Issued on or After 1.10.23 Means Just that; Costs Only Proceedings are No Exception to this Rule
The matter of Asmat Bi v Tesco Underwriting Limited was recently heard in the Country Court at Manchester before HHJ Sephton KC. The matter concerned a claim for damages as a result of a road traffic accident. No personal injuries were suffered and the claim consisted of damages in respect of hire and repairs only. The matter concluded pre-issue by way of acceptance of a Part 36 offer in the sum of £3,556.36 on 11 April 2023 and costs proceedings were not issued until 27 November 2023. Therefore the commencement date of 1 October 2023, as per the Civil Procedure (Amendment No 2) Rules 2023, was applicable. HHJ Sephton found that this matter fell within the remit of the new fixed recoverable costs regime and the Claimant recovered costs of nil as a result.
Defendant’s position
Following issue of proceedings, the Defendant duly filed and served an acknowledgement of service confirming that it did not contest an order for costs. However the Defendant later sought to set aside the Order made on 23 December 2023 for costs to be assessed on the standard basis if not agreed. The Defendant submitted that the costs of the claim fell under the amended rules and should therefore be assessed at nil. The costs claimed within the proceedings were “costs” which were subject to the Amendment Rules and, any proceedings issued after the transition date would trigger the new fixed costs regime; effectively, the purpose of the transitional provision was to provide a clear line in the sand and there should be no other interpretation of the rule.
Claimant’s position
The Claimant submitted that the costs should be assessed on the standard basis given that the Claimant had obtained accrued rights under the agreement made by way of acceptance of the Part 36 offer and that these rights could not be removed by retrospective application of the transitional provisions. The Claimant submitted that the parties had expressly agreed that costs would be paid in accordance with the pre-amendment provisions of CPR 36.13. In the alternative, the Claimant proposed that on a true construction of Rule 2 of the Amendments Rules, the new rules apply only to the costs of the Part 8 proceedings and not to costs of the underlying claim.
Points considered by the Court
The construction of the offer was first considered given the Claimant’s submission that the parties had expressly agreed for costs to be payable on the standard basis. It was noted that the wording of the offer was an exact repetition of CPR 36.5(1)(c) and, as such, it was not a promise to pay costs on a particular basis but an explanation of the relevant costs consequences that would apply. Therefore, there was no agreement to contract out of fixed costs. The decision of Ho v Adelekun [2019] EWCA Civ 1988 supports this rationale. The Claimant’s assertion as to an accrued right to assessment as per the pre-amended rules was rejected on the basis that the Claimant’s right to costs would only crystalise after they had been assessed, allowed or agreed.
The construction of the transitional provisions were thereafter considered. Both parties had referred to Bennion Bailey and Norbury on Statutory Interpretation (8th Ed) with regards to the effect of procedural changes and how these should affect existing cases. Whist there is a principle that changes should not take retrospective effect, there is also a general presumption that changes in procedure should apply to both pending and future proceedings. The Amended Rules effected a significant change with regards to the recoverable costs and the costs assessment procedure for an enormous amount of litigants however this change was well communicated and both the public and the legal profession had been on notice of this change for quite some time. The benefits of the amendments were made with the public interest in mind. Had the Claimant wished to do so she could well have issued proceedings prior to 1 October 2023 and have been entitled to costs as per the old regime.
Furthermore, there was nothing within the rules to distinguish between the costs of the Part 8 proceedings and the costs of the substantive proceedings. Therefore the Claimant’s submission that the transitional provisions applied only to the Part 8 costs was also dismissed.
The Judge was also provided with minutes of a CPRC meeting which took place in November 2023 and corroborated his findings. He noted that, whilst it was reassuring that the views of the committee appeared to coincide with his own view, the CPRC minutes were not binding in any event.
Commentary
Whilst this is only a County Court decision and therefore not binding, it demonstrates a clear view with regards to the transitional proceedings and matters that settled pre issue prior to 1.10.23 for which costs remain in issue. Paying parties will of course be particularly wise to the fact that any cases not issued prior to 1.10.23 will now be subject to fixed recoverable costs only. Any receiving parties with costs of this nature should be mindful of this point and will unfortunately have to concede fixed costs where appropriate. A failure to do so will simply incur further irrecoverable costs.
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