Precedent U – Fixed Costs Determination Rules and Procedures

(From a Claimant & Defendant perspective)

Following publication of the Civil Procedure (Amendment No. 3) Rules 2024 and the 171st Practice Direction. A new fixed costs determination (FCD) has now been formulated which coincides with the creation of the new ‘Precedent U’ form. 

FCD is a new procedure for the determination of fixed costs and will be used when all issues are agreed except costs and disbursements. It came into effect retrospectively as of 1^st October 2024. 

Essentially, it allows for any disputes arising from claims subject to fixed costs to be dealt with on paper and as such it is very much similar to a provisional Detailed Assessment of hourly rate costs in that the initial determination won’t require a hearing but either party can request an oral appeal of any determination. 

Previously there was no precedent or template for parties to follow. Parties would simply calculate fixed costs entitlement and present the same through correspondence and subsequent negotiations and/or agreement. 

Hence, this begs the question, what is this new Precedent U and what does it look like? The answer is that it is a self-calculating Excel document with three sections as follows: – 

Section A – sets out the case details, including the costs and disbursements claimed to which the fixed costs regime relates. It has separate sections for solicitor costs, disbursements and court fees.

Section B – sets out what is being claimed and why. The paying party can enter their offer and explanation if a sum is not agreed. The court also has space to enter the amount awarded along with an explanation. Not to dissimilar to the precedent paying party’s Replies to Points of Dispute of the receiving party’s bill of costs format utilised in provisional Detailed Assessments.

Section C – is only to be used where claims are made for costs exceeding fixed recoverable costs (exceptional circumstances and/or vulnerability) pursuant to CPR rule 45.9 & 45.10 and where unreasonable behaviour applies pursuant to CPR rule 45.13. However, it will also be used where CPR 45.50(3) is engaged as follows: “The costs to be awarded for stage S1 are subject to assessment up to a maximum of the figure shown for stage S1 in Table 14, except in a claim for personal injuries where the figure shown is fixed”, since this to non-PI claims on the Intermediate Track only.  Additionally, Section C will be used in claims where Unreasonable Behaviour applies pursuant to CPR 45.13. This can see an uplift or decrease of 50% of applicable fixed costs.

Other points of note are the omission of reference to VAT in the document as it is not clear if the sums to be included in the same should be inclusive or exclusive of VAT. However, a calculation column is provided to allow for this either way.   

In addition, the document includes a Statement of Truth for the receiving party and requires the Paying Party’s representative to sign their response.  

However, will the FCD only apply to the new fixed costs rules or will it capture all fixed costs disputes after 1 October 2024? 

CPR 45.64(1) provides that FCD (Fixed Costs Determination) applies to, ‘all claims to which Part 45 applies’. 

Part 45 in its current interpretation does NOT apply to claims to which the pre-October 2023 fixed costs rules apply. It also includes Personal Injury claims submitted via either the RTA or EL/PL Portals, Fast Track, Intermediate Track and Noise Induced Hearing Loss claims (on Fast or Intermediate Track).  

However, it is envisaged that for any fixed costs disputes arising on or after 1 October 2024 that these should go through the new streamlined process of the FCD. The alternative would be to make a formal application under CPR Part 23 and request an oral hearing. As with any transitionary process, it is hard to see Judges wanting pre-October 2023 cases to have an oral hearing whilst post-October 2023 cases are dealt with on paper. Hence, it will probably be more likely than not that the Court’s preference would be to utilise the FCD for all fixed costs disputes from 1 October 2024. Where any of the following applies, a separate N260 (Statement of Costs) will be required: 

• Costs are to be assessed as per CPR 45.50(3), this is Stage 1 costs for non-PI cases on the Intermediate Track which are to be assessed. Stage 1 costs for non-PI cases are capped rather than fixed. 
• Costs exceeding Fixed Recoverable Costs are sought (exceptional circumstances). 
• Costs exceeding FRC are sought on the grounds of vulnerability. 
• Where Unreasonable Behaviour test is invoked. 

So, what are the recoverable costs of a Fixed Costs Determination? 

Following the finalisation of an FCD, a successful party will be entitled to fixed recoverable costs of £500.00 plus VAT. This is set out under Table 17 of the Practice Direction 45. 

