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Part 10: Chapter 52

PART 10: THE ASSESSMENT OF COSTS

CHAPTER 52. SUMMARY ASSESSMENT

1. INTRODUCTION

1.1 The extension of summary assessment. Summary assessment was a not a new concept in 1999,¹ but its use was substantially extended when the Woolf reforms came into effect on 26^th April 1999. Before that date almost all costs had been determined by a process of detailed assessment,² if not agreed between the parties.

Summary assessment is the procedure whereby the costs of a hearing (whether interlocutory or final) are dealt with at the conclusion of the hearing by the trial (or hearing) judge. Summary assessment can be contrasted with the process of post-trial detailed assessment which is discussed further in chapter 53. The basis of assessment (i.e. standard or indemnity) and the factors the court will consider in awarding costs are dealt with in detail in chapter 3.

1.2 The power to make summary assessment – CPR rule 44.7. The power to assess costs summarily is provided by rule 44.7 (a) of the Civil Procedure Rules (“CPR”). CPR rule 44.7 provides that where a court makes a costs order against one party (other than an order for fixed costs), it may either (a) make a summary assessment of the amount of those costs or (b) order detailed assessment by a costs officer.³

1.3 When will summary assessment be made? The court should consider assessing costs on a summary basis whenever it makes an order for costs which does not include fixed costs.⁴ The general rule is that the court should make a summary assessment of costs in the following circumstances:

x at the conclusion of the trial of a fast track claim;⁵

x at the conclusion of any other hearing which has lasted not more than one day;⁶ or

x in certain Court of Appeal hearings.⁷

1 See RSC Order 62 rule 7(4)(b).

2 Known as “taxation”.

3 Unless any CPR rule, practice direction or enactment provides otherwise.

4 Costs Practice Direction (“CPD”) paragraph 13.1.

5 In which case the order will deal with the costs of the whole claim.

6 In which case the order will deal with the costs of the application or the matter to which the hearing related or the costs of the entire claim (where the hearing disposes of the claim).

7 CPD paragraph 13.2.

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The courts have held that, although the general rule applies to hearings lasting no more than one day, there is no presumption against summary assessment where the hearing lasts more than one day.⁸ However, the general rule will not apply if there is a good reason why costs should not be summarily assessed.⁹ For example, the issue of costs cannot be dealt with summarily (e.g. if the assessment of costs requires consideration of complex legal arguments) or there is insufficient time. The court will not summarily assess costs in certain defined circumstances (e.g. where the receiving party is a child or protected party).¹⁰

1.4 Who will undertake the summary assessment? Summary assessment of the costs will be carried out by the trial (or hearing) judge. Summary assessment cannot be delegated to a costs officer (i.e. costs judge, district judge etc).¹¹ If summary assessment is appropriate but there is insufficient time, the court must give directions for a further hearing before the same judge.¹²

1.5 The statement of costs. Pursuant to the provisions of the Costs Practice Direction (“CPD”), it is the duty of the parties (and their legal representatives) to assist the judge in making a summary assessment of costs.¹³ To that end, each party intending to claim costs must submit a written statement of the costs he intends to claim in the prescribed form (Form N260).¹⁴ The statement of costs claimed (which may have a schedule attached) must show separately the following:

x the number of hours to be claimed;

x the hourly rate to be claimed;

x the grade of fee earner;

x the amount and nature of any disbursement to be claimed;

x the amount of solicitor’s costs to be claimed for attending or appearing at the hearing;

x the fees of counsel to be claimed in respect of the hearing; and x any VAT to be claimed.¹⁵

1.6 The failure to comply with these provisions, without a reasonable explanation, will be taken into account by the court in deciding what order to make about costs, and the costs of any further hearing or detailed assessment that is necessitated by reason of that failure.¹⁶ Furthermore, in 1-800 Flowers Inc v Phonenames Ltd¹⁷ the court held that, in conducting summary assessment, judges should not apply their own judicial tariffs, but rather summarily assess costs by reference to the detailed breakdown of costs in the statement of costs. Jonathan Parker LJ (with whom Peter Gibson and Buxton LJJ agreed) held:

“However general the approach which the court chooses to adopt when assessing costs summarily, and however broad the brush which the

8 Q v Q (Family Division: costs: summary assessment) [2002] All ER (D) 07 (Jul).

9 CPD paragraph 13.2.

10 CPD paragraph 13.11 (1).

11 CPD paragraph 13.8.

12 CPD paragraph 13.8.

13 See CPD paragraph 13.5 (1).

14 CPD paragraph 13.5.

15 CPD paragraph 13.5 (2).

16 CPD paragraph 13.6.

17 1-800 Flowers Inc v Phonenames Ltd [2001] All ER (D) 218 (May).

