Forthcoming Amendments to the Civil Procedure Rules

The 57th update to the Civil Procedure Rules¹ introduces a number of amendments to the Rules, some of which directly impact upon the recovery of legal costs. The amendments introduced by the 57th update will come into force by the 1st October 2011², so it is essential that Solicitors are ready for the changes. This article considers the following amendments which may impact upon the recovery of legal costs.

Changes to Part 36: Goodbye Carver!

The 57th update inserts the following new Section 1A into Rule 36.14:

This new Section effectively reverses the uncertainty created by the Judgment in Carver v BAA Plc [2008] EWCA Civ 412. In Carver, the Claimant only beat the Defendant’s payment in by £51 and therefore it was decided that the Claimant had not achieved a Judgment which could properly be considered to be “more advantageous”. Thus, the Claimant failed to recover her costs and was ordered to pay the Defendant’s costs from the time that acceptance of the payment in had expired. The Court of Appeal approved the first instance decision and dismissed the Claimant’s appeal. Hence, since Carver it has been difficult to know with any certainty how much the final Judgment has had to exceed any Part 36 offer made by the Defendant for the Claimant to be protected costs-wise.

Judgments that exceed any Part 36 offer made on or after 1st October 2011, by even just £1, will be considered to be “more advantageous” than the Defendant’s offer. This new amendment to the Rules is likely to come as a welcome comfort to Claimant’s Solicitors when assessing Part 36 offers made.

The amendment is not unexpected and has been heralded in recent Judgments such as that of Lord Justice Jackson in Fox v Foundation Pilling Limited [2011] EWCA Civ 790. The purpose of Part 36 has been to create a clear and simple framework to allow parties to work towards settlement with certainty. The amendment should help to achieve this purpose.

Amendments to the Costs Practice Direction

Estates

Minor amendments are to be introduced which are intended to streamline the process and minimise work and costs incurred in litigation about estates.

Litigants in person

The rate which a litigant in person can recover for financial loss through spending time on legal work, where the actual amount of financial loss cannot be proved, will increase to £18.00 per hour. This represents an increase of over 94% on the hourly rate currently allowed.

Costs Management Scheme – Defamation Proceedings

The scheme is to be extended until 30th September 2012 and amendments are to be made to the effect of budgets on case management and costs.

County Court Provisional Assessment Pilot Scheme

The scheme has been extended for another year for detailed assessments in York, Leeds and Scarborough for Bills where the base costs claimed are less than £25,000.00.

Costs Management Scheme – Mercantile Courts and Technology and Constructions Courts

Pilot scheme inserted as Practice Direction 51G to manage the costs incurred in certain Proceedings. The pilot scheme is to run from 1st October 2011 until 30 September 2012 to operate in all Mercantile Courts and Technology and Construction Courts where the first case management conference is heard on or after 1st October 2011.

The purpose of the scheme and costs management is to allow the Courts to seek to manage the costs of the litigation and the case in accordance with the overriding objective.

The Practice Direction allows the Courts to make costs management orders approving the costs budget of any party to the proceedings. Whilst the Court cannot approve costs incurred prior to the first costs management order, the Court may record comments on those costs incurred and should take them into account when considering the reasonableness and proportionality of subsequent costs incurred.

In any appropriate Proceedings, where the Judge considers it appropriate, or on an application of any party, the Judge may make a costs management order.

It is important to note that the provisions for costs estimates detailed in Paragraph 6.4(1)(a) are not applicable where the scheme applies. Costs budgets/estimates which need to be filed, must be presented as a detailed budget setting out the estimated costs for the entire Proceedings in a standard template form, which substantially follows the Precedent HB annexed to Practice Direction 51G.

The Practice Direction details the procedure for filing the necessary costs budgets, keeping parties informed and the purpose of costs management. Where a costs management order has been made and the costs budget is no longer accurate, a revised budget must be filed and served detailing any departures from the approved budget which may be approved or disapproved by the Court.

The effect on any subsequent assessment of costs, when assessing costs on the standard basis, is that the Court will have regard to the receiving party’s last approved budget. Additionally, the Court will not depart from such approved budget unless it is satisfied that there is a good reason to do so.

As ever, costs is an increasingly complex area and if you are unsure about any aspect, it is always worth getting some professional advice before it's too late!

The information and opinions set out within this article merely represent the views of the writer and do not form any kind of formal advice. © Veritas Professional Legal Services Limited 2011. This article may not be reproduced without written permission of the copyright holder.

1 The Civil Procedure (Amendment No.2) Rules 2011

2 Section 1 of The Civil Procedure (Amendment No.2) Rules 2011