Part 8 Costs – Part of Assessment Costs?
The wording of the rules in relation to the recoverable costs of Provisional Assessment continue to cause some controversy. Practitioners may recall that when the rules were initially introduced, it was not clear as to the scope of the costs which were included. There were a number of issues, but one of them was whether the costs of checking and preparing the Bill should be included within the cap.
This arose due to the wording of the Rules which prohibited inclusion within a Bill of Costs of any costs of assessment save for the costs of preparing and checking the Bill. By inference therefore, those costs must have been costs of the assessment process. Many Defendants therefore sought to argue that those costs should be included within the £1,500 allowable on Provisional Assessment, thus reducing, effectively, the recoverable costs of the assessment process.
This led to a revision of the rules in late 2013 which made it clear that the costs of preparing and checking the Bill were not part of the cap.
However, unfortunately that did not put to bed all of the arguments which could be raised. The new attack was that where a claim settled without the need for proceedings and thus Part 8 proceedings were required in order to obtain an Order for costs, it was argued that the costs of the Part 8 proceedings should be included within the Provisional Assessment cap.
To many of us, this was illogical. If correct, this would mean that more work of the actual assessment process would be recoverable where that Assessment Process flowed from an Order in Part 7 proceedings than one flowing from Part 8 proceedings. Why should the (effective) recoverable costs be different?
This argument arose from a 2003 case of Crosbie –v- Munroe which had sought to define the costs which related to the substantive claim as opposed to those costs which related to the assessment.
The whole point behind Crosbie was to determine the effect of a Part 47.19 offer (the rule is now defunct) but which on the wording of the rules was an offer that should have been made purely in relation “to the costs of the proceedings giving rise to the assessment”.
Notwithstanding the fact that that decision was attempting to deal with an entirely different issue (and of course was a decision made 10 years before the introduction of the fixed cap on Provisional Assessment costs) the argument ran that if everything after the substantive claim was part of assessment costs, then it followed that they must be include within the cap. This argument found favour with some Judges, although others found what we would consider to be a more sensible view and treated the costs of Part 8 proceedings as separate.
The Court of Appeal seem now to have settled the issue. In it has come down firmly on the receiving parties’ side such that the costs of Part 8 proceedings are now to be treated as outside the fixed cap for Provisional Assessment.
Hopefully, the application of this decision will put an end to these arguments and what is and is not included within the fixed cap. We see absolutely no difficulty in applying the principles. There will, ordinarily, be negotiations prior to the issue of Part 8 Proceedings and those negotiations will form part of the costs within the cap. It is easy then to distinguish the costs incurred purely in relation to the preparation, issue and service of the Part 8 proceedings. The costs incurred thereafter (normally service of the bill, consideration of points of dispute, serving replies and lodgement) are again part of the costs within the cap.
When preparing the Statement of Costs to be submitted with the Provisional Assessment bundle, make sure you include estimated time for reviewing the Court’s decision and agreeing figures with the opponent. Experience has shown that this can often be a long winded process and you will be selling yourself short if you fail to seek recompense for the time which will be incurred.