ARC Costs recently secured a strong result for a Paying Party client in a housing disrepair case, following a successful provisional assessment of a disputed bill of costs. This case highlights both the importance of skilled cost negotiation and the risks associated with refusing reasonable pre-assessment offers.

Background to the Case

The matter arose from a housing disrepair claim in which the claimant was awarded £2,620 in damages. Following the successful outcome to the dispute for the Claimant, ARC Costs were instructed on behalf of the Defendant to dispute and negotiate the Bill of Costs served by the Claimant.

As the matter had settled pre-issue, steps were taken to negotiate the 3 column Bill of Costs before Part 8 proceedings were issued. In an effort to resolve the matter early and avoid unnecessary further costs, ARC Costs made a pre-issue Part 36 Offer of £8,500 to the Receiving Party in settlement of costs.

The Receiving Party, however rejected the offer and instead opted to challenge the costs through the Court’s provisional assessment procedure. This ultimately proved to be a costly decision.

Provisional Assessment of Bill of Costs: The Outcome

Part 8 proceedings were issued, and the Bill of Costs was re-served formally by the Claimant’s legal representative, with a Notice of Commencement.

Points of Dispute and Reply were exchanged, and the case proceeded to a Provisional Assessment, a paper-based process where a Costs Judge reviews the submitted costs documentation without the need for an oral hearing. Following assessment, the Court ruled in favour of the Paying Party. The Judge made an order quantifying the costs to be paid in the sum of £8,336.76—almost identical to the initial offer made by ARC Costs some 12 months earlier, and pre-issue.

Because the Receiving Party failed to beat the Paying Party’s earlier offer, the Claimant was ordered to pay £950 for the detailed assessment proceedings to the Paying Party, in accordance with CPR 47.20. This was offset against the Bill of Costs, thereby reducing the Defendant’s liability for costs further. 

This serves as a timely reminder of the risks involved in rejecting reasonable settlement offers and the cost penalties that can follow.

Understanding the Detailed Assessment Process

When parties cannot agree on costs after litigation, the matter may proceed to a Detailed Assessment Hearing where costs are assessed and determined by a Judge. The assessment of Bill of Costs process involves several key stages to determine the costs payable:

1. Bill of Costs and Notice of Commencement:

The successful party to a claim will usually be entitled to recover all or part of the costs of their case. On conclusion of a case, an order is often provided requiring the receiving party to recover their costs via the process of detailed assessment.

The Receiving Party prepares a detailed breakdown of all costs incurred during the litigation in the format of a Bill of Costs. This includes time spent, disbursements, and any success fee where applicable. They must serve the Bill of Costs alongside a Notice of Commencement, commencing detailed assessment.

2. Service and Points of Dispute:

Once the bill is served, the Paying Party has 21 days to file and serve their points of dispute, outlining any objections to the claimed costs.

3. Replies to Points of Dispute:

The Receiving Party may then file replies to address the objections raised, offering justification for the costs claimed and responding to each point in turn.

4. Negotiation: ‘

At this stage, parties are strongly encouraged to negotiate and reach an agreement. This avoids the need for judicial assessment and reduces further legal costs.  It is important to note negotiations can take place at any stage (include prior to preparation of Points of Dispute), and an amicable/negotiated outcome is usually the most cost-effective outcome for all parties involved, particularly if an attended detailed assessment is to take place if agreement cannot be reached.

5. Detailed or Provisional Assessment:

If agreement cannot be reached, the matter proceeds to assessment. If the total costs claimed are £75,000 or less, the case will typically be assessed through a Provisional Assessment, which is done on paper. If the costs claimed exceed this threshold or if the court considers it necessary, the matter proceeds to a full Detailed Assessment Hearing with oral submissions.

Default Costs Certificates:

If the Paying Party fails to serve points of dispute in time, the receiving party may apply for an Order, known as a default costs certificate. This results in the full amount claimed in the bill being awarded without assessment.

The Importance of Early Settlement in an Assessment of Bill of Costs

This case demonstrates the value of engaging constructively in negotiations. Had the Receiving Party accepted ARC’s reasonable offer of £8,500, they could have avoided the cost of provisional assessment and the additional £950 in assessment costs. In their refusal to settle, they ultimately cost themselves a penalty for failing to beat the offer, as well as having a year in the litigious process (and their own costs and time).

The decision to reject a realistic settlement offer can lead to significantly increased liabilities, particularly in attended detailed assessment which commonly run to in excess of £10,000, and in very high value bills, in excess of £100,000. Courts will often penalise a party who fails to beat a Part 36 or Calderbank offer, reinforcing the need for genuine attempts at resolution before pursuing assessment proceedings.

How can ARC Costs Assist in the Assessment of a Bill of Costs?

ARC Costs’ successful handling of this case reinforces the importance of accurate bill preparation, strategic negotiation, and a thorough understanding of the detailed assessment process. Our early offer was both reasonable and realistic, and the outcome serves as a clear example of how expert cost management can lead to positive results—even in contested assessments.

Do you require assistance with a detailed assessment of bill of costs? ARC Costs are an experienced and independent team of specialised Costs Draftsmen and Costs Lawyers. As independent experts, we can assist either Paying or Receiving parties in resolving costs disputes.

For Receiving Parties we are adept at preparing Costs Budgets and Bill of Costs, as well as providing legal costs negotiations services and preparing Points of Reply. Ultimately we can ensure your legal costs are recovered to the maximum degree possible, and we will always advise on appropriate settlement parameters from the outset for you to determine to what degree you can expect recovery of your legal costs.

Similarly if instructed by the Paying Party, we are adept at settling Points of Dispute, and conducting negotiations to reduce your exposure to legal costs.

Our legal services also extend to costs assistance in Legal Aid cases.

If you would like more information on any of our services or wish to speak to a member of our expert costs team about your legal costs, then please do not hesitate to contact us. Please call one of our independent experts at 01204 397302, or email one of our costs experts direct on info@arccosts.co.uk.

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