The defendant costs specialists

Cap on costs of provisional assessment

By on Dec 21, 2017 | 4 comments

The Court of Appeal has given an important judgment on the issue of the costs of provisional assessment.  In W Portsmouth and Company Ltd v Lowin [2017] EWCA Civ 2172, the Court ruled that the £,1500 cap on the costs of provisional assessment continues to apply even where a party has succeeded on a Part 36 offer made in the assessment proceedings.

This is to be distinguished from the situation where a party succeeds on a Part 36 offer in relation to a fixed fee matter.  In that case, Part 36 trumps fixed fees (as per Broadhurst v Tan [2016] 1 WLR 1928).

This is a sensible decision and should speed up the provisional assessment process by reducing the scope for argument and ensure the overall costs are proportionate.

Interestingly, an unnamed spokesman for the Association of Costs Lawyers was reported as commenting:

“While the clarity provided by the ruling was needed, the outcome is very harsh for costs lawyers.

There will be plenty of cases where the paying party does not accept a part 36 offer and instead causes the other side to spend significantly more than £1,500 in dealing with costs issues.

But on beating their own offer at assessment, the receiving party enjoys all the usual benefits, except in relation to this one aspect of their case. And it will be their costs lawyer who suffers through no fault of their own.

We call on the Civil Procedure Rule Committee to consider the impact and fairness of this ruling – making this exception seems at odds with the thrust of the whole part 36 scheme.”

I am not sure I agree.

Plainly, this decision will have no adverse impact on in-house Costs Lawyers.

It will also have no impact on Costs Lawyers employed by costs firms.

I believe the “harsh” outcome being described was intended to mean: “Costs Lawyers who own their own costs firms and who conduct costs litigation on a CFA Lite basis will lose out because they will be unable to recover any shortfall between the work undertaken and the cap of £1,500”.

I do not know how common it actually is for costs firms to agree to limit their fees to the level of costs recovered from the other side.

More to the point, although there will clearly be some exceptions, generally the reason the level of costs exceeds the £1,500 cap in provisional assessment matters is because:

  1. The receiving party has ignored PD 47 para.12.1: “A reply served by the receiving party under Rule 47.13 must be limited to points of principle and concessions only. It must not contain general denials, specific denials or standard form responses”; or
  2. the paying party has ignored PD 47 para.8.2: “Points of dispute must be short and to the point. They must follow Precedent G in the Schedule of Costs Precedents annexed to this Practice Direction, so far as practicable.”

If Costs Lawyers comply with the Practice Direction, their costs of assessment should rarely exceed the cap.

    4 Comments

  1. Hi Simon

    This is a very quick summary of an eventful year in costs in 2017. We can call these the new 7 pillars of wisdom

    1) Assignment was too complicated to govern, restrict or control so it was allowed.
    2) Costs Budgets will remove the need for most Detailed Assessments (unless you are gearing up to take more silly de-minimis issues to the C of A.
    3) ATE premiums still cant be touched despite the fact that most cases never required them anyway.
    4) ATE premiums can still be purchased at the outset (some fool was obviously not around when Callery v Gray was handed down dealing with that point).
    5) We have new rules that don’t fit the existing framework.
    6) We have a new bill of costs on it’s way that has more potential flaws then Britain’s Brexit deal.
    7) Now if we have to deal with people who take silly points (as per points 2 & 4) but now we can only recover £1500 for it.

    Merry Christmas all and happy new year.

    santajack

    21st December 2017

  2. It’s #3 and #4 that amaze me. In clinical negligence, how can it be reasonable in any sense to buy an ATE policy for several thousand pounds which covers only liability/causation reports when its obvious from the outset that no expert report on liability/causation is needed?! And a lot of those policies restrict greatly the cost of the reports – like the first report must cost no more than £1000 including VAT in some policies. Most of the time, the premium costs more than the total cost all the liability/causation reports obtained!

    It’s also strange how the cost of insuring the relatively tiny amount of the reports is usually several thousand pounds, yet you can also buy a policy that covers the enormous cost of everything else (but not recoverable between the parties) for just a few hundred pounds. While I understand that judges are not underwriters, surely they are not stupid? Yet they allow the ridiculous premiums.

    Sigh.

    Costing Person

    22nd December 2017

  3. Lowins is technically correct but morally wrong. At the very least there should be judicial scope to move the cap on grounds of conduct (including P36) even if only by a %.

    I’d be interested to know what research went into the formulation of the £1,500 cap…..what’s that you say? None? No that cannot be right for the leading legal system in the world. We would not just “wing” these decisions….why that would be as mad as forcing on an industry an untested Blue Peter Excel spreadsheet despite the absence of supporting infrastructure and a chorus of disapproval by almost everyone who would not gain financially from its implementation…no that would be something they did in South Korea wouldn’t it?

    Catty McCat

    3rd January 2018

  4. Edit – North Korea. They would NEVER do that in South Korea.

    Catty McCat

    3rd January 2018

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