There will be another statutory instrument (SI) next month to tidy up the one published last week with changes to the Civil Procedure Rules, after a warning that the new rule on proportionality could affect millions of pounds worth of work already done by solicitors.
Lord Justice Stephen Richards, who chairs the rule committee, said the March SI will deal with the problem identified by the Law Society over the transitional provisions for the rule.
It seems that other faults identified in the changes to the CPR will also be addressed by the SI.
The society’s president, Lucy Scott-Moncrieff, wrote to Richards LJ with concerns about “unintended consequences” of the CPR amendments, but only received a positive response to one of them – the proposed rule 44.3(7), which provides that the new test on proportionality will not apply to those cases which are commenced before 1 April 2013.
She said: “This has been interpreted by the [rule] committee as applying to all cases ‘issued in court’ on or after 1 April 2013. However, many cases are prepared months, and in some cases years, before they are issued… Solicitors will have been preparing current cases on the Lownds test on proportionality, where ‘reasonable and necessary’ work will be recoverable…
“The rule will therefore have retrospective effect in that the more restrictive rule on proportionality (where even reasonable and necessary work will be disallowed if the costs as a whole are considered disproportionate) will be applied to work done before the rule has come into effect.
“This could affect millions of pounds of work already done in current non-issued cases to the prejudice of solicitors and their clients.”
In his response, Richard LJ said the rule committee “acknowledged the force” of the society’s argument and is to insert a further transitional provision within rule 44.3 “to the effect that costs incurred in respect of work done before 1 April 2013 will not be disallowed if they would have been allowed under the rules in force immediately before that date”.
However, the rule committee rejected three other concerns articulated by the Law Society:
- The transitional provisions for one-way costs shifting (QOCS) are potentially unfair because the protection will not apply when the conditional fee agreement pre-dates 1 April but after-the-event insurance is not taken out until afterwards. Richards LJ responded that solicitors will have had sufficient notice of the rule to take out insurance by 1 April even if they might otherwise have delayed until just prior to the commencement of proceedings;
- The rules prevent recovery of a success fee in respect of counsel instructed after 1 April even where the solicitor has entered into a funding arrangement before then. Richards LJ said this issue arises out of the commencement provisions for section 44 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 and so is a matter for the Ministry of Justice to address.
- There is some ambiguity in the QOCS rule 44.14(1) in that it could be read to imply that if the costs exceed damages, none of it can be recovered. Richards LJ said the rule committee concluded that there is “no realistic possibility” a court would construe it in this way.