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The Burden of Proof in Detailed Assessment Proceedings

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Within the legal profession it is often misconceived that the burden of proof in Detailed Assessment (Costs) proceedings is always with the paying party i.e. the paying party has to prove that a receiving parties’ bill of costs is unreasonable or dispropo

Within the legal profession it is often misconceived that the burden of proof in Detailed Assessment (Costs) proceedings is always with the paying party i.e. the paying party has to prove that a receiving parties' bill of costs is unreasonable or disproportionate. However, the burden of proof is not so simplistic and can vary depending on a number of factors. This article will discuss and provide examples of some of the variances.

The burden of proof really depends on what basis the order for costs has been made. There are 2 types of basis, the standard basis and the indemnity basis.

The standard basis

Is confirmed by CPR 44.4 (2):

‘The Court will allow costs which are proportionate to the matters in issue and resolve any doubt as to whether costs were reasonably incurred or reasonable or proportionate in amount in favour of the paying party'.

The burden of proof is therefore on the receiving party to fully justify the bill of costs as any doubt is resolved in favour of the paying party. This enables a paying party to ‘chip away' at a receiving parties bill of costs and means that receiving parties will never realistically recover the full amount of their costs when they are to be assessed on the standard basis.

The indemnity basis

Is confirmed by CPR 44.4 (3):

‘The Court will resolve any doubt that it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party'.

The burden of proof is therefore on the paying party to demonstrate that any costs have been unreasonably incurred or are unreasonable in amount as any doubt is resolved in favour of the receiving party.

One important thing to mention is that the issue of proportionality is included within the standard basis but not the indemnity. This is to provide receiving parties who have received the benefit of an order for costs on the indemnity basis with more costs protection.

However, in my view just because proportionality is not mentioned in CPR 44.4(3) in relation to costs that are to be assessed on the indemnity basis does not mean a paying party can not raise such an argument. CPR 44.4 (1) clearly states that the Court will not allow costs which have been unreasonably incurred or are unreasonable in amount. Surely, if you can demonstrate that a receiving parties' bill of costs is disproportionate to the actual claim then those costs must be unreasonable?  This is an interesting point to consider and well worth raising in Points of Dispute.

When deciding the amount of costs to be allowed the Court should take into account the factors set out in CPR 44.5, which are commonly known as the "seven pillars of wisdom". The factors are as follows:

These are the main factors that both paying and receiving parties should rely on when dealing with costs subject to Detailed Assessment.

Signature of a Bill of Costs

The case of Bailey v IBC Vehicles Ltd 1998 3 All ER 570 is a case which assists receiving parties when seeking to recover costs in Detailed Assessment proceedings. The case concluded that the signing of the bill of costs by a solicitor is enough proof for the paying party that costs claimed in a bill are accurate and are not more than the receiving party is entitled to recover. It was concluded that a solicitor acts as an Officer of the Court when signing the bill and the signature of an inaccurate bill of costs would be treated as a most serious disciplinary offence.

The case should be used to satisfy any concerns a paying party may have over any breaches of the ‘indemnity principle'. The case therefore places the emphasis on the paying party to demonstrate that there is still some reasonable doubt over the receiving parties' retainer. In my experience the case does not prevent paying parties raising unfounded allegations in relation to the ‘indemnity principle' which is clearly done in order to receive disclosure of the receiving parties' retainer.

Conditional Fee Agreements

A further burden of proof in Detailed Assessment Proceedings is with the receiving party in relation to cases funded on a Conditional Fee Agreement (CFA). A bill of costs in CFA cases is treated differently to a conventional bill of costs (privately paying).

This is in accordance with the case of Hollins v Russell [2003] EWCA Civ 718.  The case ruled that given the number of technical challenges to CFA's then the signature to the bill (in accordance with the case of ‘Bailey') was insufficient to satisfy that there had been no breach of either the CFA Regulations or the indemnity principle and should not extend to CFA cases.

In CFA cases the burden of proof is therefore on the receiving party to satisfy any doubts over the retainer. This is often done by disclosing the CFA to the paying party, which was recommended in the ‘Hollins' case in order to avoid ‘satellite litigation'.

Disclosure of Documents

Another scenario where the burden of proof occurs is in relation to the disclosure of documents in Detailed Assessment proceedings. The case of Pamplin v Express Newspapers Ltd [1985] 2 All ER 185  provides useful guidance. The case ruled that a taxing master can override legal professional privilege and order the disclosure of documentation if they are satisfied that there is a factual issue to be decided.

This case therefore places a burden of proof on both receiving and paying parties. The paying party must satisfy the Court that there is a factual issue to be decided in order for disclosure to take place. The receiving party must then disclose (assuming the paying party has satisfied the Court that there is a factual issue to be decided) the documentation sought i.e. the CFA, and prove that it is a valid retainer.

The burden of proof in Detailed Assessment proceedings is therefore not as straight forward as most people think!

It has a number of variances (this article does not list each and every possible burden) and can lead to complex and technical arguments.

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