Big reduction in bill is reason enough to reduce costs of assessment

Reducing a bill “substantially” on assessment is reason on its own to reduce the costs of the assessment itself, a Senior Courts Costs Office judge has ruled.

Costs Judge Brown said there was no need to prove any misconduct or other “skulduggery” as well.

In Milbrooke Construction Ltd v Jones [2021] EWHC B20 (Costs), the claimant’s costs were allowed at £81,950, a 39% reduction on the bill, most of which was down to a 50% cut in document time. The judge found the claim for this “highly excessive and unreasonable”.

The defendant argued that this should be reflected in the costs of the assessment.

The sum allowed was significantly above the offers made by the defendant; while the claimant had not beaten its own part 36 offers, it had beaten some of its more recent Calderbank offers.

Master Brown considered at length the decision in April of Deputy Master Campbell in Mulleraj (where the bill was reduced by 44%), and agreed with him that rule 47.20(1) created, in effect, a presumption that the receiving party would receive its costs.

Rule 47.20(3) explicitly required the court to take account of the amount, if any, by which the bill has been reduced in deciding whether to make “some other” order. This meant that “the reduction on the bill may, when considering all the circumstances, be a basis for a ‘different order’”.

Master Brown went on: “Needless perhaps to say, that does not mean that it must impose a different order; the court must always have regard to all the circumstances of the case. Small reductions in circumstances where sums are reasonably claimed are not likely to be enough.

“But it does seem to be that it is not open to a court simply to disregard the reduction in the bill as a factor in determining costs without more.”

He continued that there was “no warrant for reading this provision with the limitation that it applies only where there has been some fraud or some other misconduct (or ‘skulduggery’, as it was put by the deputy costs judge). The terms of the provision carry no such limitation.

“Moreover, Parliament cannot, in my view, be taken to have intended that such a limitation should be read into the provision.”

Indeed, there were “good reasons” why a significantly overstated claim for costs was in itself a circumstance that Parliament intended could result in a ‘different’ order as to costs, even assuming no misconduct.

The CPR were intended to impose a higher discipline on parties in their conduct of litigation than had been the case, he explained, and it was in these circumstances that the principle of costs ‘following the event’ was described a starting point from which a court could more readily depart.

“There seems to me to be no good reason why there should not be the same or similar expectations in respect of claims for costs; and, moreover, that such a discipline should be encouraged by costs incentives under the rules.

“Claims for costs generally require certification by the senior fee-earner of a law firm, and are often prepared by or on behalf of solicitors for their benefit (albeit bills are, of course, brought by direct access barristers and litigants in person). Solicitors are officers of the court and there does not seem to be any good reason why they and other legal representatives should be treated any differently from, and in effect, more indulgently than, ordinary litigants.”

The judge also did not accept the characterisation of a ‘different’ order as a penalty.

He continued: “To my mind, a significant overstatement in a bill is also liable to reduce the prospect of settlement of a claim for costs and to make achieving a settlement more difficult. It can also significantly increase the length of the detailed assessment so that greater costs are incurred in the assessment hearing by both sides than would have been incurred had a more reasonable claim been advanced.”

Master Brown acknowledged too the importance of part 36 and other admissible offers in considering the assessment of costs, “but it seems to me that it follows from the terms of rule 47.20(3) that part 36 offers or other admissible offers are not the only factors to which the court should have regard”.

A “substantial” part of a day of the assessment was devoted to dealing with the time spent on documents – they were the main category of costs and “the main battleground between the parties”.

“The time spent in challenging and preparing for the hearing in respect of the documents time alone was likely to have been substantial. To my mind, it is difficult to see why the costs of resisting what to my mind was a clearly a claim that was unreasonable in amount should not, in some way, be reflected in a ‘different’ order.”

He concluded that a 30% reduction in the claimant’s costs was appropriate.

Alex Bagnall, Costs Lawyer, for the claimant. Francis George, solicitor-advocate, for the defendant.

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Costs News
Published date
21 Oct 2021

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