The Civil Procedure (Amendment No. 2) Rules 2023
The Civil Procedure (Amendment No.2) Rules come into force on 1st October 2023 and apply to claims issued on or after 1st October 2023, save for personal injury claims (including disease claims). In relation to personal injury cases, fixed costs will apply where the cause of action arises on or after 1 October 2023 but as regards disease cases, whilst the requisite date remains 1 October 2023, fixed costs will apply where the letter of claim is sent after this date.
Consequently, cases being prepared now, may ultimately fall within the ambit of the new regime.
Indeed, the recently published SI constitutes a radically different landscape which will shortly be with us including the introduction of a separate intermediate track between the existing fast and multi tracks.
Whilst the new regime encompasses most civil litigation cases of less than £100,000.00, there are exemptions ie housing (delayed for circa 2 years so watch this space), mesothelioma or asbestos lung disease claim and the other areas listed in CPR 26.9(10).
All other cases, save for clinical negligence cases (see immediately below) of less than £100,000.00 will now almost universally automatically fall within fixed costs flowing from the existing fast track and the entirely new intermediate track.
There is no exemption for clinical negligence cases, therefore in the event that breach, and causation are not in issue, then there does not appear to be a bar to the new regime being applicable, but a separate fixed costs regime is expected for clinical negligence cases in the not too distant future and more should be known then.
Briefly, after the defence is filed the court will serve on each party a provisional notice of allocation together with an appropriate directions questionnaire in the normal way (CPR 26.4). When filing the completed directions questionnaire, the parties and indeed the court are required to consider exploring settlement and if applicable to proffer a written request for a stay (CPR 26.5).
If settlement is not explored or achieved, the court is required to allocate the claim to a track and, where applicable, assign to a complexity band no later than 4 weeks thereafter. Alternatively, before deciding upon a track to which to allocate or the complexity band to which to assign the proceedings or deciding whether to give directions for an allocation hearing or an assignment hearing to be fixed, the court may order a party to provide further information about the case (CPR26.7).
The scope of each track is found in CPR 26.9 – essentially, the fast track (claims up to £25,000.00) is the normal track for any claim for which the small claims track is not the normal track, and the intermediate track applies where the claim is suitable for neither for the small claims track nor the fast track.
Matters relevant when deciding the appropriate track are listed in CPR 26.13 (a) to (i). Note, however, the specific reference to “include”. Consequently, the court does not appear to be fettered in any way at this stage of the process despite there being no…(j) Any other relevant factors”. Also, it is for the court to perform a juggling act and assess the financial value of a claim.
Having allocated to a track, the court must then assign a complexity band. Both the fast and intermediate tracks have 4 complexity bands attached to them, the upper band under the intermediate track being “Any claim which would normally be allocated to the intermediate track, but which is unsuitable for assignment to complexity bands 1 to 3, including any personal injury claim where there are serious issues of fact and law” (emphasis added). Consequently, where a claim includes a claim for monetary relief, the value of which is not more than £100,000.00, the claim can be managed proportionality and heard in less than 3 days with oral expert evidence at trial likely to be limited to two experts per party, (emphasis added), the intermediate track will apply (CPR 26.9(7)). It goes without saying that there will be considerable potential for CMC’s to be more akin to epic gladiatorial contests moving forward with so much at stake than the sedate hearings of the past.
Each of the bands attached to the fast and intermediate tracks have corresponding fixed costs for the stages of the claim set out in the practice direction. They are far from generous. For example, stage 4 of the intermediate track allows £9,300 plus an amount equivalent to 8% of the damages from pre-issue (there is no distinctions between pre and post issue) up to and including the date of service of the defence; this goes down alarmingly to £1,600.00 plus 3% for stage 1 – how this dovetails with front loading is anyone’s guess. Also, the parsimonious sum available for formal ADR of £1,200.00 across all 4 intermediate stages could be unworkable. This sum appears to rule out all forms of recognised resolution save for discussions direct between the parties even with an extra £2,300.00 for additional specialist legal representation. Will Counsel undertake work at this level of remuneration?
Successful offers under part 36 at last have some teeth with the successful party being entitled to an enhancement of 35% upon the applicable fixed costs with 10% enhanced interest coming into play where a part 36 is beaten at trial.
In addition to the punitive sanctions under part 36, a party’s unreasonable behaviour can give rise to an order increasing or decreasing applicable fixed recoverable costs by 50% under CPR 45.13. Unreasonable behaviour is defined as “conduct for which there is no reasonable explanation” and conceivably therefore a party who refuses to accept a stay before allocation to explore settlement but then is not able to proffer a reasonable explanation may receiving a 50% penalty in costs despite the very limited sums on offer for conducting a formal ADR. Given the current climate, it may be very difficult to resist an argument here.
The 50% sanction above will not extend to VAT, disbursements, or any additional amounts under part 36 but there does not appear any bar to both CPR part 36 and CPR 45.13 operating in tandem.
Provision is made for recovering costs exceeding fixed recoverable costs at CPR 45.9 where “exceptional circumstances” exist. Presumably, the pre-existing test will be a starting point and if successful, such costs can either be summarily assessed or subject to detailed assessment. Additionally, if a party or witness is vulnerable, and that such vulnerability has given rise to a not less than 20% increase upon the fixed recoverable costs, then the court may also entertain an application for an amount exceeding fixed recoverable costs to reflect this. Again, if successful, such costs being summarily or detailed assessed. In either case, however, if 20% above the prevailing fixed recoverable costs is not achieved following either form of assessment, then the prevailing fixed recoverable costs will be imposed with no increase and the party making the application condemned to the costs of that application.
There is much to digest, and numerous other matters are canvased including disbursements, approval, counterclaims, interlocutory applications, and preliminary issues to name a few. For those dealing with NIHL cases, the matrix even caters for costs associated with restoring a company to the roll.
Overall, this is a win win for insurance companies but perhaps not for access to justice – only time will tell.
Moving forward, all litigators will need to fully digest the new rules and adopt a business plan which will enable this level of work to remain profitable as the level of fixed costs which will be on offer will almost certainly not equate to the level of assessed costs currently being recovered.
How can PIC help?
Please get in touch with our specialist advocacy department if you wish to discuss any aspect of the recently published SI.
Rob Street, Costs Lawyer
06.07.2023