This blog has looked many times at the drafting error in The Civil Procedure (Amendment No. 2) Rules 2023 concerning the transitional provisions and Fixed Recoverable Costs. These state that the new rules “only apply to a claim where proceedings are issued on or after 1st October 2023”. This is despite the fact they are clearly intended to cover cases that settle pre-issue (where, self-evidently, proceedings will not have been issued).
The 10th edition of the White Book supplement Costs & Funding following the Civil Justice Reforms: Questions & Answers addresses this issue:
“Q6. The notes to the new rules deal with transitional arrangements, and at para.10, state that ‘The new FRC will apply to claims where proceedings are issued on or after 1st October 2023, save for personal injury’. The question arises as to what happens to non-PI claims that settle prior to issue, both for claims that begin before and after 1 October 2023. In the first instance there will be claims which began before 1 October 2023, but settle after that date without the necessity of issuing proceedings. Is it the case that the FRC will not apply to these claims? Going forward, there will be matters which begin after 1 October 2023, but again settle without the need to issue proceedings. On the strict reading of the rules, these claims will not fall within the FRC as proceedings were not issued after 1 October 2023. Is this correct and if not, where in the rules does it state how these costs are brought within the FRC regime? If it is intended only for matters which begin after 1 October 2023 but settle without proceedings to be within the regime, what is the cut off point for such matters to be included? We foresee satellite litigation as to whether work was commenced on or before 1 October 2023. Finally, it appears that the rules allow the defendant to recover costs for a claim which is intimated, but abandoned before the issue of proceedings. Is this correct? If so, by what mechanism will the defendant obtain costs, and when will a claim be considered abandoned?”
The answer given is:
“Non-PI claims which have not been issued at all will not be caught by the post-30 September 2023 regime. If by ‘begin’ what is intended is ‘cause of action’, then in a non-PI claim where the cause of action arises after 30 September 2023, and which settles before issue, again such a claim will not be caught by the post-30 September 2023 regime. The trigger is the issue of the claim, not when work commenced and so the anticipated satellite litigation is unlikely.
Simply put: not issued and not a PI claim, then the post-30 September 2023 regime does not apply.”
This is correct on a literal interpretation of the transitional provisions but is not what was intended and is not how the courts will interpret this.
We now have a judgment on the correct interpretation, although only at County Court level. In Bi v Tesco Underwriting Ltd (Manchester County Court) [copy of judgment courtesy of costs counsel Andrew Hogan who represented the successful Defendant] HHJ Sephton KC was dealing with an RTA that occurred on 19/8/22. There was no personal injury but there was vehicle damage. The Defendant made a Part 36 offer for £3,555.36, which was accepted on 11/4/23, prior to proceedings being issued.
Costs could not be agreed and Part 8 costs-only proceedings were issued on 27/11/23, with an order for costs made on 23/12/23.
The Court had little difficulty concluding that the issuing of costs-only proceedings after 30/9/23 brought the claim under the new regime. If they had been issued before 1/10/23, the old rules would have applied:
“In my judgment, the natural meaning of the Transitional Provisions is that the Amendment Rules apply to the claimant’s claim for costs because:
(a) This was a claim where proceedings were issued after 1st October 2023.
(b) The claimant’s claim could only be determined by reference to the applicable Rules.
(c) The rules by which the defendant’s liability for costs were to be assessed were amended by the Amendment Rules.
(d) The relevant rules relate to costs.”
The Judge observed that this interpretation was consistent with the view of the Civil Procedure Rules Committee:
“… where proceedings have not already been issued on or after 1 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 the costs, then they may issue costs only proceedings for the determination of those costs…
If those proceedings are issued on or after 1st October, [fixed costs] would apply to all costs in respect of that claim, irrespective of whether they were incurred before or after 1st October.”
Given the White Book has got this wrong, and precious court time is being wasted on this issue, is it really too much to ask the Civil Procedure Rules Committee to correct their drafting error?
