Detailed Assessment of Costs

What Is Detailed Assessment?

When litigation concludes and a court orders one party to pay the other's costs, the question of how much those costs should be is rarely straightforward. If the parties cannot agree a figure between themselves, the matter proceeds to detailed assessment. This is a line-by-line examination of the winning party's bill of costs, conducted by a costs judge or district judge.

The process is distinct from summary assessment, which takes place at the end of a hearing lasting less than one day and results in a quick determination. Detailed assessment, by contrast, involves a thorough review of every item of work claimed, and can involve thousands of individual entries covering solicitors' time, counsel's fees, court fees, and other disbursements.

When Is Detailed Assessment Needed?

Detailed assessment arises whenever a costs order has been made (for example, "the defendant shall pay the claimant's costs, to be subject to detailed assessment if not agreed") and the parties cannot negotiate an agreed figure. Common situations include:

• After a successful trial where costs are awarded to the winning party
• Following settlement of a claim where the costs order provides for assessment
• After an interim application where costs are reserved or awarded
• In legally aided cases where the Legal Aid Agency requires assessment

The receiving party (the party whose costs are being assessed) must commence proceedings by serving a notice of commencement along with a copy of the bill of costs, usually within three months of the costs order being made.

The Detailed Assessment Process

The process follows a structured sequence under CPR Part 47:

1. The Bill of Costs

The receiving party prepares and serves a bill of costs in the prescribed format. Since 2022, electronic bills (in Precedent S format) have been required for most work done after April 2018. The bill must set out every item of work claimed, the time spent, the hourly rate, counsel's fees, court fees, expert fees, and all other disbursements. Drafting a bill that is accurate, compliant, and maximises recovery requires specialist knowledge.

2. Points of Dispute

The paying party has 21 days from service of the notice of commencement to serve points of dispute. These are detailed objections to specific items in the bill, setting out why particular costs are unreasonable, disproportionate, or were not necessarily incurred. Failure to serve points of dispute in time can result in a default costs certificate being issued for the full amount of the bill.

3. Replies

The receiving party may serve optional replies to the points of dispute within 21 days. Replies allow the receiving party to respond to the specific objections raised and to justify the costs claimed. While replies are optional, they are often tactically important, particularly where the paying party has raised arguments that could gain traction if left unanswered.

4. The Assessment Hearing

If the bill does not exceed 75,000 pounds, it will usually be dealt with by provisional assessment on the papers. For larger bills, or where provisional assessment has been requested to go to an oral hearing, the case will be listed before a costs judge. At the hearing, each disputed item is examined and the judge determines a fair and reasonable figure.

Standard Basis vs Indemnity Basis

The basis of assessment makes a significant difference to the outcome. On the standard basis, the court will allow only costs that are proportionate to the matters in issue, and will resolve any doubt about reasonableness in favour of the paying party. On the indemnity basis, the proportionality test does not apply, and any doubt about reasonableness is resolved in favour of the receiving party. Indemnity costs are typically awarded where a party's conduct has been unreasonable, or where a Part 36 offer has been beaten.

Why You Need a Costs Lawyer

Detailed assessment is a technical and specialist area. Whether you are the receiving party trying to maximise recovery or the paying party trying to reduce the bill, a costs lawyer brings focused expertise that a general litigation solicitor simply cannot match. Costs lawyers deal with bills of costs, hourly rates, proportionality arguments, and assessment procedure every day.

For the receiving party, a costs lawyer will draft the bill of costs to ensure compliance with the rules, maximise the sums claimed, and present the best possible case at assessment. For the paying party, a costs lawyer will scrutinise every line of the bill, identify items that are unreasonable or disproportionate, and draft points of dispute that give the strongest prospects of achieving a significant reduction.

Typical Timeframes

The receiving party should commence proceedings within three months of the costs order. The paying party then has 21 days to serve points of dispute. After that, the court will either provisionally assess the bill on the papers or list it for an oral hearing. From commencement to final resolution, cases typically take between three months and eighteen months, though complex cases can take longer. Many cases settle through negotiation before reaching a hearing.

The Costs of the Assessment Process

Detailed assessment proceedings carry their own costs. The general rule is that the receiving party is entitled to the costs of the assessment proceedings, but this can be modified if the paying party achieves a significant reduction or makes effective offers under Part 47. Court fees for commencing detailed assessment proceedings vary depending on the size of the bill. The costs of instructing a costs lawyer to handle the assessment are themselves recoverable as part of the costs of the assessment proceedings.

Frequently Asked Questions

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