When a dispute over legal costs proceeds to detailed assessment, there are two separate questions to consider. The first is how much of the bill should ultimately be paid. The second is who should bear the costs of the detailed assessment process itself.

CPR 47.20 deals with the second of these questions. It sets out the general rule that the receiving party is entitled to recover the costs of detailed assessment proceedings but also gives the court discretion to make a different order. This means that the conduct of the parties, the extent to which the bill has been reduced and the reasonableness of the items claimed or disputed can all affect the final costs position.

 

What does CPR 47.20 say?

Under CPR 47.20, the receiving party is generally entitled to the costs of the detailed assessment proceedings unless an Act, the Civil Procedure Rules or a relevant Practice Direction provides otherwise, or the court makes a different order.

The starting point therefore favours the receiving party. However, it is not an automatic entitlement to recover every cost incurred during the assessment process. The court must consider all the circumstances when deciding whether to depart from the general rule, including the conduct of both parties, the amount by which the bill has been reduced and whether it was reasonable to claim or dispute particular items.

This is important because detailed assessment is itself a costs process. Preparing the bill, reviewing points of dispute, preparing replies, negotiating the amount and attending an assessment hearing can all generate additional costs. The party who ultimately succeeds on the underlying costs dispute therefore needs to consider whether those additional costs will also be recoverable.

 

When will the receiving party recover the costs of assessment?

Where the receiving party has substantially succeeded in recovering the costs claimed, the general position under CPR 47.20 is that the paying party will be responsible for the costs of the assessment.

This does not mean that the receiving party has to succeed on every individual item. A bill may contain numerous disputed items and still result in the receiving party being awarded the costs of the assessment overall. However, the extent of the reductions and the way in which the parties have conducted themselves can influence the court’s decision.

The court may therefore consider whether the assessment was reasonably necessary, how much of the bill was ultimately allowed and whether either party took an unreasonable approach to particular issues.

 

When might the court make a different costs order?

CPR 47.20 gives the court considerable flexibility where the circumstances justify departing from the general rule. Three matters are specifically identified within the rule: the conduct of the parties, the amount by which the bill has been reduced and whether it was reasonable to claim or dispute a particular item.

For example, a receiving party who submits an unnecessarily inflated bill and then suffers substantial reductions may face an adverse costs order. Equally, a paying party who disputes items without reasonable grounds or adopts an unnecessarily obstructive approach to the assessment may find that its conduct is reflected in the costs order.

The court can therefore look beyond the simple question of which party achieved the greater reduction or recovery. The way the assessment has been conducted can be just as important.

 

How do Part 36 offers affect detailed assessment costs?

Part 36 can have a significant effect on the costs of detailed assessment. CPR 47.20 expressly provides that Part 36 applies to detailed assessment proceedings, subject to specific modifications. For these purposes, the receiving party is treated as the claimant and the paying party as the defendant, while the detailed assessment hearing is treated as the trial.

This means that a Part 36 offer made during the assessment process can alter the usual costs position. If a paying party makes a valid offer and the receiving party fails to obtain a more advantageous result at assessment, the receiving party may face liability for the paying party’s assessment costs from the relevant point.

The tactical importance of offers should therefore not be underestimated. Both parties should consider carefully whether an offer reflects the likely outcome of the assessment and what the costs consequences could be if the offer is rejected.

Calderbank offers may also be relevant in appropriate circumstances, particularly where a party wants to protect its position on costs without using Part 36.

 

What happens when the bill is substantially reduced?

The amount by which a bill is reduced is specifically relevant to the court’s decision under CPR 47.20. A substantial reduction may indicate that the receiving party claimed costs which were not ultimately recoverable, and this can influence the court’s approach to the costs of the assessment.

This is one reason why preparing an accurate and defensible bill of costs is so important. A receiving party should avoid treating the assessment process as an opportunity to claim every potentially arguable item without considering whether those costs can properly be justified.

For the paying party, however, a successful challenge to individual items does not necessarily mean that it will automatically recover all of its own assessment costs. The overall result, the extent of the reduction and the conduct of both parties will remain relevant.

It’s worth noting that this inter partes 20% reduction consideration under CPR 47.20 is a separate matter from the one-fifth rule that applies to solicitor-client assessments under section 70 of the Solicitors Act 1974, where a 20% reduction carries its own specific costs consequence. The two shouldn’t be conflated: CPR 47.20 governs disputes between opposing parties over recoverable costs, while the Solicitors Act one-fifth rule governs a client’s challenge to their own solicitor’s bill.

 

What practical steps should parties take?

The costs consequences of detailed assessment should be considered from the outset rather than left until the assessment hearing. Both receiving and paying parties should keep the following points in mind:

• Prepare the bill carefully: A receiving party should ensure that the bill is accurate, properly supported and defensible. Unreasonable or excessive claims can increase the risk of an adverse costs order.
• Assess points of dispute proportionately: A paying party should focus on genuine issues rather than disputing items without a reasonable basis. An unnecessarily aggressive approach can itself have costs consequences.
• Consider offers early: Part 36 or Calderbank offers can provide important protection and should be considered alongside the likely outcome of the assessment.
• Keep a record of conduct: Correspondence, negotiations and offers may become relevant if the court has to decide whether to depart from the usual rule.
• Consider the overall economics: The costs of detailed assessment should be weighed against the amount genuinely in dispute. It may not be proportionate to incur significant costs arguing over relatively modest sums.

