The Introduction of the Fixed Costs Determination process
We are now one year on from the extension of the fixed recoverable costs regime to include all types of civil litigation claims with a value of up to £100,000.00. The number of cases which fall within the extended scheme has been growing, and in light of the limited and untested guidance when it comes to allocation to tracks and recoverability of disbursements, this has had the inevitable knock-on effect of increasing the likelihood of the number fixed costs disputes which arise.
As such, the CPR has been updated to introduce the new Fixed Costs Determination (FCD) streamlined process and a new Precedent U.
Precedent U
The new Fixed Costs Determination process is set out in the amendments to CPR 45 in a new Section X and sets out the circumstances for when a Precedent U should be prepared and filed. Precedent U is an Excel based precedent and is split into three sections.
Section A acts as the front page and includes the usual claim details. It requires a receiving party to confirm the allocated track and banding that has been applied in addition to details of the value of the claim. There are sections provided to detail the fixed costs, disbursements and Court fees which are sought. Reference is required to the stage or rule to which each item claimed relates to. Finally, Section A concludes with a statement of truth confirming the belief that the costs stated are correct. Additionally, it also requires confirmation that the fees of any specialist legal representative and disbursements incurred in the amounts stated will be paid to the persons stated.
Section B serves as a quasi-Precedent G and provides the receiving party the opportunity to explain the costs sought. Alongside this it provides space for the paying party to make a counter offer and set out their challenges. Finally, space is provided for the Court to annotate and record their decision in respect of each item sought under the FRC regime.
Section C is a separate section and provides for the receiving party to make submissions for a claim for costs under CPR 45.9 (claim for costs exceeding FRC where there are exceptional circumstances), 45.10 (claim for costs exceeding FRC where a party or witness is vulnerable and that vulnerability has resulted in additional work), 45.50(3) (costs for stage S1 are subject to assessment up to the maximum figure show, except in personal injury claims) and/or 45.13 (where there are allegations of unreasonable behaviour). Section C requires an N260 to be prepared and submitted in respect of the additional costs sought. It also provides space for the paying party’s response to those costs claimed.
Summary assessment of fixed costs following the conclusion of a hearing
CPR 45.63 introduces a provision for fixed costs to be subject to summary determination at the conclusion of a hearing. Any party who intends to claim fixed costs or disbursements must file and serve a completed Precedent U no later than 24 hours before the time fixed for the hearing. If the Court is unable to make a summary determination at the conclusion of a hearing it may direct that the fixed costs and disbursements be determined without a further hearing and may give directions for the determination as it thinks fit. The costs that determination shall be treated as if it were an interim application under CPR 45.8.
The Fixed Costs Determination process following compromising a claim
Where all matters, save for costs, are agreed without a hearing, an application will be required to apply a FCD to take place. In litigated matters this will require an application to be made in those proceedings under Part 23. In non-litigated matters, costs only proceedings will be required to be commenced together with a Precedent U and any supporting evidence for the costs claimed.
In either case, the paying party are required to respond within 21 days by preparing their responses within Section B and C within the Precedent U. The Court will then determine the costs without a hearing by annotating their decisions on the Precedent U.
Costs of the process will be capped at £500 plus VAT as set out in a new table 17 (plus court fee).
Right to Appeal a Fixed Costs Determination
There will then be an opportunity to challenge any decisions in the determination by requesting a hearing. Costs of the hearing will be paid by the requesting party unless they achieve an adjustment in their favour of at least 20%. Those costs will be treated as an interim application (£250-£333).
Disapplication of Part 36 Offers in the FCD process
It should also be noted that CPR 45.66 confirms that Part 36 does not apply to any determination under the new process. This inevitably means that, without the encouragement and rewards of making good and early Part 36 offers, the best course of action will likely be the FCD process instead of negotiation.
Kris Kilsby is a Costs Lawyer at Paramount Legal Costs and a Council member of the Association of Costs Lawyers and Helen Spalding is a Costs Solicitor. For any further questions or queries about the FRC Regime please get in touch at [email protected] or [email protected].
