What is CPR 44.6?

The Civil Procedure Rules (CPR) govern the management of legal proceedings in England and Wales, including how costs are assessed and awarded. CPR 44.6 allows the court to determine the amount of costs that should be paid and whether those costs should be assessed on the standard or indemnity basis. CPR 44.6 also specifically grants the court discretion in determining the appropriate method for assessing costs, which can either be through summary assessment or detailed assessment under CPR 47.

The method chosen depends on the complexity of the case and the nature of the costs incurred. By allowing for both summary and detailed assessments, CPR 44.6 strikes a balance between efficiency and thoroughness in determining costs.

Civil Procedure Rule 44.6 states the following:

“Procedure for assessing costs

44.6

(1) Where the court orders a party to pay costs to another party (other than fixed costs) it may either –

(a) make a summary assessment of the costs; or

(b) order detailed assessment of the costs by a costs officer,

unless any rule, practice direction or other enactment provides otherwise.

(Practice Direction 44 – General rules about costs sets out the factors which will affect the court’s decision under paragraph (1).)

(2) A party may recover the fixed costs specified in Part 45 in accordance with that Part.”

Summary Assessment of Costs

Summary assessment is a streamlined process of quantifying costs whereby the Court assesses and determines costs at the end of a hearing rather than deferring the issue to a separate detailed process. The purpose of this approach is to ensure that costs are resolved promptly and proportionately, avoiding unnecessary delays in litigation.  It is however, only for modest cost disputes, and summary assessments adopts a “broad brush” type approach to assessing costs.

The Court will typically use summary assessment in the following situations:

• At the conclusion of a fast track trial, which usually lasts no more than one day.
• At the end of any hearing that lasts one day or less, unless there is a compelling reason to defer the assessment (such as complex issues to be considered, or high amounts of costs to be assessed).

In order for a summary assessment of costs to take place, the parties must have filed a Statement of Costs 24 hours before the hearing (or 2 working days if the matter relates to a Fast Track Trial). The Statement of Costs needs to include the hourly rate charged, the number of hours incurred, the grade of the solicitor or fee earner and details of the disbursements incurred.

The Statement of Costs should follow the format of form N260 and must be signed by the solicitor or the client. Form N260 does not need to be used, however, an explanation has to be provided for any deviation from the same.

The judge will review the submissions and make an immediate determination, ensuring that the order for costs is reasonable and proportionate to the case. This method prevents drawn out disputes over costs and encourages efficiency in litigation.

Detailed Assessment of Costs under CPR 47

Where summary assessment is inappropriate, the court will order detailed assessment proceedings under CPR 47. This is a more rigorous process where costs are examined in detail to ensure fairness and accuracy in the amounts claimed.

Detailed assessment is generally required in the following circumstances:

• Multi-Track cases, where the complexity and value of the dispute necessitate a thorough review of costs, and where costs have been specifically budgeted.
• When summary assessment is impractical, such as when a case involves extensive legal work and detailed cost breakdowns.
• In situations where public funds are involved, requiring careful scrutiny.

Under CPR part 47, the party seeking costs (the Receiving Party) must prepare and serve a bill of costs, which itemises the amounts claimed, including legal fees, disbursements, and other expenses incurred. When the opposing (Paying) party has received the Bill of Costs, they should then serve their Points of Dispute within 21 days of service of the Bill. Points of dispute are used as a tool to negotiate a Bill of Costs.

If the paying party does not submit any points of dispute, the receiving party can apply for a Default Costs Certificate. This will allow the claimant to claim the full amount of the bill.

If the receiving party does not accept the paying party’s Points of Dispute, they can negotiate further and also prepare and serve Points of Reply within 21 days, though there are no sanctions for serving these late like with Points of Dispute.

If an agreement as to costs cannot be reached, a costs judge may be needed to decide the level of costs, thus requiring the receiving party to file a request for a detailed assessment hearing.

Applying for a detailed assessment hearing incurs an additional Court fee (scaled dependant on the Bill value). It should be noted that parties are encouraged to engage in Alternative Dispute Resolution (ADR) prior to proceeding to an assessment hearing, and a party’s refusal of an offer of ADR will have serious costs consequences as recently determined by the Court of Appeal.

If costs are agreed, these will be payable within 14 days by default, unless otherwise agreed between the parties.

At ARC Costs, our Costs Draftsmen and specially trained and regulated Costs Lawyers play a crucial role in the effective management of costs under 44.6. They assist in preparing bill of costs, advising on costs assessments (both summary and detailed), negotiating settlements, and responding to costs disputes. Their expertise ensures that process is handled efficiently and in compliance with the rules, and they help parties recover or minimise their costs exposure.

CPR 44.6: Standard and Indemnity Basis Assessment

CPR 44.6 is closely related to the standard basis and indemnity basis of costs assessment, as it gives the court discretion to determine which basis should be applied when assessing costs. These two bases, outlined in Civil Procedure Rule 44.3, dictate how costs are scrutinised and awarded. 

Standard basis of costs assessment

Costs on the standard basis must be:

• Reasonable and proportionate to the matters in issue.
• Assessed with any doubts resolved in favour of the paying party.

This is the default basis of assessment unless the court orders otherwise. It ensures that costs are not excessive and only necessary expenses are recovered.

Indemnity basis of costs assessment

Under the indemnity basis, costs must be:

• Reasonable (but not necessarily proportionate).
• Assessed with any doubts resolved in favour of the receiving party.

This basis is typically awarded in cases involving unreasonable conduct by the paying party, such as misconduct in litigation or rejecting reasonable settlement offers.

However, if a valid part 36 offer is in play, the court’s discretion under CPR 44.6 is influenced by the mandatory costs consequences of Part 36 (CPR 36.17). While Part 36 provides structured costs consequences, CPR 44.6 allows the court some discretion in deciding if there are exceptional circumstances to depart from those consequences. For example, if a party behaved unreasonably or there was misconduct, the court may adjust the costs award accordingly.

Recent case law, such as OMV Petrom SA v Glencore International AG [2017] EWCA Civ 195, highlights that the court can consider the overall conduct of the parties when applying costs consequences under CPR 44.6 and Part 36.

How can ARC Costs Assist with Costs Matters under CPR 44.6?

ARC Costs are an experienced and independent team of specialised Costs Draftsmen and Costs Lawyers. As independent experts, we offer assistance to both Paying and Receiving parties in resolving cost-related issues. We frequently assist with the recovery of costs under CPR 44.6, and as independent experts, we can also assist Paying parties in challenging any costs claims received.

For Receiving parties, we provide assistance with anything relating to your legal costs claim, whether it be preparing a Costs Budget, preparing the Bill of Costs or negotiating recovery of your outstanding fees.

If you require any free initial advice, or our assistance with regards to any aspect of costs, please email us at info@arccosts.co.uk, or contact us via the Contact Us page, and one of the team will get in touch on the same working day. Alternatively, speak to one of the team on 01204 397302.

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