Provisional Assessment Costs Cap Refused Despite Low Costs Recovery

 

 

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What is the Provisional Assessment Costs Cap?

Following  Detailed Assessment proceedings, a Detailed Assessment or Provisional Assessment Hearing will be required if an agreement as to costs cannot be reached between parties on a Bill of Costs. If costs are valued valued at £75,000 or less, the case will generally proceed to Provisional Assessment i.e. to be determined on the papers only. It is at this stage that the Court will assess and grant an award of costs.

The procedure for provisional assessment can be found under Civil Procedure Rules (CPR) 47.15, and rules for assessment of costs can be found under Practice Direction (PD) 47. Liability for costs of detailed assessment proceedings can be found under rule 47.20, but the general rule of thumb is that the successful party will recover their costs of detailed assessment from the losing party.  The successful party if a negotiated settled is reach is normally the Receiving Party however, on assessment if a Receiving Party has failed to beat a better offer from the Paying Party, than the Bill has been assessed at, then the Paying Party will recover their detailed assessment costs.

In addition to the costs listed within the Bill of Costs awarded at a Provisional Assessment Hearing, the successful party will be entitled to recover their costs of Provisional Assessment if they are successful in beating any offer received from the Paying Party. These costs will be restricted to £1,500 + VAT plus the Court fee under CPR 47.15 (5).

“In proceedings which do not go beyond provisional assessment, the maximum amount the court will award to any party as costs of the assessment (other than the costs of drafting the bill of costs) is £1,500 together with any VAT thereon and any court fees paid by that party.”

If the decision made by the Judge at a Provisional Assessment Hearing is contested and proceeds to an oral hearing, the contesting party must achieve an outcome that is 20% or more favourable to them than the sum originally awarded in the Provisional Assessment. Under CPR 47.15 (10), they will be required to pay additional costs if this outcome has not been achieved unless otherwise ordered by the Court.,

“Any party which has requested an oral hearing, will pay the costs of and incidental to that hearing unless –

(a) it achieves an adjustment in its own favour by 20% or more of the sum provisionally assessed; or

(b) the court otherwise orders.”

A party may recover more than the costs cap of £1,500 in very limited circumstances. Parties have attempted to obtain more than the costs cap using Part 36 and the consequences of indemnity costs. In cases whereby a party has beaten their own Part 36 Offer, they are usually be entitled recover costs on the indemnity basis from the last date of acceptance specified in the offer. It is likely that those costs will exceed the Provisional Assessment costs cap.  However, in the case of Lowin v W Portsmouth and Co Ltd [2017] EWCA Civ 2172 , there was a costs assessment on the indemnity basis; however, it was held that the Provisional Assessment costs cap continues to apply in these circumstances.

 

UK Sovereign Investments Ltd v Hussain [2022] EWHC 2390 (SCCO)

 

In the case of UK Sovereign Investments Ltd v Hussain costs of provisional assessment in the sum of £12,000 were held to be recoverable by Deputy Costs Judge Campbell despite the Bill being reduced to less than £75,000 through negotiation, the provisional assessment limit, for which a cap of £1,500 + VAT + Court fee limit applies on detailed assessment costs.

The Defendants in the case argued that the initial Bill of Costs which amounted to £83,425 was “grossly exaggerated” and therefore that the consequential costs related to a non-provisional assessment type matter were not reasonable. The Judge; however, stated that although the amount claimed was “odd”, he could not find that the amount claimed within the Bill was not reasonable.

The primary case, which involved a claim for damages and the return of a deposit was settled at just under £104,000 plus costs which were to be assessed if not agreed.

Costs in the case were eventually reduced from £83,425 and agreed at £59,000 (just over 70% recovery, which is not unusual). A further dispute arose as the agreed costs did not exceed £75,000; and therefore the Defendants argued that the Provisional Assessment costs cap of £1,500 should be applicable for detailed assessment costs, rather than the uncapped amounts associated with an attended detailed assessment hearing.

As the initial bill; however, exceeded £75,000, it was considered reasonable that the detailed assessment costs were uncapped. Therefore the Defendants were required to prove unreasonable conduct on the part of the Claimants for the cap to be applied.

Deputy Costs Judge Campbell stated that there was no evidence of unreasonable behaviour or an exaggerated bill simply because the bill had been negotiated and reduced. He stated that the Claimant may have agreed to the settlement to reach finality or speed up the process.

He further stated;

“There may have been many reasons why the claimant was willing to discount the bill about which the court does not know and will never be told,”

Although the Costs Judge did not place the cap on costs of provisional assessment, he did reduce the level of detailed assessment costs claimed from £19,000 to £12,456 as he considered the figure claimed to have been “strikingly high”.

The costs consultant commented on the case stating that it has “‘left the door open to arguments at assessment about whether a costs claim was exaggerated.”

How Can ARC Costs Assist?

ARC Costs are a team of experienced Costs Lawyers and Costs Draftsmen who can assist in the negotiation and recovery of your costs under the Detailed or Provisional Assessment process.

We can assist in the recovery of your legal costs by drafting your Bill of costs, as well as Points of Reply and negotiating your Bill of Costs with the other side before advising on whether the claim should proceed to a Detailed/ Provisional Assessment Hearing. If your claim proceeds to a Hearing, we can ensure that an advocate is made available to attend the hearing on your behalf.

We can also assist paying parties in reducing their legal costs burden, by preparing Points of Dispute and conducting detailed assessment proceedings on your behalf.

We also provide assistance on fixed costs matters.

Should you have a query concerning detailed/provisional assessment, we can be contacted via email at info@arccosts.co.uk or by telephone on 01204 397302. For more information on legal costs, please find out more about our speciality areas of expertise and our services on our legal costs page.

 

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