General rules on costs

In England and Wales, the general rules on legal costs are governed by the Civil Procedure Rules (CPR) and the overriding principle of ensuring fairness and proportionality. 

As a general rule, the losing party in civil litigation usually pays the costs of the winning party. This is known as the “costs follow the event” rule.

The court may decide otherwise depending on the circumstances (e.g., the conduct of the parties or offers made during the case).

While the general rule is that the loser pays, the court has wide discretion to decide who is entitled to costs and how much they should be.

The court considers factors when making a costs order, such as:

• The conduct of the parties.
• Whether the parties tried to settle the matter before trial.
• The success of the parties on different issues.
• The use of Part 36 offers (formal settlement offers).

What is a Detailed Assessment of Costs?

A detailed assessment of costs usually occurs on conclusion of a case to decide the full amount of costs payable. It can take place between a Solicitor and Client (under the Solicitors Act 1974), if the client challenges the Solicitor’s bill, or between a successful party and unsuccessful party to a case (referred to as an inter-partes costs dispute), to decide how much costs are owed to each party. 

In inter partes disputes, the winning party, known as the receiving party, is entitled to recover their costs and disbursements from the losing party, known as the paying party.

Detailed Assessment Proceedings at Court may be required if the parties cannot negotiate a settlement as to costs.

The Detailed Assessment of Costs Process

On successful conclusion of the case, the first step for the receiving party must file a detailed Bill of Costs. This outlines the costs for any work done in conducting the case, as well as disbursements. The bill should then be served on the paying party alongside a Notice of Commencement, commencing the detailed assessment of costs process.

When the 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 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.

Detailed Assessment Hearings

Following an application to the Court for a detailed assessment hearing, a Court Order should be received within 6 weeks, listing the matter for a detailed assessment hearing, or a provisional assessment hearing.

Provisional Assessment Hearing 

A matter will be listed for a provisional assessment hearing if the Bill is valued at £75,000 or less. This is usually done on paper with no requirement for parties to attend. However, an oral hearing can be requested if any party wishes to contest the outcome of the paper assessment. 

This however, is at extra cost for which the applying party will not recover their costs if they fail to alter the outcome by more than 20%.

Detailed Assessment Hearing 

An oral assessment, in which both parties should attend, will be listed if the Bill of Costs is valued in excess of £75,000. It is recommended that a costs specialist is instructed to attend a Detailed Assessment Hearing so that you achieve the best result possible.

After both types of hearing, the judge or authorised Court Officer issues an order determining the amount of costs that the paying party must pay. They may reduce or uphold the costs claimed, and the paying party is generally expected to pay the final assessed amount within 14 days.

How Can ARC Costs Assist?

ARC Costs are highly experienced and have been successful in costs recovery in the majority of our dispute resolution cases.

We can assist in claiming legal costs by drafting your bill of costs, as well as settling points of reply and negotiating your bill of costs with the other side before advising on whether the claim should proceed to a Detailed Assessment Hearing.

We can also provide legal advice and assist in the negotiation of a bill of costs, irrespective of whether you are a receiving or paying party.

We can be contacted via email at info@arccosts.co.uk, or by telephone on 01204 397302 for a free, no obligation discussion.

For more information on legal costs, please find out more about our speciality areas of expertise and our services on our legal costs page.

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