A recent post commented on problems with the drafting of the transitional provisions concerning Fixed Recoverable Costs. The latest Minutes from the Civil Procedure Rules Committee recognises this issue:
“It was NOTED that a recent article had given rise to a concern in relation to the transitional provisions within the amending statutory instrument (SI) and the application of FRC in (i) non-personal injury (PI) cases (ii) which arise before 1st October 2023, (iii) where proceedings are never issued but (iv) which settle after 1st October 2023. The Chair made some initial comments and the matter was discussed. HHJ Bird emphasised the importance of costs only proceedings, in contrast to a costs application, namely that, for costs only, an application is considered proceedings and this was AGREED. The CPRC further observed that:
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- the new FRC regime comes into force on 1st October 2023;
- absent transitional provisions, the FRC regime would apply from 1st October to any proceedings within its scope;
- for non-PI claims, the transitional provision in rule 2, paragraph (1) of the SI, provides that the new FRC regime does not apply where proceedings have been issued before 1st October;
- parties may expressly agree to costs on a non-FRC basis and there will be an amendment to rule 45.1(3) to clarify this;
- where proceedings have not already been issued on or after 1st October and the parties do not expressly agree to costs on a non-FRC basis, but they agree on the incidence, but not the amount, of costs, then they may issue costs only proceedings for the determination of those costs (in respect of FRC, costs only proceedings under rule 46.14 amount to proceedings);
- if those proceedings are issued on or after 1st October, FRC would apply to all costs in respect of that claim, irrespective of whether they were incurred before or after 1st October.”
It is not entirely clear from the Minutes as to whether any amendment is proposed to the Transitional Provisions to reflect the above or whether the view is simply that the above analysis adequately deals with the problem.
As to the reasoning, I am not entirely happy with this. It appears that they are arguing that costs only proceedings issued after 1/10/23 would bring the underlying claim with the definition “a claim where proceedings are issued on or after 1st October 2023” under The Civil Procedure (Amendment No. 2) Rules 2023. Costs only proceedings have traditionally been treated as separate proceedings (see Crosbie v Munroe & Anor [2003] EWCA Civ 350). This new line of argument seems to suggest that if costs only proceedings are issued post-1/10/23, then this means that the underling claim has been issued post-1/10/23.
This may have messy consequences. What about a solicitor who enters into a lawful contingency fee agreement with a claimant to cover pre-issue (i.e. non-contentious) work? The claim settles pre-issue with the defendant agreeing to pay the claimant’s reasonable costs. The parties are unable to agree quantum of those costs and costs only proceedings are issued. Previously, the costs only proceedings would have been treated as separate to the underlying claim and the underlying claim would have remained non-contentious. If the Civil Procedure Rules Committee is correct, would issuing costs only proceedings not retrospectively make the underlying claim contentious work (and thus make the retainer unenforceable)?
There may be other unintended consequences of treating the issuing of costs only proceedings as being the same as issuing proceedings in the underlying claim.
The Civil Procedure Rules Committee would be better employed amending defective drafting rather than engaging in elaborate reasoning that potentially opens up another can of worms.
