The last of Jackson LJ’s Civil Costs Review Seminars was concerned with the detailed assessment procedure. There was overwhelming, if not unanimous, support for the introduction of provisional assessments of costs on paper.
In the recent Written Ministerial Statement by Parliamentary Under-Secretary of State for Justice (Jonathan Djanogly MP), confirming that the Government planned to press ahead with the Jackson proposals, it was announced that there were a range of continuing judiciary-led costs and case management work including a “pilot of assessing disputed costs under £25,000 on the papers rather than at a hearing, in Leeds, Scarborough and York County Courts from October 2010”.
The new rules relating to the pilot scheme are incorporated in the 53rd CPR Update and will run from 1 October 2010 to 30 September 2011.
The first thing to note is that the pilot applies to cases where the base costs are £25,000 or less. With success fees and ATE premiums this will catch a large number of claims. It is not immediately obvious from the new rules whether the onus will be on the receiving party to specifically request the provisional assessment or whether someone at the court will be sitting there with a calculator to check the level of base costs is above or below £25,000. If the onus is on the receiving party, it is not clear what the sanction, if any, would be for getting this wrong.
The aim of the new scheme is clearly twofold:
1. Reduce the amount of court time taken up by detailed assessment hearings.
2. Reduce the high costs to the parties that are currently incurred in relation to fully contested detailed assessment hearings.
It is worth exploring the likely success of the pilot scheme in achieving these aims.
Apparently, the current thinking is that it is estimated that under the pilot scheme it should only take the judge about 45 minutes to review the documents provided and come to a decision. This is clearly significantly faster than the time taken currently in relation to detailed assessment hearings where much longer is needed for even the lowest value and most straightforward claim. There are, however, a number of potential problems.
At the last of the Jackson Review Costs Seminars, hosted by the Supreme Court Costs Office Practitioners’ Group and Reed Smith LLP, there were only two dissenting voices to the idea of provisional paper assessments. One was a regional costs judge and the other was a principal costs officer. Their concern was that such a process would lead to an unmanageable surge in detailed assessments that would overwhelm the courts. Far from reducing the amount of time the courts spent dealing with costs matters, it would have the opposite effect.
Currently, the detailed assessment route is an expensive one. With lower value claims the costs of detailed assessment can outweigh the costs of the substantive claim. Even on no more than medium sized bills, the detailed assessment costs can easily run into five figures. Therefore, parties, or at least those properly advised, will be reluctant to proceed down this route if it can be avoided. With the provisional assessment, the only cost that will be incurred, beyond the costs of Points of Dispute and any Replies already incurred, will be the court fee. The court fee for bills that do not exceed £15,000 is £300. For bills which exceed £15,000 but do not exceed £50,000 the fee is £600. Either party can therefore obtain a provisional assessment for a bill of up to £50,000 for no more than £600. This is certainly set at a level where the costs of assessment are unlikely to act as a disincentive, unlike the current level of costs.
A large number of cases currently settle after the matter has been listed for an assessment hearing but before the actual hearing. This is often only a day or two before the hearing. No doubt this is usually caused by the approaching hearing suddenly focusing the minds of those involved. Even a very late settlement will avoid the majority of the assessment costs. The judiciary routinely complain about late settlements of costs disputes. (This is a routine occurrence in substantive litigation as well, of course.) In reality, it is probably only because of late settlements that judges are able to keep on top of some of their paperwork. If late settlements did not occur, the courts would probably grind to a halt.
With the provisional assessment process will there be any incentive on parties to review and try to settle costs in advance of hearings? The court fee will already have been incurred and no further saving will be available. There is certainly every possibility that parties will be more likely to request assessments in the first place and then less likely to look to compromise matters before the assessment has actually occurred.
The second problem is that there is an automatic right to seek a full oral detailed assessment if either party is unhappy with the provisional assessment. Given it appears that there will be no reasons given for reductions made, or not made, to bills, there has to be a real possibility that there will be just as many full detailed assessments as there are presently. The worst case scenario is that the courts are faced with a large number of provisional assessments that they did not previously have to deal with and no reduction in the number of full assessment hearings.
Whether the provisional assessment pilot increases or decreases the workload of the courts remains to be seen.
We’ll examine the other issues on another day.