procedure would likely have been already in force, and a receiving party cannot be said to suffer injustice as a result of what would be a retrospective interpretation of section X.
Conclusions
Above is a snapshot of some of the arguments likely to be heard as the changes settle in. The issues will only be temporary as the cases which are pre-October 2023/2024 begin to dwindle in numbers. However, there will a class of cases in which these arguments merit attention.
If a paying party was successful in their objection regarding a receiving party’s failure to use an FCD, the most likely outcome is that the receiving party would be restricted in costs to that which apply to FCDs and any associated hearing.
Therefore, it can be worth putting one’s best foot forward when debating these points.
