30 October, 2014
Provisional assessment was introduced as part of the Jackson reforms in April 2013. The procedure applies to all detailed assessment proceedings commenced in the High Court or County Court on or after 1 April 2013 where the amount of costs claimed is £75,000 or less.
How does it work?
If a Provisional Assessment is requested, a judge will assess the receiving parties' costs on paper. The Provisional Assessment is based only on the information contained in the bill and the supporting papers i.e. points of dispute, replies, costs order and fee notes. Copies of any Part 36 offers made in respect of the costs claimed must be sent to the Court in a sealed envelope marked "Part 36 or similar offers".
Once the Court has completed the Provisional Assessment it will return copies of the assessed bill with the court's decision noted upon it to both parties. The parties then have 14 days to agree the total sum due. If the parties are unable to agree the final figure then the matter is to be returned to the Court with written submissions from both parties for a final determination at an oral hearing. The party who requested the oral hearing will pay the costs of that exercise if it does not achieve a 20% improvement upon the Provisional Assessment.
Does it work?
The Provisional Assessment procedure has been criticised as it can result in unpredictable and unfair decisions. The Judge is unfamiliar with the case and is allocated only 45 minutes to assess a bill. As the exercise is entirely paper based and no representations are permitted the outcome of the Assessment depends very much on the judge.
The costs of the procedure have been limited to £1500 plus VAT; whilst this prevents either side incurring excessive costs on costs, it has removed some of the impetus from both sides to settle the claim. The result therefore has been an increase in parties commencing the Provisional Assessment procedure. The Court undertakes to complete the assessment in less than 6 weeks, however there are reports that due to the heavy back log in some courts, some assessments have taken up to 10 months to complete.
Whilst it is perhaps too early to judge how the new procedure is working in practice, our experience at Forbes on the whole has been positive. It is true that parties are increasingly less likely to enter into meaningful negotiations and instead prefer to opt for the Provisional Assessment procedure but this has resulted in reduced costs overall. The key is to ensure that concise Points of Dispute are filed and realistic offers made at the outset to ensure the parties' position is protected.