The defendant costs specialists

Costs estimates transitional provisions

By on Mar 26, 2013 | 3 comments

The other day I commented on the fact the amended costs rules do not appear to have a transitional provision concerning the removal of Part 47.19 offers. I am therefore grateful to Dominic Swallow for pointing out that this is actually tucked away in the Transitional Provisions to the Civil Procedure (Amendment) Rules 2013 at s 22(1):

“The provision made by rule 47.20(1) to (5) and (7) in the Schedule (liability for costs of detailed assessment proceedings) does not apply to detailed assessments commenced before 1 April 2013 and in relation to such detailed assessments, rules 47.18 and 47.19 as they were in force immediately before 1 April 2013 apply instead.”

So far as I can see, this provision is not contained within the body of the CPR or the Practice Direction to the new CPR 47 (concerning Procedure for Detailed Assessment of Costs and Default Provisions). Nor is it contained within the Transitional Provisions section of the Practice Direction to the new CPR 48. It was no doubt sensibly decided that practitioners would find it unhelpful for the transitional provisions relating to detailed assessment proceedings to be located in the same place and it would be far more sensible to scatter them randomly around.

Fortunately, District Judges undertaking provisional assessment hearings have all been given 4.5 hours of training, a quarterly newsletter and a podcast to deal with Jackson implementation and so they will all be fully up to speed with the contents and location of all the relevant rules and provisions.

So the new rules will not apply to detailed assessments “commenced” before 1 April 2013. This is very important as Part 36 will be incorporated into detailed assessment proceedings by CPR 47.20(4). That section is expressly excluded from cases where detailed assessment is commenced pre-1 April 2013 (AFD) by the transitional provision above. I therefore read that to mean that for cases where detailed assessment has already been commenced pre-AFD, a party cannot make a Part 36 offer (or repeat a previous offer as a Part 36 offer post-AFD) and expect it to have the effect of a valid Part 36 offer. This will create yet more confusion.

The new CPR 47.6(1) reads:

“Detailed assessment proceedings are commenced by the receiving party serving on the paying party-

(a) notice of commencement in the relevant practice form; and
(b) a copy of the bill of costs.”

and we should probably treat that as being the meaning of “commenced” for the purposes of the rules (although this could have been drafted more clearly).

It does still leave open a problem of “Part 47.19” offers made pre-AFD and where a notice of commencement has not been served pre-AFD. In that case I would suggest my previous analysis on the last post (and in the commentary section of the blog post) will apply.

Now we’ve cleared that up, lets move on to the next “missing” transitional provision.

The current Costs Practice Direction deals with the consequences of filing inaccurate costs estimates. CPD 6.5A requires a receiving party in detailed assessment proceedings, if there is a difference of 20% or more between the base costs claimed and those shown in an earlier estimate filed, to serve a statement of the reasons for the difference with his bill of costs. CPD 6.6 states that where there is such a difference and it appears to the court that the receiving party has not provided a satisfactory explanation for that difference, or the paying party reasonably relied on the estimate, the court may regard the difference between the costs claimed and the costs shown in the estimate as evidence that the costs claimed are unreasonable or disproportionate.

From AFD costs estimates are replaced by costs budgets and the new corresponding practice direction now has similar provisions relating to costs budgets as previously applied to costs estimates (where the court does not make a formal costs management order).

And what does the corresponding transitional provision say given the rules have removed any reference to costs estimates? Nothing, so far as I can see because there isn’t one.

What is a court meant to do if there is a 20% difference in an estimate, the receiving party has not provided a satisfactory explanation for that difference or the paying party reasonably relied on the estimate, and the costs fall to be assessed after AFD?

Was a conscious decision made to wipe the slate clean for misdemeanours made before AFD? Was the need for a transitional provision overlooked? Have I overlooked the relevant rule? Is it hidden away in Statutory Instrument 2013 No 650 for The Free School Lunches and Milk (Universal Credit) (England) Order 2013?

A free bottle of champagne to the first reader who can locate the missing transitional provision.

    3 Comments

  1. Hmmm…. Tricky…

    I think the answer is that there is no transitional provision covering the ‘Costs Estimate’ point… Because one is not required!

    Para 21 of the Amendment states that the following definition should be entered into the Glossary –

    “Budget” – An ESTIMATE of the reasonable and proportionate costs (including disbursements) which a party intends to incur in the proceedings. [My emphasis]

    So any estimate is also a ‘budget’ for the purpose of the rules and PDs.

    We then turn to Subsection 3 of the PD supplementing Rule 44, which applies to any case where Costs Budgets have been filed in accordance with PD 3E but no costs management order (“CMO”) will have been made. On the face of it therefore this excludes Costs Estimates as they will not have been served pursuant to PD 3E. However Para 3.4 says:

    “On the assessment of the costs of a party, the court will have regard to the last approved or agreed budget, and may have regard to any OTHER BUDGET previously filed by that party, or by any other party in the same proceedings. Such OTHER BUDGETS may be taken into account when assessing the reasonableness and proportionality of any costs claimed.” [My emphasis]

    Therefore in the situation described above in the post a CMO will not have been made but the previous Costs Estimate is a ‘budget’ by definition and as such it appears that the court ‘may’ take it into account.

    I accept that this is removed from the 20% excess and statement of reliance we see in the present CPD 6.5A and the balance of the new PD 3 to CPR 44 and that there is no guarantee the court will take the estimate into account (given the word ‘may’) but equally it appears that the paying party will no longer have to demonstrate reliance!

    Anyway that’s the best I can come up with!

    3 further points:

    1 – Simon, thanks for the kind recognition above, you are welcome and no problem!

    2 – sorry to all for the length of this post

    3 – does the above qualify for the free champers!!!!!

    Dominic Swallow

    26th March 2013

  2. Very good Dominic but I would suggest costs estimates are not identical to costs budgets. A costs estimate for current purposes is:

    “an estimate of costs of –

    (i) base costs (including disbursements) already incurred; and
    (ii) base costs (including disbursements) to be incurred,

    which a party, if successful in the proceedings, intends to seek to recover from any other party under an order for costs”

    whereas a costs budget under the new glossary is:

    “An estimate of the reasonable and proportionate costs (including disbursements) which a party intends to incur in the proceedings”

    Subtly different, but different nonetheless.

    Simon Gibbs

    26th March 2013

  3. Different???

    Not so sure, as the new ‘budgets’ will also include costs incurred, despite the fact that the definition only mentions costs to be incurred…

    Additionally the definition upon which you rely will disappear as of 01/04/13.

    Come, come Simon you’re not wriggling out of the free champers that easily!!!!

    Dominic Swallow

    26th March 2013

Trackbacks/Pingbacks

  1. Legal costs chaos | - [...] What has become clearer by the day is how much those at the coal-face of the reforms are struggling…
  2. Part 47.19 transitional provisions | - [...] correction following this [...]
  3. Inaccurate costs estimates | Legal Costs Blog - […] The move from costs estimates to costs budgets has left rather a mess in the rules due to the…

Post a Reply

Your email address will not be published. Required fields are marked *