There has been much commentary recently about the use of mediation in legal costs disputes. The recent case of Bristow v The Princess Alexander Hospital NHS Trust (Case No. HQ 12X02176) is a further example.
However, the purpose of this blog is to touch upon the fact that the Receiving Party in this case only received 80% of his costs of the detailed assessment proceedings because the Bill of Costs was reduced by 43% on detailed assessment. Master Simons found that the Bill was “not accurate” and had included “significant amounts which should not have been included”. Master Simons exercised his discretion under section 3 of CPR 47.20, which states the following:
In deciding whether to make some other order, the court must have regard to all the circumstances, including –
(a) the conduct of all the parties;
(b) the amount, if any, by which the bill of costs has been reduced; and
(c) whether it was reasonable for a party to claim the costs of a particular item or to dispute that item.
This case demonstrates the importance of preparing accurate Bills of Costs and only including costs which are recoverable inter partes.
There are still many Receiving Parties who will claim every single unit of time possible and are relaxed about accepting a significantly lower sum for the Bill of Costs through negotiation or on detailed assessment. In my opinion, this is a risky strategy as it can damage a firm’s reputation and create a lack of trust with Paying Parties. Such firms also run the risk of costs penalties under section 3 of CPR 47.20.
In my experience, preparing a Bill of Costs which only includes costs which are recoverable inter partes, often leads to a much quicker settlement and is an approach that should be adopted by all Receiving Parties. This is quite simple, if something is irrecoverable inter partes, then by the very virtue of it being irrecoverable it should not be included in the Bill of Costs, for example administrative time or funding costs. By including it in the Bill of Costs you lose credibility not only with your opponent but also the Costs Judge/Master at the detailed assessment hearing and you also face the risk of a costs penalty.
This blog was prepared by Andrew McAulay, who is a Costs Lawyer and Partner, in the Costs and Litigation Funding team at Clarion.
Andrew can be contacted on 0113 336 3334 or at firstname.lastname@example.org