Costs - Fixed, summary, and detailed assessment of costs

Learning Outcomes

After studying this article, you will be able to explain the three main methods of costs assessment in civil litigation: fixed costs, summary assessment, and detailed assessment. You will understand when each method applies, how the court determines the amount recoverable, and the difference between standard and indemnity basis assessments. You will also be able to identify key procedural requirements and apply these principles to SQE1-style scenarios.

SQE1 Syllabus

For SQE1, you are required to understand the rules and procedures for the assessment of costs in civil litigation. Focus your revision on:

• the distinction between fixed costs, summary assessment, and detailed assessment of costs
• when each method of costs assessment applies and the relevant procedural steps
• the difference between standard and indemnity basis for assessing costs
• the factors the court considers when determining the amount of recoverable costs
• the practical implications of costs management and budgeting in litigation

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. What is the main difference between summary assessment and detailed assessment of costs?
2. When are fixed costs most commonly applied in civil litigation?
3. What is the effect of costs being assessed on the indemnity basis rather than the standard basis?
4. What must a party do to prepare for a summary assessment of costs at an interim hearing?

Introduction

In civil litigation, the allocation and quantification of legal costs is governed by the Civil Procedure Rules (CPR). The court may assess costs using three principal methods: fixed costs, summary assessment, and detailed assessment. Each method has its own rules, procedures, and practical consequences for parties. Understanding these mechanisms is essential for advising clients, complying with procedural requirements, and maximising or limiting costs recovery.

Fixed Costs

Fixed costs are predetermined sums set by the CPR for certain types of claims and procedural steps. They provide certainty and efficiency, especially in straightforward or lower-value cases.

Key Term: fixed costs
Fixed costs are set amounts recoverable for specific steps or types of claims, as prescribed by the CPR, regardless of the actual costs incurred.

Fixed costs most commonly apply in:

• small claims track cases
• certain fast track personal injury claims (e.g. road traffic accidents)
• specified actions where the CPR or a Practice Direction prescribes fixed sums

The amount recoverable is not subject to judicial discretion or assessment, except in limited circumstances. Fixed costs cover only the items specified; disbursements such as court fees or expert fees may be recoverable in addition.

Worked Example 1.1

A claimant wins a fast track road traffic accident claim worth £8,000. The CPR prescribes fixed costs of £1,500 for the pre-issue stage, £1,000 for post-issue work, and £1,000 for advocacy at trial. What is the total recoverable in fixed costs (excluding disbursements)?

Answer: The claimant can recover £3,500 in fixed costs, regardless of the actual legal fees incurred.

Summary Assessment

Summary assessment is a quick, on-the-spot determination of costs by the judge, usually at the end of a hearing or trial lasting no more than one day.

Key Term: summary assessment
Summary assessment is the process by which the judge determines and orders payment of costs at the conclusion of a short hearing, based on a statement of costs.

Summary assessment is most commonly used:

• at the end of fast track trials
• after interim applications or hearings lasting one day or less

The party seeking costs must prepare and serve a statement of costs (usually Form N260) on the other party and the court, typically at least 24 hours before the hearing. The judge will consider the statement, hear any objections, and order payment of a reasonable sum.

Worked Example 1.2

At the end of a one-day interim application, the judge invites the parties to address costs. The successful party has served a statement of costs totalling £2,000. The judge considers the work reasonable and orders the losing party to pay £2,000 within 14 days.

Answer: The judge has made a summary assessment of costs, and the losing party must pay the amount ordered.

Detailed Assessment

Detailed assessment is a line-by-line scrutiny of a party’s bill of costs, usually conducted by a specialist costs judge after the conclusion of a multi-track trial or where summary assessment is not appropriate.

Key Term: detailed assessment
Detailed assessment is the process by which the court examines each item in a bill of costs to determine whether it was reasonably and proportionately incurred.

Detailed assessment is required:

• after multi-track trials
• where the court orders costs to be assessed in detail
• for costs not subject to fixed costs or summary assessment

The process involves:

1. The receiving party serving a notice of commencement and a detailed bill of costs on the paying party.
2. The paying party serving points of dispute within 21 days.
3. The receiving party replying to points of dispute if desired.
4. If agreement is not reached, a detailed assessment hearing is held.

For bills of costs up to £75,000, the court may conduct a provisional assessment on paper without an oral hearing.

Worked Example 1.3

A claimant is awarded costs after a multi-track trial. Their bill of costs totals £120,000. The defendant disputes several items as excessive. At a detailed assessment hearing, the judge disallows £20,000 as unreasonable and orders the defendant to pay £100,000.

Answer: The judge has conducted a detailed assessment and reduced the recoverable costs to £100,000.

Standard and Indemnity Basis

The court will assess costs on either the standard or indemnity basis.

Key Term: standard basis
On the standard basis, only costs that are reasonable and proportionate are allowed, and any doubt is resolved in favour of the paying party.

Key Term: indemnity basis
On the indemnity basis, only costs that are reasonable are allowed, and any doubt is resolved in favour of the receiving party. Proportionality is not required.

The standard basis is the default. Indemnity basis is used where the court disapproves of a party’s conduct or where there are contractual or other reasons.

Worked Example 1.4

A defendant has acted unreasonably throughout proceedings. The judge orders costs against the defendant on the indemnity basis. The claimant claims £50,000. The judge finds all items reasonable and allows the full amount.

Answer: On the indemnity basis, the claimant recovers £50,000, as all costs claimed are reasonable and any doubt is resolved in their favour.

Factors Considered in Assessment

When assessing costs, the court considers:

• the conduct of the parties before and during proceedings
• the value and complexity of the case
• the importance of the matter to the parties
• the skill, effort, and time involved
• approved costs budgets (in multi-track cases)

The court will disallow or reduce costs that are unreasonable or disproportionate.

Exam Warning

If a party fails to file a required costs budget on time in a multi-track case, the court may restrict recovery to court fees only. This can have severe consequences for costs recovery.

Summary

Key Point Checklist

This article has covered the following key knowledge points:

• Fixed costs are set amounts recoverable for certain claims or steps, regardless of actual costs.
• Summary assessment is a quick determination of costs by the judge at the end of a short hearing or fast track trial.
• Detailed assessment is a thorough, item-by-item review of costs, usually after multi-track trials.
• Costs are assessed on the standard basis (default) or indemnity basis (for misconduct or special reasons).
• The court considers proportionality, reasonableness, and parties’ conduct when assessing costs.
• Failure to comply with procedural requirements (such as filing costs budgets) can severely limit costs recovery.

Key Terms and Concepts

• fixed costs
• summary assessment
• detailed assessment
• standard basis
• indemnity basis