From 6 April 2019, Practice Direction 21 of the CPR will be amended to make it compulsory for a bill of costs or a “informal breakdown in the form of a schedule” to be prepared and filed with any application for the approval of payment of expenses from the damages of a protected party or minor.
Many cases now settle by way of a JSM or Mediation. We recommend preparing a Bill of Costs for the JSM or Mediation in order to:
- Try and reach settlement of costs at the ADR meeting (to avoid the time and expense of detailed assessment);
- If a settlement on costs cannot be achieved, then to obtain a healthy payment on account; and
- Proceed swiftly post settlement with any application under CPR 21 (where applicable)The bill or schedule should make a clear distinction between inter partes and solicitor/own client costs. In terms of a schedule, we recommend preparing a statement of costs for summary assessment (Form N260 or N260B) which can be adapted, where appropriate.The bill or schedule will enable the Judge at the approval hearing to properly determine the appropriate amount to be deducted from damages, which may include (in terms of a Solicitor) a success fee, ATE insurance premium and any inter partes costs shortfall (if claimed).This blog was prepared by Andrew McAulay who is a Partner at Clarion and the Head of the Costs and Litigation Funding team. Andrew can be contacted at email@example.com or on 0113 336 3334.
The traditional approach to costs recovery has been to prepare a statement of costs for trial, perhaps convert it into a without prejudice schedule of costs for negotiation and, when all else fails, instruct your costs specialist to prepare a formal bill of costs and commence detailed assessment proceedings. Unsurprisingly, this whole process can take many months and, if the paying party are unwilling to make a payment on account of costs, it can cause difficulties with cash flow. This is particularly noticeable for firms with a large caseload.
The tide, however, has started to turn and we are receiving an increasing number of instructions to prepare a skeleton bill of costs in readiness for a JSM. This proactive approach means that your costs are summarised and presented to the opponent on an occasion where, hopefully, they have the appetite for negotiation and therefore there is a realistic chance that both damages and costs can be concluded in one go.
For matters subject to costs management, it is essential that the costs are presented in accordance with precedent H phases to enable the paying party insight into whether there has been any over spend in a particular phase. Costs that fall outside costs management should be isolated and thought should be given to good reasons for departure from the budget if there has been an overspend. This will equip you with the information required to try and persuade the opponent to reach an agreement on costs and avoid the costs associated with detailed assessment.
And, of course, if you are unable to settle your costs then the skeleton bill can be updated and converted into a formal bill of costs in readiness to commence detailed assessment proceedings.
Those clients who adopt a proactive approach to costs recovery are reducing the amount of time it takes to conclude costs negotiations and, ultimately, for the money to reach their bank account. They, wisely, think about the costs aspect of their case in tandem with their client’s claim and they reserve their Costs Lawyer well in advance of the JSM.
Joanne Chase is a Senior Associate Costs Lawyer in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact her at firstname.lastname@example.org and 0113 336 3327, or the Clarion Costs Team on 0113 246 0622.
The case of Jago v Whitbread Group plc relates to the Defendant’s application for an order pursuant to CPR 44.11(1) & (2), which reads as follows:
“The Court may make an order under this rule where –
- a party or that party’s legal representative, in connection with a summary or detailed assessment, fails to comply with a rule, practice direction or court order; or
- it appears to the Court that the conduct of a party or that party’s legal representative, before or during the proceedings or in the assessment proceedings, was unreasonable or improper.”
The Defendant requested that the Court disallow all or part of the Claimant’s entitlement to costs on the grounds of her solicitors improper and/or unreasonable conduct during the detailed assessment proceedings.
The following is a brief summary of the substantive case and detailed assessment proceedings:
- The Claimant brought a personal injury claim against the Defendant, which settled for damages of circa £41,000, with costs to be subject to detailed assessment, if not agreed.
- The matter settled on 4 March 2015 and on 12 March 2015, the Claimant disclosed an informal statement of costs to the Defendant. The statement of costs was a two page document which totalled £101,677.21. The statement included a success fee of 20%, various disbursements in the total sum of £537.00 and two and half hours for preparing and checking the statement of costs. The statement was signed by a senior solicitor and partner at the Claimant’s firm.
- On receipt of the statement of costs, the Defendant’s solicitors responded requesting disclosure of the Claimant’s conditional fee agreement, with the Claimant’s solicitors responding on 18 June 2015, stating that the Claimant “……was not subject to a CFA in regards to this matter”.
- The Defendant’s solicitors responded querying why therefore a success fee of 20% had been claimed in the statement of costs when no CFA was in existence.
- On 19 November 2015, the Claimant served notice of commencement of detailed assessment, with the bill of costs totalling £91,474.41. This bill of costs was of course over £10,000 less than the sum claimed in the statement of costs. Disbursements had been reduced to £430.00 and profit costs had also been reduced. A success fee of 25% was claimed in the bill of costs, despite the correspondence on 18 June 2015 stating that the matter was not subject to a CFA.
