Mis-certification of a Bill of Costs: be careful!
Back in May, I posted a vlog about the SRA’s decision following the Court of Appeal’s Judgment in Gempride v Bamrah  EWCA Civ 1367, the vlog is available >here.
I was therefore very interested to read the recent decision of Master James in the case of Farmer v The Chief Constable of Lancashire  EWHC B18 (Costs) and to share it with you. Here are the key points:
- Mr Farmer (“the Receiving Party”) had the benefit of a costs order against the Defendant (“the Paying Party”).
- A Bill of Costs was prepared, and detailed assessment proceedings were commenced. The original Bill of Costs totalled £174,565.79.
- There were issues over the validity of Conditional Fee Agreements, recoverability of success fees and incorrect hourly rates which led to the service of an amended bill in the sum of £116,192.50. That total was also incorrect, and the Court found that the bill should have been drawn in the region of £66,000 to £69,000.
- The Bill of Costs had been certified as accurate and true. Certain points / items were also maintained through replies and a witness statement.
- Had the Bill of Costs been prepared correctly, then the matter would have been dealt with under the Provisional Assessment scheme. This would have saved substantial time and cost for each party and the Court.
- There were also costs included in the Bill of Costs which were not recoverable inter-partes.
- The Paying Party applied to strike out the remainder of the Bill of Costs, pursuant to CPR 44.11.
- The Court struck out the remainder of the Bill of Costs; the Receiving Party was entitled to nothing.
- The Receiving Party was ordered to pay the costs of the detailed assessment and re-pay the payments on account received.
In Gempride the penalty reduction was 50%. In this case the penalty reduction was a full strike out of the remainder of the costs (circa. £66,000.00 - £69,000.00).
It is fundamentally important to ensure a Bill of Costs has been prepared correctly before you certify it. Mis-certification of a Bill of Costs is a serious issue.
Mistakes happen and the Court will look more favourably on innocent mistakes which are rectified quickly. In this case, the Receiving Party pursued the matter to detailed assessment and maintained retainers that were clearly not enforceable.
In May, I provided five tips to help ensure that you avoid any mis-certification issues. Please >view the vlog to help you check a Bill of Costs (or a costs budget or statement of costs for summary assessment) correctly and to stay clear of any mis-certification arguments and costs penalties.You might also want to use my five tips to create an internal check-list.
Andrew McAulay is a Partner at Clarion and the Head of the Costs and Litigation Funding Team. If you have any questions please contact Andrew on 0113 336 3334 or at firstname.lastname@example.org
Counsel’s fees included in fixed recoverable costs: permission to appeal refused
The Supreme Court has refused permission to appeal in Aldred v Cham  EWCA Civ 1780 on the grounds that the application did not give rise to a point of law of general public importance.
The Claimant was a minor, who had been involved in an RTA. The case considered whether the cost of counsel’s advice on settlement was a disbursement for which an amount could be allowed in addition to fixed recoverable costs.
The Court of Appeal held that the fact that the Claimant was a minor was a characteristic of the Claimant, not a particular feature of the dispute (although obiter, it was also held that the same would apply where age, linguistic ability and mental wellbeing were being considered). Accordingly, the cost of counsel’s advice could not be recovered separately as a disbursement. There are concerns that the ruling disadvantages parties with language or disability issues.
In refusing permission to appeal, the panel did however suggest that it was appropriate for the Civil Procedure Rules Committee (CPRC) to review the matter. The matter was briefly discussed at the May meeting of the CPRC within the topic of vulnerable parties, the costs subcommittee will be considering the matter further.
The recoverable costs of costs management and interest on costs clarified
In Marbrow v Sharpes Garden Services Ltd  EWHC B26 (Costs) the Court confirmed that: (1) the caps on the recoverable costs of preparing the costs budget and other costs management work are exclusive of VAT; (2) that interest on a disbursement funding loan is not recoverable from a paying party; and (3) the entitlement to statutory interest should run from the date of the costs order in all but exceptional circumstances.
- The paying party argued that the caps on recoverable costs set out in paragraph 7.2 of Practice Direction 3E, must include VAT because it was not expressly stated in the Practice Direction to be otherwise. The Court recognised that there was no authority on the point and ruled that the caps must be exclusive of VAT because all the figures set out in a budget also exclude VAT. Furthermore, it was held that if the caps were not VAT exclusive then a VAT-registered litigant would have an advantage over a non-VAT registered litigant in the event of a costs assessment.
- A claim was made in the bill of costs for £2,484.48 in respect of interest incurred under a disbursement funding loan. The paying party argued that the interest was a cost of funding the claim and was therefore irrecoverable in accordance with Hunt v RM Douglas (Roofing) Ltd  11 WLUK 221; unsurprisingly the Court ruled in its favour.
- Finally, it was submitted that statutory interest should run from three months after the date of the order for costs. In making that submission, the paying party could not point to any feature of the dispute to justify a departure from the ordinary rule that interest under the Judgment Act 1838 is automatic from the date of judgment or order for costs. It was not surprising therefore that the Court could not find a good reason to depart from the ordinary rule either.
Lock up and cash flow – How the Precedent H Costs Budget can assist: updating and monitoring is key
In our Costs Management team’s first of many podcast, we include useful tips regarding how the precedent H Cost Budget can assist with lock up and cash-flow. We also discuss the statement of truth and the importance of the incurred costs. Please follow this link to view it.
Sue is a senior associate and the Head of the Costs Management team in the Costs and Litigation Funding Department at Clarion. You can contact Sue at email@example.com and on 0113 336 3389.
Anna is an associate in the specialist Costs Management team in the Costs and Litigation Funding Department at Clarion. You can contact Anna at firstname.lastname@example.org and on 0113 288 5619.
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