88th update to CPR

The 88th update to the Civil Procedure Rules was laid before Parliament on 3 February 2017 and comes into force on 6 April 2017. The update is a mixture of items which will affect all litigators (amendments relating to payment, and sanctions for non-payment, of the trial fee) and matters of niche interest (amendments to procedure in shipping collision cases).

Amongst the items are a couple which are of particular significance to costs law and practice.

Codifying Qader

In the recent case of Qader v Esure , the Court of Appeal considered whether fixed costs continue to apply to matters which start in the portals in accordance with pre-action protocols for low value personal injury claims; subsequently exit the relevant portals, and are later allocated to the multitrack. The court concluded that fixed costs ceased to apply at that point.

The update to the Civil Procedure Rules codifies that result, by adding the words “and for as long as the case is not allocated to the multitrack” to CPR 45.29B (in respect of RTA claims) and 45.29D (in respect of EL/PL claims). Consequently fixed costs will apply up to the point of allocation, following which costs calculated on an hourly rate basis will apply. Such matters will also be subject to costs budgeting.

At the same time, the update to the rules removes the phrase “but not more than £25,000” in the final column of the pre-action rows in tables 6B (RTA claims), 6C (EL claims) and 6D (PL claims). This amendment means that there is no cap on the level of damages which can be subject to fixed costs, provided that the matter was put on the portal at the outset. This is particularly likely to be of relevance in RTA cases where the damages other than vehicle related damages are less than £25,000 but there is a significant level of vehicle related damages. Such claims will be placed on the portal (because vehicle related damages are excluded for determining the portal limit), but if they exit the portal then the fixed costs will be calculable by reference to the agreed damages including vehicle related damages.

Overturning SARPD

SARPD Oil v Addax was a Court of Appeal case which, amongst other things, included the controversial suggestion that the costs management stage was the appropriate forum for a party to raise objections to their opponent’s budget in respect of the incurred costs, and that failure to do so could lead to the incurred costs being treated as agreed.

This has been reversed, to make clear that the court will be concerned solely with the costs to be incurred. CPR 3.15 (1) will be amended to state:

“In addition to exercising its other powers, the court may manage the costs to be incurred (the budgeted costs) by any party in any proceedings.”

The amendment is underlined. The phrase ‘the budgeted costs’ then replaces the word budget throughout CPR 3.15 and 3.18.

In addition, ‘budget’ is replaced by ‘the budgeted costs’ in the updated Practice Direction 3E. Notably, however, paragraph 7.2 is not amended, and will continue to read:

“Save in exceptional circumstances-

(a)    the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% of the approved or agreed budget; and

(b)    all other recoverable costs of the budgeting and costs management process shall not exceed 2% of the approved or agreed budget.”

John M Hayes recently argued successfully that the percentages are calculated by reference to the costs to be incurred only. The reference in the amended rules to ‘budget’, rather than ‘budgeted costs’, may indicate that percentages are intended to be calculated by reference to costs incurred and to be incurred, but it is regrettable that this was not explicitly stated in the rules.

Lee Coulthard is a based in West Yorkshire at our Leeds Office and is widely acknowledged as a technical legal costs authority.  Lee is regularly instructed by receiving and paying parties to appear in court centres throughout England and Wales.  Call Lee direct on 01943 601350 or by email  lee.coulthard@johnmhayes.co.uk

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