A case in which costs were slashed as a result of poor conduct on the part of the receiving party during cost litigation.
When I studied Civil Litigation on my LPC, I had already been drafting Bills of Costs for almost 2 years, though I didn’t consider myself particularly experienced. I was surprised therefore, when after a single afternoon of studying our tutor explained we were all now able to prepare Bills of Costs… Good luck with that I thought.
Over the years, I have encountered many fee earners who greatly value the skill required to prepare an accurate and compliant Bill of Costs, but there is no question that I have also encountered those who consider the task with some condescension. To a degree I don’t blame them, the chances are that like me, they too were mistakenly taught that they could prepare the document in just a few hours.
The recent case of Jago v Whitbread highlights not only the importance of preparing an accurate Bill of Costs, but also (should the task be outsourced) the importance of instructing a cost draftsmen who will prepare the Bill and conduct themselves to the same high standards which you would expect from any other Solicitor or fee earner acting on your file.
CPR 44.11 establishes that the Court can apply sanctions where a party’s conduct in the assessment process is deemed to have been unreasonable or improper.
The court may make an order under this rule where–
(a) 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
(b) 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.
(2) Where paragraph (1) applies, the court may –
(a) disallow all or part of the costs which are being assessed; or
(b) order the party at fault or that party’s legal representative to pay costs which that party or legal representative has caused any other party to incur.
In Jango v Whitbread the costs were prepared by a Trainee Legal Executive and the various certificates signed by a Partner.
There were numerous examples of unreasonable or improper conduct. Profit costs, disbursements and additional liabilities were all claimed incorrectly and in breach of the indemnity principle. A signed statement of costs was initially served to the value of £101,677.21. Following this a Bill of Costs totalling £91,474.41 was served with a signed certificate of accuracy. Upon the Defendant challenging the Bill within Points of Dispute, the Claimant elected to withdraw the Bill and serve a new Bill (again with a signed certificate of accuracy) now totalling £56,719.00. Somewhat staggeringly this Bill was then amended and reduced again to a figure of £55,393.19. It was this final Bill of £55,393.19 which was before Master Whalan when the court was asked by the Defendant to apply a cost sanction in accordance with CPR 44.11.
Somewhat unsurprisingly given the above, Master Whalan accepted the Defendant’s submissions and made a finding that the Claimant’s conduct during the assessment process was unreasonable and improper. Master Whalen stressed that this was a case of ‘cock-up and not conspiracy’ nevertheless the Partner has mis-certified a Bill containing numerous inaccuracies multiple times. In fact even the £55,393.19 Bill included items for which the Claimant had no entitlement to costs.
As a result of this finding the Claimant’s reasonable/assessed costs were subject to a further 50% reduction. In addition, a number of specific items included the drafting and checking of the Bill of Costs were assessed at nil.
The claim for costs which was initially claimed at over £100,000.00 was ultimately settled for £18,000.00 net of the 50% reduction. Once the costs of the various Applications and the assessment procedure were taken into account the receiving party was left recovering £2,515.60 costs in a claim which (if it had been properly conducted) was ‘worth’ £36,000.00.
Part of the explanation given for the errors in the Bill(s) was that the receiving party were unable to afford the instruction of experienced Cost Draftsmen. Master Whalan offers some interesting guidance on the point at paragraph 31 of his judgment, namely he does not accept the Claimant’s reasoning on the basis that:
“The cost of both drafting and checking the bill is included ordinarily and properly in the costs to be assessed and the costs of the detailed assessment are not simply recoverable, but, pursuant to CPR 47.20, ordinarily recovered by the receiving party.”
The lesson to take from this case is an important one. To maximise recovery, ensure that you instruct someone who you trust has the required expertise and knowhow to prepare an accurate and compliant Bill of Costs. In other news, MRN have recently been awarded the 2017 Modern Claims Awards ‘Costs Company of the Year’…