- The bill of costs was certified by the supervising solicitor and partner. A claim of three and a half hours was included by a law costs draftsman and one hour by the supervising solicitor to check the bill of costs. The certification confirmed that the bill of costs was valid and accurate (and therefore no breach of the indemnity principle).
- In December 2015, the Defendants served points of dispute and shortly thereafter amended points of dispute raising a number of significant queries and challenges to the bill of costs.
- On 15 January 2016, the Claimant filed and served a fresh bill of costs. Instead of amending the existing bill of costs, the Claimant’s solicitors effectively started the detailed assessment proceedings again with a redrafted bill of costs. The redrafted bill totalled £56,719.00, which represented a reduction of circa. £35,000.00 from the total sum claimed in the bill of costs served in November 2015.
- In respect of the revised bill of costs, the success fee was removed. Disbursements were reduced further to £385.00 and the profit costs sought in the bill were significantly reduced. Again, a claim of three and half hours was included in the bill of costs for a law costs draftsman preparing the same, together with an hour for the supervising solicitor/partner checking and certifying the bill of costs.
- On receipt of the redrafted bill of costs, the Defendant’s solicitors wrote to the Claimant’s solicitors highlighting the procedural error in that they should have simply amended the existing bill of costs rather than creating a new bill of costs.
- In response to that correspondence, on 8 April 2016 the Claimant’s solicitors filed and served a further bill, this time an amended bill of costs. The total sum claimed in the bill was £55,393.19. Profit costs were reduced again together with a further reduction to disbursements. Again, the bill was signed and certified by the supervising solicitor and partner.
Master Whalan found the Claimant’s solicitors’ actions to be “improper” and “unreasonable” and imposed the following penalty for the “improper” and “unreasonable” behaviour:
- The Claimant’s entitlement to costs be disallowed to the extent of 50% of the assessed costs allowed on detailed assessment.
- Specific deductions to the bill of costs (see paragraph 41 of the Judgment). These reductions included time in relation to other work done i.e. preparing, checking and certifying the bill of costs.
In reaching his decision, Master Whalan stated that the breaches in the case were significant, repeated and either unexplained or unjustified (paragraph 40 of the Judgment).
This is an excellent case which demonstrates the importance of preparing an accurate bill of costs and ensuring that a bill of costs does not breach the indemnity principle before certifying the same. What is clear from the Judgment is that Master Whalan would probably have been forgiving for the errors made in the first instance, but the failings the second time round and further failings thereafter were not capable of forgiveness and resulted in the severe penalty reduction of only 50% of assessed costs for the Claimant’s solicitors. So ensure statements of costs and bills of costs are prepared and checked properly!
This blog was prepared by Andrew McAulay who is a Partner at Clarion and Head of the Costs and Litigation Funding Team. Andrew can be contacted on 0113 336 3334 or at email@example.com
In Simpson v MGN Limited & Anor  EWHC 126 (QB), the Claimant failed to submit a revised costs budget to include the costs of a preliminary issue trial and failed to serve a costs statement on the Defendant.
The budget, which the Claimant had filed at the first cmc, included a contingency for a preliminary issue trial. This was not agreed between the parties and the Judge neither agreed nor approved this, simply marking the phase with N/A. The Defendant had also included a contingent phase for the preliminary issue, however the parties had managed to agree the amount, which the court recorded.
The Defendant argued that the costs relating to the preliminary issue trial should not be allowed on the basis that the Claimant had failed to seek a revision. The Judge considered the sequence of events, which included the Claimant providing the Defendant with an updated budget to include the preliminary issue phase. Despite the Claimant failing to request a revision from the court, the Judge found that disallowing the costs would be an unjustly disproportionate sanction, not sufficiently justified by the overriding objective.
The Judge commented as follows:
“The application of the wording of CPR 3.18(b) is not so straightforward in the circumstances of this case, where (a) the receiving party has put forward a budget for this phase of the litigation but one that is not agreed or approved, or disapproved but considered inapplicable; and (b) the paying party has prepared a budget for this phase which has been agreed. I am inclined to think that the wording of CPR 3.18 was not aimed at such a situation, but rather at ensuring that once the court has reached a decision on what it is reasonable for a party to spend on a given phase that conclusion should be final in the absence of some good reason. However, that was not a point addressed in argument and I reach no conclusion on it. Assuming that I am wrong in this it seems to me that on the facts of this case there is good reason to depart from the budget approved by Master Yoxall for this phase of the litigation, by allowing recovery of some costs by the Claimant”.
The Judge also applied the principles in the CPR regarding failure to serve a statement of costs and used his discretion to reduce the statement of costs by 10%.
If you have any questions or queries in relation to this blog please contact Sue Fox (firstname.lastname@example.org and 0113 3363389) or the Clarion Costs Team on 0113 2460622.