Cap on costs of provisional assessment
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  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  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:
- 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
- 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.