 

What is the role of provisional assessment?

Provisional assessment is one route through which certain detailed assessment proceedings can initially be dealt with on paper. Under CPR 47.15, the procedure applies to bills within the prescribed financial limit, currently £75,000. Where the matter remains at provisional assessment, the maximum amount that can generally be awarded for the costs of the assessment itself is £1,500 plus VAT and applicable court fees, excluding the costs of preparing the bill.

There is also a specific costs risk where a party requests an oral hearing following provisional assessment. The party requesting the hearing will generally pay the costs of and incidental to that hearing unless it achieves an adjustment in its favour of at least 20% of the sum provisionally assessed, or the court orders otherwise.

This makes the decision to request an oral hearing an important tactical consideration. A party should assess whether the potential improvement justifies the additional costs risk before making the request.

 

What are the key deadlines in detailed assessment?

Although CPR 47.20 is primarily concerned with liability for the costs of assessment, parties also need to comply with the wider Part 47 procedure.

Detailed assessment proceedings are generally commenced by the receiving party serving a notice of commencement and the bill of costs on the paying party. In the usual case, proceedings must be commenced within three months of the relevant judgment, order or other determination giving rise to the right to assessment.

Once the notice of commencement has been served, the paying party generally has 21 days to serve Points of Dispute. Failure to serve points of dispute within that period can restrict the party’s ability to participate further in the assessment unless the court gives permission, while the receiving party may become entitled to seek a default costs certificate where no points of dispute have been served.

These procedural deadlines should therefore be treated as an important part of managing the costs risk, rather than as administrative matters that can be dealt with later.

 

Who pays the costs of detailed assessment proceedings?

The general rule under CPR 47.20 is that the receiving party is entitled to the costs of the detailed assessment proceedings. However, this is subject to the court’s discretion and any other applicable rule, Practice Direction or statutory provision.

The court can make a different order where the circumstances justify doing so, taking into account matters including the conduct of the parties, the extent to which the bill was reduced and whether it was reasonable to claim or dispute particular items.

Part 36 offers can also significantly change the position. A party that fails to beat a relevant offer may face liability for the other party’s assessment costs despite the usual CPR 47.20 starting point.

 

Why is specialist costs advice important?

Detailed assessment involves more than determining whether individual items on a bill should be allowed or reduced. The overall costs consequences can depend on the level of recovery, the conduct of the parties, offers made during the process and the proportionality of continuing to dispute particular issues.

For receiving parties, careful preparation of the bill and a realistic approach to negotiations can help protect recovery. For paying parties, focused and properly supported points of dispute can help ensure that genuine issues are identified without creating unnecessary costs exposure.

Early specialist advice can therefore help parties understand both the substantive costs issues and the potential consequences of the assessment process itself.

 

How can Greener Costs assist?

Greener Costs provides specialist costs advice to both receiving and paying parties involved in detailed assessment proceedings. From preparing and reviewing bills of costs and drafting points of dispute to advising on offers and assessment strategy, our costs specialists can help you understand the potential recovery and costs risks at each stage.

If you are involved in detailed assessment proceedings and need advice on the costs consequences under CPR 47.20, contact Greener Costs on 01204 263047 or email info@greenercosts.co.uk.

 

Frequently Asked Questions

Who normally pays the costs of detailed assessment?

The general rule under CPR 47.20 is that the receiving party is entitled to recover the costs of the detailed assessment proceedings from the paying party. However, the court can make a different order after considering all the circumstances, including the conduct of the parties and the extent to which the bill has been reduced.

Can a paying party recover the costs of detailed assessment?

Yes. Although the receiving party normally starts with an entitlement to the costs of assessment, the court can order the paying party to recover some or all of its assessment costs where the circumstances justify doing so. A relevant Part 36 offer that the receiving party fails to beat can also have significant consequences.

Does a large reduction in the bill affect assessment costs?

It can. CPR 47.20 specifically requires the court to consider the amount by which the bill has been reduced when deciding whether to make a different costs order. A substantial reduction may therefore increase the risk that the receiving party will not recover all of its assessment costs.

How long does a paying party have to serve points of dispute?

The paying party generally has 21 days from service of the notice of commencement to serve points of dispute. If points of dispute are served late, the party may not be heard further in the detailed assessment proceedings without the court’s permission.

Can Part 36 offers be made during detailed assessment?

Yes. CPR 47.20 expressly applies Part 36 to the costs of detailed assessment proceedings, subject to specified modifications. The outcome of an assessment can therefore have consequences for which party pays the assessment costs where a Part 36 offer has been made.