April 2023 will see significant changes to CPR 44.14.
These changes will allow defendants to enforce costs orders made in their favour against costs orders made in favour of claimants.
Defendants will also be able to enforce costs orders up to the aggregate amount in money terms of any settlement, including cases concluding by way of acceptance of Part 36 offers and Tomlin Orders.
The effect of the new rule will be to reverse the decisions in Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654; [2018] 1 WLR 6137 (which precluded enforcement in cases where settlement had been agreed, rather than the court ordering an award of damages) and Ho v Adelekun [2021] UKSC 43; [2021] 1 WLR 5132 (which precluded the offset of costs against costs).
The new rule will apply to cases issued on or after 6th April 2023.
The Current Rule
CPR 44.14 currently reads as follows:
Effect of qualified one-way costs shifting
44.14
(1) Subject to rules 44.15 and 44.16, orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the claimant.
(2) Orders for costs made against a claimant may only be enforced after the proceedings have been concluded and the costs have been assessed or agreed.
(3) An order for costs which is enforced only to the extent permitted by paragraph (1) shall not be treated as an unsatisfied or outstanding judgment for the purposes of any court record.
The Amendment
The amendment, by virtue of The Civil Procedure (Amendment) Rules 2023, reads as follows:
Amendment of Part 44
24. In rule 44.14—
(a)in paragraph (1), for “damages” substitute “, or agreements to pay or settle a claim for, damages, costs”;
(b)after paragraph (1), insert—
“(2) For the purposes of this Section, orders for costs includes orders for costs deemed to have been made (either against the claimant or in favour of the claimant) as set out in rule 44.9.”;
(c)renumber what was paragraph (2) as paragraph (3);
(d)after what will now be paragraph (3), insert—
“(4) Where enforcement is permitted against any order for costs made in favour of the claimant, rule 44.12 applies.”; and
(e)renumber what was paragraph (3) as paragraph (5).
The New Rule
The amended rule, by virtue of The Civil Procedure (Amendment) Rules 2023, will read as follows (amendments in bold):
Effect of qualified one-way costs shifting
44.14
(1) Subject to rules 44.15 and 44.16, orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages or agreements to pay or settle a claim for, damages, costs and interest made in favour of the claimant.
(2) For the purposes of this Section, orders for costs include orders for costs deemed to have been made (either against the claimant of in favour of the claimant) as set out in rule 44.9.
(3) Orders for costs made against a claimant may only be enforced after the proceedings have been concluded and the costs have been assessed or agreed.
(4) Where enforcement is permitted against any order for costs made in favour of the claimant, rule 44.12 applies.
(5) An order for costs which is enforced only to the extent permitted by paragraph (1) shall not be treated as an unsatisfied or outstanding judgment for the purposes of any court record.
Practical Points
- Defendant Part 36 offers are likely to have far more bite than they did previously.
- Defendants will now effectively be able to enforce costs orders up to the aggregate amount of damages and costs awarded to a claimant.
- Claimants, and their lawyers (who will now have more at stake themselves than was previously the case), are going to have to think very carefully before rejecting offers.
- Claimants and their lawyers will have to think carefully before making or opposing interim applications, as adverse costs orders are now more likely to be enforceable.
- There may be a greater need for ATE protection and claimants will need to be advised accordingly.
- There may be a flurry of cases issued between now and 6th April as claimants seek to avoid being caught by the new rule.
- There will likely be satellite litigation. There always is.
Should you wish to discuss the above, please do not hesitate to contact me in chambers.
