Cost assessment in transition

The amended civil procedure rules and other major changes from 1 April 2013, implementing the Jackson reforms, contain a bewildering array of transitional provisions. Nevertheless, a proper grasp of the provisions is essential.

The provisional rules as first drafted for the new proportionality test suggested this would apply retrospectively to all work done before 1 April 2013 unless proceeding had been issued by that date. It was then announced that this would be amended so that all work done pre- 1 April 2013 would be subject to the old test and any work done post-April 2013 subject to the new test.

We now have the Civil Procedure (Amendment No.2) Rules 2013 to deal with this amendment but this gives us something different again:

"Paragraphs (2)(a) and (5) do not apply in relation to-

(a) cases commenced before 1 April 2013; or

(b) costs incurred in respect of work done before 1 April 2013,

and in relation to such cases or costs, rule 44.4.(2)(a) as it was in force immediately before 1 April 2013 will apply instead."

What this means is that the old proportionality test will apply to all work done for cases where proceedings have been issued before 1 April 2013. By the time you read this it is probably too late to have made a firm-wide decision to issue on everything.

Offers in detailed assessment proceedings are currently governed by CPR 47.19. That rule disappears from 1 April 2013 with Part 36 then applying to detailed assessment proceedings. Unfortunately the transitional provisions say nothing about a successful Part 47.19 offer made before 1 April 2013 where costs come to be assessed after 1 April 2013.

So what does a paying party do who believes he has made a good Part 47.19 offer back in January if the matter is not settled pre- 1 April 2013? It would almost certainly be a mistake repeat the offer as a Part 36 offer post- 1 April 2013. Acceptance by the receiving party of the Part 36 offer would immediately deprive the paying party of any right to any of their detailed assessment costs and would give the receiving party a right to all their assessment costs up to the date of acceptance (including those incurred after the reasonable offer was made).

A paying party must hope that the Part 47.19 offer is part of "all the circumstances" the court will take into account when deciding whether to depart from the general rule that the receiving party is entitled to their costs of the detailed assessment proceedings.

The current Costs Practice Direction 6.5A requires a receiving party in detailed assessment proceedings, if there is a difference of 20 per cent or more between the base costs claimed and those shown in an earlier estimate filed, to serve a statement of the reasons for the difference with his bill of costs.

Costs Practice Direction 6.6 states that where there is such a difference and it appears to the court that the receiving party has not provided a satisfactory explanation for that difference, or the paying party reasonably relied on the estimate, the court may regard the difference between the costs claimed and the costs shown in the estimate as evidence that the costs claimed are unreasonable or disproportionate.

From 1 April 2013 costs estimates are replaced by costs budgets and the new corresponding practice direction now has similar provisions relating to costs budgets as previously applied to costs estimates (where the court does not make a formal costs management order).

Again, unfortunately it appears that the need for a corresponding transitional provision was overlooked. What is a court meant to do if there is a 20 per cent difference in an estimate, the receiving party has not provided a satisfactory explanation for that difference or the paying party reasonably relied on the estimate, and the costs fall to be assessed after 1 April 2013? Anybody's guess.