The new fixed costs determination regime: CPR 45 Section X

October 2, 2024

by David Illingworth

 

As of 1 October 2024, the new Section X of CPR 45 comes into force. This new set of rules set out the processes for, and costs recoverable in, the summary determination of costs in proceedings to which fixed costs under CPR 45 apply.

Summary determination of costs at the end of a hearing

CPR 45.63 provides for a new process for the summary assessment of costs at the end of a hearing to which fixed costs apply (e.g. a trial in the Fast Track).

The rules now require any party who intends to claim any fixed costs or disbursements under Part 45 at the end of the hearing to file a copy of the new Precedent U at least 24 hours before the hearing.

The new Precedent U, which is available via justice.gov.uk, has three sections:

1. Section A set out the fixed costs, disbursements and court fees the party is seeking to recover.
2. Where any amounts sought are disputed, section B provides a space for the paying party to give its views and the court to make a decision. This will be familiar from the Precedent H and Precedent R templates used in the Multi Track.
3. Section C is only to be used if the receiving party is seeking costs over and above the normal fixed costs under one of the applicable exceptions, e.g. the “exceptional circumstances” exception in CPR 45.9.

If the court is unable to make a summary determination at the conclusion of the hearing, it may direct that fixed costs be determined “with or without a further hearing and may give such directions for the determination as it thinks fit”. This is a very broad discretion in terms of the court’s case management. It is apt, for example, to cover scenarios where a party has failed to file a Precedent U in time, or where the court requires some further information before costs can summarily be determined.

“Costs only” procedure

CPR 45.64 sets out a new procedure which applies where the parties have reached an “agreement made or confirmed in writing” on all issues except costs and disbursements. It will apply, for instance, where a settlement agreement has been reduced to writing in a draft consent order, but where costs remains in dispute.

A determination of costs under CPR 45.65 may be applied for under Part 23, if proceedings have already been started; or, if still in the pre-action phase, under a modified form of the costs-only proceedings provided for by CPR 46.14.

In either scenario, the presumption is that evidence in support of the application must be served with it, and must include the written agreement on all issues aside from costs, plus a Precedent U. Any evidence in response must be filed and served within 21 days of service of the application if proceedings have been started. If proceedings are still in the pre-action phase, the respondent has until 21 days after filing the acknowledgement of service (in response to the Part 8 claim form which CPR 46.14 requires for costs-only proceedings to be initiated). This must include a completed response to the applicant’s Precedent U.

The default position, unless the court orders otherwise, is that the application shall be determined without a hearing. The rules are drafted on the assumption that a completed Precedent U, plus any other evidence provided by the parties, will give the court sufficient information to make a summary determination of the costs which remain in dispute.

However, there is a “stage 2”. Once the court has filled in the Precedent U with its decision on costs, and served this on the parties, the parties have 21 days to file and serve a written request for a hearing, identifying which of the decisions in the court’s determination it wishes the court to reconsider and providing a time estimate. This 21 day period is set in stone: “if no such request is filed and served within that period, the determination shall be binding upon the parties”.

As to the costs of this “costs only” procedure:

1. The costs of the application for costs determination are fixed at £500: Table 17 of PD 45. The rules are silent on whether VAT is recoverable on top: CPR 45.2, which provides for VAT to be recovered in other sections of Part 45 but has not, apparently, been amended to extend to Section X. It is submitted that VAT ought to be recoverable in any event.
2. Any appropriate court fee for the application is also recoverable.
3. If a party has requested a hearing to reconsider the court’s determination, they will be ordered to pay the costs of and incident to the hearing “unless they achieve an adjustment in their own favour that is at least 20% of the sum determined” by the court on the Precedent U. It would appear this means the applicant must beat the overall sum determined by 20%. This disincentivises applicants from disputing relatively small amounts of costs within the overall determination reached by the court.
4. When assessing the costs of the hearing, it is treated as an interim application under CPR 45.8 and the amount payable shall be summarily determined at the hearing. In practice, this means that costs of the hearing will normally be fixed at either £250 or £333 plus VAT, depending on the complexity band (PD 45 Table 1), plus the court fee for the hearing.

What about proceedings under the “old” Part 45?

For personal injury practitioners, the “old” Part 45 (CPR 45x in the White Book) will continue to apply where the cause of action accrued before 1 October 2023. This means there is no requirement to file a Precedent U ahead of a trial subject to the fixed costs regime. However, it may well assist the court if the parties were to use a Precedent U template in any event. The new template provides a useful way of setting out clearly for the court the costs sought and the extent to which those costs are already agreed.