Search
Close this search box.

Changes To The Detailed Assessment Of Costs – Post 1st April 2013

6 minutes read

One of the main aims of the Jackson reforms is to streamline the process for assessing costs at the end of a case.  It is thought that the current system simply takes too much time and is far too costly.

Detailed Assessment

The first mention of the assessment of costs within The Civil Procedure (Amendment) Rules 2013 is in the costs management section and specifically CPR 3.18, which concerns assessments of costs on the standard basis where a costs management order has been made.  This rule provides that the Court will have regard to the receiving party’s last approved or agreed budget for each phase of the proceedings and will not depart from the budget unless there is a good reason to do so. 

Whilst the Court of Appeal did find good reasons to depart in the recent decision of Sylvia Henry v News Group Newspapers Ltd [2013] EWCA Civ 19 it was made clear in paragraph 28 of the judgment that once the new rules are implemented they will lay a greater emphasis on the importance of an approved or agreed budget as providing a prima facie limit on the amount of recoverable costs.  Therefore were a costs management order has been made it will be unlikely that costs in excess of the final budget will be recoverable.

The most striking difference with regard to the new basis of assessment concerns assessments on the standard basis and can be found at CPR 44.3 2(a).  This rule states that the Court will only allow costs which are proportionate to the matters in issue.  Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably and necessarily incurred.  This is a clear reversal from the old rules in that proportionality will now trump necessity.   

The other notable change is that Part 47.19 offers no longer feature in the new rules.  CPR 47.20(4) provides for Part 36 offers to be applied to the costs of detailed assessment proceedings and it is now recommended that reasonable offers are made from the outset to ensure maximum costs protection, especially in cases that are subject to provisional assessment where minimal negotiation is likely given the cap to be imposed on costs of detailed assessment in these instances.

The other rules regarding the detailed assessment procedure remain very much as they are now, such as the time limits for commencing detailed assessment and requesting a detailed assessment hearing, the time frame for serving Points of Dispute and Replies (which in the case of Replies remain optional) and the procedure for obtaining a default or final costs certificate. 

Now that the practice directions are available there are a number of changes to note.  Due to the introduction of costs budgeting, subsection 3 of the new costs practice directions deals with the assessment of costs where budgets have been filed but no costs management order made by the Court and the costs claimed on detailed assessment exceed the budget by 20%.  The new practice directions are very similar to the current practice direction section 6 concerning costs estimates that have been exceeded by 20%, in that receiving parties must provide an explanation for the difference and paying parties a statement if they intend to argue that a budget was relied upon when seeking to reduce costs claimed in this way.

The new practice directions also state that Points of Dispute and Replies should be shorter and more ‘focused’ and should not plead against every individual item in a bill of costs.  The paying party must also state in an open letter accompanying the Points of Dispute what sum if any is offered for the costs claimed.  An offer can also be made under Part 36.

Detailed Assessment in the future

It seems likely that the change in culture due to the introduction of costs budgeting will reduce the scope of costs assessments at the conclusion of proceedings.  The fact that a party has seen and considered the other party’s budget from an early stage may to lead to fewer disputes at the end of the process. Case law has already developed in this area, such as the previously mentioned case of Sylvia Henry –v- News Group Newspapers Ltd and Safetynet Security Ltd v Coppage and another [2012] EWHC B11 (Mercantile) which held that where the costs claimed were within the last budget they could be approved and a final costs order made there and then. 

Even in cases where costs management is brought in there will be some room for detailed assessment to deal with indemnity principle arguments, arguments over quantum where a part of the case for which a budget has been approved has been completed before settlement, partial costs orders, exaggerated claims or claims where the Claimant recovers considerably less at trial than was initially pleaded and for pre-issue costs as these are already incurred prior to the first CMC.

Related Documents

Related People

Search

Make An Enquiry

Scroll to Top