From 1 April 2013 we have a new proportionality test (although it will not apply to work undertaken before that date). New CPR 44.3(2):
“Where the amount of costs is to be assessed on the standard basis, the court will—
(a) only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred”
New CPR 44.3(5):
“Costs incurred are proportionate if they bear a reasonable relationship to—
(a) the sums in issue in the proceedings;
(b) the value of any non-monetary relief in issue in the proceedings;
(c) the complexity of the litigation;
(d) any additional work generated by the conduct of the paying party; and
(e) any wider factors involved in the proceedings, such as reputation or public importance.”
No Practice Direction to explain how this is to be applied.
It is envisaged that the approach proposed by Lord Justice Jackson will apply:
“I propose that in an assessment of costs on the standard basis, proportionality should prevail over reasonableness and the proportionality test should be applied on a global basis. The court should first make an assessment of reasonable costs, having regard to the individual items in the bill, the time reasonably spent on those items and the other factors listed in CPR rule 44.5(3). The court should then stand back and consider whether the total figure is proportionate. If the total figure is not proportionate, the court should make an appropriate reduction.”
Now, back to my post the other day concerning whether costs judges are expected to undertake the arithmetic on a bill following a provisional assessment or whether they simply send the annotated Points of Dispute/Replies back to the parties and it is for them to work out the final figure allowed. Practice Direction 14.4(2) provides:
“Once the provisional assessment has been carried out the court will return Precedent G (the points of dispute and any reply) with the court’s decisions noted upon it. Within 14 days of receipt of Precedent G the parties must agree the total sum due to the receiving party on the basis of the court’s decisions. If the parties are unable to agree the arithmetic, they must refer the dispute back to the court for a decision on the basis of written submissions.”
How does this tie in with the new proportionality test? If, at the end of the provisional assessment, the judge does not know the figure he has allowed (because he has not done the calculations) how does he know whether to apply a further discount to make the costs “proportionate”? The new rules do not envisage any procedure for the parties to return to the court after they have agreed the “total sum due” to ask the court to make a further “proportionality” adjustment if appropriate.
There has been a staggering failure to think through the practicalities of how the new provisional assessment process will work. But then, there was a notable category of lawyer absent from the rules committee: a Costs Lawyer.
3 thoughts on “Provisional assessment and proportionality”
Simon,
I quite agree it is quite bizarre, but then there are other obvious ‘problems’ with the PA scheme. For example, if we are to believe that the Judge will not be doing the arithmetic (presumably so that the parties will believe that the Judiciary are not just reducing Bills by an ‘automatic’ 25% as was believed within the pilot) then why do the offers have to be lodged at the outset of the process? Surely the offers could be submitted once the parties have calculated the result of the judge’s reductions?
As you highlight the above is not the limit of the problems and indeed the new rules create many similar conflicts. All of these problems create their own uncertainties and don’t assist the profession – albeit there is an obvious potential for increased costs work in the short term whilst the profession struggle for guidance on the many, many problems.
The above aside and on a slightly different point my own view is that hidden amongst the new rules and PDs is an even more worrying aspect for the costs profession. Those costs professionals who have been proceeding under the basis that “Oh we’ll there will still be Part 8s and detailed assessments arising from the same” are potentially going to be disappointed – see PD 9.9 to CPR 46.14 (the new Part 8 Costs Only proceedings).
The above PD introduces a power to the Court to summarily assess costs, not just deal with them by detailed assessment!
Now the PD makes it clear that the summary assessment can only take place if a hearing is convened under CPR 46.14, presumably intended to mean if the parties cannot agree an order or some other issue arises. However some courts, for example, Bury CC have always listed Part 8 Costs Only hearings which is adjourned if an order is agreed – it would appear that if the parties attended such a hearing the Court could now be invited to summarily assess the costs, providing it has all the information to do so!
Even if the Court can be persuaded not to summarily assess at that hearing but order the matter for detailed assessment then the Court will still be ordering a ‘reasonable’ payment on account following CPR 44.2(8).
It is going to be very interesting to see how the above plays out and even more interesting to see how long it takes Courts that don’t like detailed assessments to try to switch to summary assessment where possible! And all of this against a background where as I understand it the judges are being told to summary assess wherever possible.
I can only assume that this issue is a ‘clever’ way that the rules committee have found to try to expedite the reduction of the ‘tail’ many in the costs industry have always referred to.
Finally apologies to all for the length of the post however I thought it important to bring the above to people’s attention as I have not seen it mentioned anywhere.
I am sure others may have a different view but the PD is quite clear – I accept it says ‘should’ and not ‘must’ but still quite worrying!
In relation to provisional assessments other than between the parties, there’s a curious inconsistency in PD 47 between para 17, which deals with LSC-only assessments and para 18, which deals with assessment of costs payable out of other sorts of fund.
In the latter case, para 18.6 reflects the old CPD 44.6 by providing that if you don’t accept the result of a provisional assessment you should inform the court within 14 days that you want a hearing.
However, in the case of LSC-only provisional assessments, para 17 says nothing about what to do if you don’t accept the provisional assessment, ie it does not reflect the old CPD 43.6. That worried me until I found that Rule 47.18(7)- which is in similar terms to the old Rule 47.17(7) – states that ‘The court will fix a date for an assessment hearing if the solicitor informs the court, within 14 days after receiving the provisionally assessed bill, that the solicitor wants the court to hold such a hearing.’
I’ve often wondered why it is necessary to have practice directions that do little more than re-state the rules. However, if we must have them, can’t they at least have some consistency of approach?
Maybe the MoJ has adopted as its mission statement G K Chesterton’s ‘If a thing is worth doing, it is worth doing badly.’
Pingback: PROVISIONAL ASSESSMENT OF COSTS: LINKS TO HELPFUL GUIDANCE | Civil Litigation Brief