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court chooses to use, the assessment must in my judgment be directed to and focused upon the detailed breakdown of costs contained in the receiving party's statement of costs.”¹⁸

1.7 Summary assessment and CFAs. Costs may still be summarily assessed notwithstanding the fact that a party has entered into a CFA. Indeed, paragraph 14.1 of the CPD provides that the existence of a CFA or other funding agreement is not by itself a sufficient reason for not summarily assessing costs. However, CPR rule 44.3A(1) provides that the court will not assess any additional liability (i.e. success fee) until the conclusion of the proceedings or the part of the proceedings to which the arrangement relates. In such a case, the court should nonetheless make a summary assessment of the base costs of the interim hearing or application unless there is a good reason not to.¹⁹

1.8 Payment. Following summary assessment, the paying party will usually be required to make payment within 14 days of the judgment or order specifying the assessed sum to be paid, although the court may specify a later date for payment.²⁰

2. GUIDELINE HOURLY RATES

2.1 Hourly rates before April 1999. Before the days of summary assessment, taxing masters used to arrive at hourly rates by means of a two stage process. This entailed, first, ascertaining the cost to the receiving party’s solicitors of the time which was reasonably spent by appropriate fee earners on the case (the “A” factor);²¹ secondly assessing a reasonable addition for care and conduct relating to the difficulty of the matter (the “B” factor). The solicitors’ profit was derived from the B factor. For a full exposition of how these two factors were assessed see Re Eastwood (Deceased), Lloyd’s Bank Ltd v Eastwood [1975] 1 Ch 112; Leopold Lazarus Ltd v Secretary of State for Trade and Industry (1976) 120 SJ 268; and the article by HH Michael Cook “Solicitors’ Hourly Rates”.²²

2.2 Guideline hourly rates required for summary assessment. If costs were going to be summarily assessed by all judges at the end of hearings, a simpler scheme of identifying rates would be required. This was necessary because (a) the judges doing summary assessments would often have less expertise than the former taxing masters and (b) summary assessment was intended to be a rough and ready process, to be carried out more swiftly than “taxations” under the RSC or “detailed assessments”

under the CPR. Accordingly it was decided that guideline hourly rates should be issued for the assistance of judges doing summary assessments.

2.3 Guideline hourly rates issued by the Supreme Court Costs Office. In the early days of the CPR the Supreme Court Costs Office (“SCCO”) started to publish

18 Ibid, paragraph 115.

19 CPD paragraph 13.12(1).

20 See CPR rules 3.1(2)(a) and 44.8.

21 The solicitor submitted what he considered to be the appropriate hourly cost and the number of hours spent by each fee earner on the case. To this was added an uplift for care and conduct. The court assessed the reasonableness of each element. Various courts up and down the country developed their own going rates for the hourly cost. The Association of Law Costs Draftsmen collected these together and published them, so that it was possible to look at the level of costs generally allowed in a particular place. The going rate figure for hourly rate would then be taken as the A factor.

22 [2005] CJQ 142.

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guideline hourly rates for the summary assessment of costs.²³ The Senior Costs Judge arrived at those rates by consulting with Designated Civil Judges throughout the country, who in turn consulted with their district judges and court users.

Thereafter those hourly rates were subject to percentage adjustments over the years and the revised rates were published in booklets distributed to all judges. The constituent elements of the hourly rates and how those rates were apportioned as between costs and profit were unknown.

2.4 Guideline Rates for 2007 – the last guideline rates set by the SCCO. The final version of hourly rates set by the SCCO was contained in the “Guide to the Summary Assessment of Costs 2007 Edition”.²⁴ Those guideline rates were as follows:

Table 52.1: Guideline hourly rates prevailing during 2007

Band A Band B Band C Band D

London 1 380 274 210 129

London 2 292 222 181 116

London 3 228 184 152 111

(210-246) (158-210)

National 1 195 173 145 106

National 2 183 161 133 101

National 3 167 150 128 95

Band A - Solicitors, over 8 years qualified experience.

Band B - Solicitors or Legal Executives, over 4 years qualified experience.

Band C - Other qualified Solicitors or Legal Executives.

Band D - Trainee solicitors, paralegals and equivalent.

2.5 In the above table “London 1” means solicitors in the City, i.e. EC1, EC2, EC3 and EC4. “London 2” means solicitors in Central London, i.e. W1, WC1, WC2 and SW1. “London 3” means solicitors in Outer London, i.e. all other London postcodes plus Bromley, Croydon, Dartford, Gravesend and Uxbridge. “National 1”, “National 2” and “National 3” mean solicitors in the areas identified below:

National 1

Aldershot, Farnham, Bournemouth (including Poole)

23 These unified rates replaced the former rates, which were built up using the A and B factors.

Senior Costs Judge Peter Hurst tells me that this change was instructed by the then Lord Chancellor (acting on advice). “The actual effect was that the hourly rates increased overnight by 50%. We therefore have a situation where the guideline hourly rates are effectively two thirds solicitors overheads and one third profit. If a 100% success fee is added to that, the profit element becomes distorted. There may be an argument for going back to the original base rate A figure, and allowing solicitors an uplift for care and conduct on that base rate, and allowing in addition a success fee based on the A figure, rather than the A + B figure.”

24 SCCO, January 2007.

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Leeds Inner (within 2 kilometres radius of the City Art Gallery) Lewes

Chelmsford North, Cambridge County, Peterborough, Bury St E, Norfolk,

Bradford (Dewsbury, Halifax, Huddersfield, Keighley & Skipton) Cumbria

Devon, Cornwall Grimsby, Skegness