Should either party then request an oral review of the paper decision the costs of the oral hearing are also fixed pursuant to Table 1 of Practice Direction 45. The recoverable costs of the oral review are dependent on the Track/Band the claim is in as follows:

• Fast Track, Bands 1-3 – £250.00 + VAT
• Fast Track Band 4, and Intermediate Track – £333.00 + VAT.

As with the oral reviews in the provisional Detailed Assessment process, the party who requested the oral review must achieve a reduction/increase of 20%, failing which they will not recover their costs of the oral hearing.

An additional court fee will be payable as is the usual Part 23 application fee where proceedings have been issued. This is pursuant to the new CPR 45.64 which states: “Where proceedings have been started, the application must be made in those proceedings under Part 23 as modified by this rule.” Hence, the general Court application fee for requesting an FCD is currently that of a general application fee in the sum of £303.  

But what if proceedings are not issued? 

Then CPR 46.14 applies. This means costs-only proceedings must be brought. CPR 45.64(3) states that: “Where proceedings have not been started, the application must be made by the commencement of costs only proceedings”. The current cost of commencing costs-only proceedings is £65.  

What should be notes at this juncture is that it will be more cost effective to make an application for commencement of costs only proceedings requiring a court fee in the sum of £65.00 only. There is indeed ambiguity in terms of whether the Court expects the application fee of £303.00 plus the costs only proceedings of £65.00. At present, the receiving party will get recoverable time costs of £500 plus VAT plus either the application fee of £303 or the costs-only proceedings fee of £65 for non-issued cases.  

How will the process work? 

The process will be set out in revisions to Part 45 which will come into force on 1 October 2024. The key details for the updates to Part 45 are as follows: 

There will be a separate process for a summary determination of fixed costs to be dealt with on paper and without a hearing, but the Court can order an oral hearing if it feels it is needed to fairly determine the issues. The costs for the procedure will be fixed as mentioned above at £500 plus VAT.  

However, where the order for costs is made at an actual hearing, such as a Trial, the Court will make the determination, in absence of agreement, at the hearing itself. The implication being that advocates on both sides need to be prepared for any costs arguments at any final hearing. 

Where the court can’t make a summary determination at the conclusion of the hearing, the court is able to direct that the amount of fixed costs or disbursements be determined with or without a hearing and can give such directions as it sees fit utilising a wide range of discretion. 

The costs of the determination will be treated as if it were an interim application under CPR 45.8. This means costs of anywhere between £250 to £333 plus VAT for profit costs. 

Where a claim settles without a hearing and the only issue is costs then Part 23 will now be modified by Part 45. The application must be started by commencement of costs only proceedings. The receiving party must provide evidence in support of the application. together with the new Precedent U. The Paying Party will have an opportunity to file any evidence within 21 days of service of the application where proceedings were previously issued or withing 21-days of filing the acknowledgement of service where proceedings were not previously issued. 

The Court will record its determination by annotating Precedent U. Any party can request an oral hearing within 21 days of the determination notice and if no oral hearing is requested the determination will be binding. Parties will be given at least 14 days’ notice of any hearing. 

Under Part 46 new rules will be incorporated. Part 36 will not apply to any determination. This means that there will no longer be any opportunity to obtain Part 36 benefits in fixed costs disputes. This may well discourage parties from making offers in determination proceedings. 

The matter proceeds to all the way to trial, what happens next?

The Precedent U will have particular importance in matters proceeding to trial in that where the Court will make an order for costs it will make a summary determination of the amount of fixed costs and disbursements to which the receiving party is entitled to recover.

The paying party/Defendant will therefore need to prepare a Precedent U for recovery of their own costs which will need to be filed at court in advance of the trial. This is the same as filing an N260 pre-trial albeit using a different form. This is likely to be the only opportunity to recover costs should the Defendant be successful and so it would be imperative for them to file and serve their Precedent U pre-trial as failure to do so would most likely lead to their costs being assessed at £nil should the receiving party receive an adverse outcome.  

However, it is also imperative, that the receiving party’s Precedent U is responded to by the paying party using Section B of the form and Counsel is briefed on costs since this will likely be the only opportunity to challenge the costs and/or disbursements incurred by the receiving party. Given that the Precedent U only has to be filed and served 24 hours before the hearing, the turnaround time for considering the receiving party’s costs is very limited.

Where the Court cannot make a summary determination at the conclusion of a trial, a further hearing may be listed. The costs of that determination will be limited to the applicable FCD costs.  

If you have any questions, feel free to contact us.