OPTIONS FOR REFORM

4.1 The summary assessment of costs is not an easy subject to address given the strongly held and polarised views on the issue. However, it seems to me that three possible options need to be considered. I describe each possible option below.

4.2 Option 1: make no change. One school of thought which has been put to me is that the present rules work well and no change is required. This proposition must be seriously considered. It is not the function of this review to make change for change’s sake.

4.3 Option 2: abolition.³¹ Another possible course of action is to abolish the summary assessment procedure. Instead of summary assessment, judges could be encouraged to order (where appropriate) the paying party to make an interim payment on account of costs. The outstanding balance of any costs would then be agreed between the parties or assessed by post-trial detailed assessment.

Alternatively, the judge could make a provisional assessment of, for example, 70% or 75% of the costs claimed at the hearing. Thereafter, that assessment becomes final, unless either party requires a detailed assessment. If a detailed assessment is required, whichever party does worse than the provisional assessment bears the costs of the detailed assessment.

4.4 Option 3: restructure. A less drastic alternative would be to keep the summary assessment procedure, but revise the rules governing its use. For example, the CPR provisions could be redrafted to encourage judges to only consider summary assessment where: (1) they have sufficient expertise (including the relevant training);

(2) there is sufficient time available to undertake the assessment properly; and (3) all those involved in the summary assessment have the necessary information and have had sufficient opportunity to consider it. Further changes could include improving

31 It is argued that summary assessment should be abolished at pages 403-404 of Cook on Costs (2009 edition) by HH Michael Cook.

Chapter 52: Summary assessment

Part 10: Chapter 52

the usefulness of the statement of costs and imposing more extensive costs training requirements on judges who undertake summary assessment. If, notwithstanding such rule changes, the judge is still unable to conduct the summary assessment of costs, the judge would be encouraged to order the paying party to make a payment on account with the balance of costs to be agreed or subject to detailed assessment.

4.5 If option 3 is the preferred route, I request that practitioners inform me during Phase 2 what further information it would be appropriate to include in costs schedules for the purpose of summary assessment.

4.6 The current practice of Mercantile judges. At the mercantile judges’

conference on 27^th February 2009 I was told that it is normal practice for Mercantile judges in heavy one day cases to order post-trial detailed assessment of costs (with a hefty interim payment on account of costs) instead of summary assessment. The subsequent inquiries made by Mercantile judges confirm that in practice detailed assessments very seldom follow the making of such orders. In other words the precise assessment of costs is agreed between the parties, either in the amount of the interim assessment or in some other amount. It may be helpful to bear in mind the experience of the Mercantile judges, when considering the options discussed above.

4.7 Possible revision of the Mars guidelines. In the light of comments made during Phase 1 would suggest that consideration be given to modifying the guidance given in Mars (UK) Ltd v Teknowledge Ltd [1999] 2 Costs LR 44. This guidance has been followed in a number of later decisions and has the effect of restricting the amount of an interim payment on account of costs. One possible option would be for the interim payment to be, not a conservative sum which will inevitably be exceeded on detailed assessment, but instead the judge’s best estimate of the likely final figure less a modest discount of, say, 10%.³² An interim payment on this basis may be more likely to promote settlement, whilst safeguarding the positions of both parties. If the judge has fallen into error and the solicitors cannot agree the correct figure, they can still go to detailed assessment.

4.8 Rates for summary assessment. I have set out in section 2 above the genesis of the present guideline rates for summary assessment. The question now arises whether this review should have any input into the deliberations of the ACCC in relation to rates or whether I should treat that as “no go” area, being entirely within the province of Professor Nickell and his colleagues. I shall seek the views of Professor Nickell on this issue, once he and his colleagues have had an opportunity to consider this Preliminary Report.

5. REVIEW

5.1 During Phase 2 I look forward to receiving comments on the three options identified above and the other matters raised. I should also be pleased to receive any further statistical or other data concerning summary assessment.

5.2 In addressing these issues, it is important to bear in mind that reforms suggested elsewhere in this working paper may have an effect upon summary assessment. For example, extending the scope of the fixed costs regime in the fast track (see chapter 22) would inevitably reduce the number of cases requiring

32 Subject to possible reduction in cases where the paying party is of limited means or there are doubts about the solvency of the receiving party. In either of these situations the risk of an interim payment turning out to be too high may be unacceptable.

Chapter 52: Summary assessment Part 10: Chapter 52

summary assessment, or at least make the process of summary assessment³³ a purely mechanistic one.

33 If the parties cannot agree figures.