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Updates, Insight & Analysis

 
     

Important Judgment Shapes The Format Of Bills Of Costs

Oct 13 2015

Our Senior Costs Lawyer Jon Lord analyses the Senior Costs Judge’s recent ruling and its implications for the format of bills of costs.

The Senior Costs Judge has handed down an important judgment on the format of bills of costs in cases which have been subject to costs management.

Dealing with a claim for costs in a clinical negligence case, BP v Cardiff & Vale University Local Health Board [2015] EWHC B13 (Costs), Master Gordon-Saker ruled that the claimant’s bill should not only have been split to enable consideration to be given to the two different tests of proportionality pre and post 1 April 2013 but should also have been divided into parts to reflect the different phases of the budget and the costs of budgeting.

In this case, the claimant had split the bill into different parts to reflect changes in funding arrangements and different periods of VAT but not in relation to the proportionality tests or to reflect the phases of the costs budget.

Whilst the CPR do not explicitly state that a bill should be divided in accordance with the new guidance, it is widely recognised that the traditional format is unsuitable for cases which have been through costs management. As the Senior Costs Judge pointed out, “…on a detailed assessment [ in a budgeted case], the court will need to know which costs are claimed in relation to each phase and will need to know which costs claimed within each phase were incurred before the budget was agreed or approved, as those costs will have to be assessed, and which costs were incurred after”.

If a court cannot identify those costs, it will not be able to give effect to CPR 3.18 which requires it to take into account the receiving party’s last approved or agreed budget for each phase and not depart from it unless there is good reason to do so. In the present case, the court could not comply with CPR 3.18 but the paying party did not raise it as an issue.


The Shape Of Things To Come?

The rules surrounding bill format are still some way behind the reforms on costs management. Whilst ‘J-Codes’ have been approved which will allow more sophisticated time recording according to budget phases, they are still a long way from being commonly used and a new format bill is only scheduled to begin a phase of testing from October 2015.

An amendment to CPR 47.6, applicable from 1 October 2015, requires a breakdown of costs for each budgeted phase to be served with a bill of costs but it is understood that this will not contain the detail now envisaged by Master Gordon-Saker.

The Senior Costs Judge also ruled on the caps prescribed by PD7.2 to Rule 3E, which limit the recoverable cost of preparing a budget to the higher of £1,000 or 1% of the approved budget and the recoverable cost of costs management to 2% of the approved budget. His view is that the term ‘costs’ includes any recoverable success fee and VAT and therefore the cap includes the success fee but in order to apply the rule consistently with the cap on the recoverable costs of provisional assessment, it does not include VAT. It is not known whether that ruling will be challenged further.

At Civil and Commercial Costs Lawyers, we have already adapted our processes to ensure that bills of costs pass through the courts without challenge to the format.

If you would like us to come and talk to you about how the changes affect your firm, or any other costs issues, Jon and the rest of our highly experienced team of Costs Lawyers and Draftsmen will be delighted to help - give us a call on 0207 842 5950 or simply email us at info@civilandcommercial.com