The Fixed Costs Determination (FCD) process and accompanying Precedent U came into force on 1 October 2024, as part of the 171st Update to Practice Directions.
What is Fixed Costs Determination?
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 allows for any disputes arising from claims subject to fixed costs to be dealt with on paper using the Precedent U form. It is a similar process to provisional assessment, in that there is a paper hearing which can then be orally reviewed if either party disagrees with the court's decision.
What is the Precedent U?
The Precedent U is essentially a statement of fixed costs. It is a self-calculating Excel document.
There are 3 sections:
- Section A sets out the case details, including the costs and disbursements claimed.
- 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.
- Section C is to be used where claims for costs exceeding fixed costs are made .e.g. exceptional circumstances, vulnerability or unreasonable behaviour. Section C is also to be used for Intermediate Track, Stage 1 non-PI claims where the costs are capped and not fixed.
The Precedent U also requires the receiving party to sign a statement of truth confirming the fees and disbursements have been incurred.
The Costs of a Fixed Costs Determination
The successful party in the FCD process will be entitled to fixed costs of £500.00 plus VAT.
Should either party then request an oral review of the paper decision the costs of the oral hearing are also fixed. The recoverable costs of the oral review are dependent on the Track/Band the claim is in:
- 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 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.
The Court fee for requesting a FCD is that of a general application fee - £303.00.
Given the relatively straightforward nature and the costs involved it is likely that receiving parties will be quick to request a FCD should payment of the costs and disbursements not be received in a timely manner.
Trials
The Precedent U will have particular importance in matters proceeding to trial.
At trial, where the court makes 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.
Defendants will 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. The court is unlikely to list a further hearing simply because a party has failed to file and serve their Precedent U and is likely to assess those costs at £nil.
It is also imperative, that the other party's Precedent U is responded to using Section B of the form and Counsel is briefed on costs. This is likely to be the only opportunity to challenge the costs and/or disbursements claimed so it is important that the disputes are set out correctly. Given that the Precedent U only has to be filed and served 24 hours before the hearing, the turnaround time for considering the other 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 FCD costs as set out above.
What this means for insurers?
This brings the 'costs of arguing about costs' in line with the substantive claims and those costs are fixed and reasonable in amount providing insurers with certainty when challenging fixed costs issues and disbursements. when challenging disbursements
This lower cost exposure opens the doorway to strategic litigation in relation on costs, something that claimant cost firms are already worried about.
The DWF Costs team are happy to accept instructions in respect of both preparing and considering Precedent Us ahead of trials.
