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Home » Blog » Under the Microscope: Provisional Assessment and Costs
Under the Microscope: Provisional Assessment and Costs
Posted by Michelle Barron on 25th September, 2018 in Opinion and categorised in .
The Jackson reforms were introduced in April 2013. By and large they have bedded in, and rule change and case law have clarified some of the finer details. However, when it comes to provisional assessment we are still seeing novel points arising which give rise to much debate in the office.
Provisional assessments are carried out in lieu of an oral hearing on bills of costs payable between the parties which have a value of £75,000 or less. They are governed by CPR 47.15.
If there is no oral hearing, due to the provisional assessment being accepted by the parties, the costs are capped at £1,500 + VAT + court fee. Part 36 applies to costs assessments, but even if a “claimant” (receiving party) beats its own offer, the costs are still capped at that sum.
This was confirmed in W Portsmouth and Company Ltd v Lowin [2017] EWCA Civ 2172 when the Court of Appeal said there was nothing in the rules to suggest that CPR 47.15 should be dis-applied or modified.
But what about cases where the provisional assessment isn’t accepted, and an oral hearing takes place?
CPR 47.15(10) states that any party which has requested an oral hearing, will pay the costs of and incidental to that hearing unless:
That’s fine as far as it goes. But if they do achieve an adjustment of 20% or more in their favour, does the other side pay the costs of the hearing, or do the costs become costs in case, with CPR 47.20 (1) applying - the receiving party being entitled to the costs of the detailed assessment proceedings as a starting point?
One circumstance which overturns 47.20 (1) is where a Part 36 offer has been made in the detailed assessment proceedings. But a Part 36 offer could be made after the provisional assessment has taken place, and before the oral hearing. It is very unusual that a party can make such an offer afterhaving a good indication of what the court thinks the case is worth (whether in damages or costs).
Could a paying party make a Part 36 offer to escape the effect of Part 47.15?
The claimant serves a bill of £50,000. Despite trying to settle the costs the parties can’t reach agreement and the claimant requests a provisional assessment. At assessment, the court assesses the costs in the sum of £40,000. The defendant decides that this figure is still too high and requests an oral hearing.
Under CPR 47.15(10) unless the bill is reduced to £32,000 or less, the defendant (as the party requesting the oral hearing) must pay the costs of and incidental to the hearing.
But what happens if the defendant makes a Part 36 offer of £36,000 and at the oral hearing the court assesses the bill in the sum of £34,000? The defendant hasn’t achieved a 20% adjustment in his own favour, but he has beaten his Part 36 offer.
Of course, both parties are on an equal footing (having both had sight of the provisionally assessed bill), but it seems somewhat harsh that a paying party, who may be perfectly happy to accept the assessment, has to offer or agree to accept a lesser sum due to the tension in the two sets of rules (Part 36 and Part 47.15). What is the point of provisional assessment in that instance?
You then have issues over the timing of the Part 36 offer. CPR 36.13 (4) states “where a Part 36 offer which was made less than 21 days before the start of a trial is accepted… the liability for costs must be determined by the court unless the parties have agreed the costs”.
And under 36.17(7), the costs consequences following judgment do not apply to a Part 36 offer made less than 21 days before trial, unless the court has abridged the relevant period.
The relevant question therefore is what is the definition of “the start of a trial” for this instance. CPR 47.20 (4) discusses how Part 36 applies to detailed assessment. It states that the following modifications apply:
(a) ‘claimant’ refers to ‘receiving party’ and ‘defendant’ refers to ‘paying party’;\
All well and good but at the time CPR 47.20 was written, provisional assessment didn’t exist.
Does a “detailed assessment hearing” mean a provisional assessment, or only an oral hearing following such provisional assessment? And is a detailed assessment hearing “in progress” from the time the court carries out the provisional assessment, or only once any oral hearing has started with both parties and the judge all present in the same room?
And finally, what happens if both parties request an oral hearing? Or after one party requests it, identifying the item or items in the court’s provisional assessment which are sought to be reviewed at the hearing under 47.15 (8), the other party also raises different items which they ask the court to consider?
For example, a paying party could seek the reduction in hourly rates, and the receiving party may seek the re-instatement of some counsel’s fees (or vice versa). Success on either point could lead to at least a 20% betterment of the outcome, but what happens if both or neither points are successful and the increase/decrease in the final sum largely cancel each other out? It’s true that under CPR 47.15 (10) (b) the court can “otherwise order” costs of the hearing. But how would that sit with any Part 36 offers?
Some of the above points are admittedly rare, but not all of them. Perhaps some more clarity in the rules would be helpful, particularly if sufficient time was allowed to consult people who deal with these issues on a daily basis.