Costs of Provisional Assessment and Recovery of the Same
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What is a Provisional Assessment?
A Provisional Assessment of costs will take place at the end of Detailed Assessment proceedings if an agreement as to costs cannot be reached between parties on a Bill of Costs valued at £75,000 or less, and the Court is required to assess 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.
Provisional assessment proceedings culminate in a paper based hearing taking place to ensure the costs of detailed assessment are kept proportionate:
(1) This rule applies to any detailed assessment proceedings commenced in the High Court or the County Court on or after 1 April 2013 in which the costs claimed are the amount set out in paragraph 14.1 of the practice direction supplementing this Part, or less.
(2) In proceedings to which this rule applies, the parties must comply with the procedure set out in Part 47 as modified by paragraph 14 Practice Direction 47.
Costs of Provisional Assessment: Negotiation of Costs
Before being awarded costs of Provisional Assessment at a Court hearing, both parties must attempt to negotiate costs through the Detailed Assessment process.
The receiving party must initiate Detailed Assessment within three months of the date of judgment, discontinuance or acceptance of a Part 36 offer to commence Detailed Assessment proceedings.
If the receiving party fails to commence Detailed Assessment proceedings within 3 months, the paying party may apply for an Unless Order requiring the receiving party to commence proceedings within such time as the Court may specify (CPR 47.8). The Court will then set a deadline for assessment proceedings to be commenced, failing which the entitlement to costs will be struck out.
To initiate Detailed Assessment, the receiving party should serve their Bill of Costs alongside their Notice of Commencement on the paying party. The paying party will then have 21 days to submit their Points of Dispute in an attempt to negotiate and reduce the level of costs listed within the Bill.
If the paying party do not submit their Points of Dispute within the required time limits, the receiving party can apply for a Default Costs Certificate, meaning that they will be awarded the entirety of the costs listed within their bill.
If the paying party submit their Points of Dispute within 21 days, the receiving party can further respond by submitting their Replies to Points of Dispute within 21 days. Parties should continue to negotiate costs in this manner until a settlement has been reached. If an agreement as to costs cannot be reached between the parties, the receiving party should make an application to the Court for a Provisional/Detailed Assessment Hearing, depending on the value of the Bill.
Applying for a Provisional Assessment Hearing
“(3) The court will undertake a provisional assessment of the receiving party’s costs on receipt of Form N258 and the relevant supporting documents specified in Practice Direction 47.”
To apply for a Provisional Assessment Hearing, you must complete the N258 Form and prepare the accompanying documentation to be filed – Items to include can be found under PD 47 13.2, some of which are listed below:
- Copy of the Notice of Commencement
- Copy of the document giving rise to an entitlement to costs – Court Order or Part 36 Offer Acceptance
- Two copies of the Bill of Costs
- Points of Dispute
- Replies to Points of Dispute (Preferably in Precedent G format)
- Copies of all fee notes
- Details of any additional liabilities – ATE Insurance Policy or CFA
- Copy of the document informing the client of chargeable rates
- Statement of Address outlining all parties details and references
- All offers made to date in respect of costs, enclosed in a sealed envelope
The correct Court fee must also be paid; this can be found in the EX50A
When the request for a hearing has been filed, the Court will make an Order listing the matter for a provisional or detailed assessment hearing within six weeks. These timescales can vary depending on the particular Court. We would always recommend that negotiations are continued in the interim in an attempt to settle the matter before the hearing is due to take place.
Costs of Provisional Assessment: The Hearing
Under CPR 47.15 (4)
“The provisional assessment will be based on the information contained in the bill and supporting papers and the contentions set out in Precedent G (the points of dispute and any reply).”
The Court Provisional Assessment hearing will be carried out by a Costs Judge/ Costs Officer on paper; they will consider all the information set out within the Bill of costs, as well as the arguments outlined within the Points of Dispute and Points of Reply. The Judge will then come to a decision on the level of costs that should be awarded to the receiving party.
The Judge will then send a copy of the bill as provisionally assessed to all parties. The parties will then have 21 days to contest the bill. Under CPR 47.15 (7):
“When a provisional assessment has been carried out, the court will send a copy of the bill, as provisionally assessed, to each party with a notice stating that any party who wishes to challenge any aspect of the provisional assessment must, within 21 days of the receipt of the notice, file and serve on all other parties a written request for an oral hearing. If no such request is filed and served within that period, the provisional assessment shall be binding upon the parties, save in exceptional circumstances.”
Under CPR 47.15(6), the Judge can make the decision that the matter should be listed for a Detailed Assessment oral hearing if they believe it is more suitable to do so.
“The court may at any time decide that the matter is unsuitable for a provisional assessment and may give directions for the matter to be listed for hearing. The matter will then proceed under rule 47.14 without modification.”
In accordance with CPR 47.22, it is possible to appeal any decision made during the course of a provisional or detailed assessment hearing.
Any appeal notice (N161) must be lodged with a Costs Judge or a District Judge of the High Court within 21 days of the date of the detailed assessment hearing/decision. Directions will then be given, and a copy of the Appeal notice will be served upon any other parties to proceedings.
However, on provisional assessment, the first recourse to contest a decision is to apply for an oral hearing within 21 days of receipt of the provisional assessment decision. This will result in additional costs above and beyond the provisional assessment cap applying, and only on exhausting all provisional assessment/oral hearing options should any steps be taken to an appeal.
Recovering The Costs of Provisional Assessment
In addition to the costs listed within the Bill of Costs awarded at a Provisional Assessment, the receiving 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 any party contests the decision made by the Judge at a Provisional Assessment and proceeds to an oral hearing, they 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.”
How Can ARC Costs Assist?
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.
Should you have a query concerning detailed/provisional assessment, we can be contacted via email at firstname.lastname@example.org 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.