15 March 2023
Points of dispute (PoDs) that simply said the time claimed in respect of documents was “either unnecessarily incurred and/or unreasonable amount” were insufficiently particularised, the High Court has ruled.
Taking a broad brush approach like this would mean less work for the Costs Lawyers involved, said His Honour Judge Gosnell, sitting in Leeds as a High Court judge, and may also be tactically smart.
The Costs Lawyer who acted for the claimant receiving party in O’Sullivan v Holmes & Hills LLP  EWHC 508 (KB), Kain Knight director Nick McDonnell, described it as “another defining case which reaffirms that a paying party must meaningfully attempt to identify not only specific ‘items’ in bills of costs they wish to challenge, but also any specific entries in documents schedules”.
He continued: “Failure to do so is likely to result in the point of dispute being dismissed in its entirety.”
The Essex-based law firm acted for Danny O’Sullivan in a successful personal injury claim. He was awarded £80,000 in damages and Holmes & Hills accepted £45,000 in costs. It then sought to recover a further £17,000 from him under the terms of the retainer.
Mr O’Sullivan instructed different solicitors to challenge the deduction under section 70 of the Solicitors Act 1974.
There were 116 items in the bill and the case concerned two of them, on time spent by five different fee-earners on documents totalling £27,500. Each entry referred to a schedule – one was six pages long and contained 83 separate entries for tasks carried out, specifying the fee-earner involved, the time spent and the date the work was done. The other ran to just over a page and contained 17 entries.
The points of dispute simply said: “The time claimed in respect of documents is disputed as being either unnecessarily incurred and/or unreasonable amount.”
District Judge Batchelor carried out a provisional assessment, finding the time claimed unnecessarily incurred and/or unreasonable in amount. Holmes & Hills sought an oral hearing, contending that the PoDs were inadequately pleaded by failing to state concisely the nature and grounds of dispute bearing in mind the significant number of entries on each of the schedules.
Mr Simpson for the respondent countered that the PoDs contained sufficient material for the judge and law firm to respond fairly to them. Both counsel relied on the 2020 Court of Appeal ruling in Ainsworth v Stewarts Law, in which it upheld a decision by the Senior Costs Judge to dismiss overly generalised PoDs.
DJ Batchelor dismissed the challenge, saying the paying party had “appropriately engaged with 46.9(3); they had specified the specific item in the bill”. She continued: “I do not accept this reference that ‘items’ meant ‘entries’ in Ainsworth. To adopt that would mean that each and every timed entry would have to be specifically addressed, and that is going back to what I will describe as the ‘bad old days’ that Sir Rupert Jackson was so keen we move away from.”
On appeal, HHJ Gosnell said the “real issue” was how the district judge should have interpreted Ainsworth.
“I do not think it is helpful to ask whether Lady Justice Asplin knew the difference between ‘items’ and ‘entries’. I have little doubt that she would have done, if the distinction was explained to her.” The terms were used interchangeably in Ainsworth, he found.
HHJ Gosnell continued: “On the basis of my interpretation of the judgment in Ainsworth, the points of dispute in the current case do not satisfy the requirements of CPR 47PD paragraph 8.3 in that they do not identify specific points stating concisely the nature and grounds of dispute.
“The receiving party cannot identify which individual units of work are disputed and why. The assertion that the time was either unnecessarily incurred or unreasonable in amount is an assertion of two alternative allegations which are actually completely different…
“The receiving party is entitled to know which of these two allegations applies to any unit of work challenged so that it can meet the challenge with an explanation or evidence. To allow a generic alternative challenge to stand in relation to potentially any and all entries in the schedule is clearly unfair to the receiving party.”
The judge noted that the PoDs in Ainsworth which were found to be inadequate “were actually significantly more extensive than the one sentence point of dispute in the current case”.
The district judge was “right to record Lady Justice Asplin’s remark that ‘This need not be a lengthy process’”, he said, but “the length of the process is in the hands of the paying party”.
“If there is a documents section as in this case where there is a schedule with 83 timed but identifiable items, it is up to the paying party how many items it wishes to challenge. A sensible paying party may make a value judgment and decide to challenge only the highest and therefore more valuable entries.
“If the paying party chooses to challenge every single item in the schedule, then he is the one adopting a disproportionate course of action which the receiving party has to be able to fairly respond to.”
Mr O’Sullivan could have produced a counter-schedule of document time, HHJ Gosnell said, or annotated the individual schedules with specific objections attached to the PoDs. Alternatively, he could have grouped specific objections together under identified headings and cross-referenced them to specific document times.
He gave two examples: “Unreasonable amount of time spent preparing witness statements – entries dated 1.1.18, 3.1.18, 4.5.18 and 7.7.18.” And: “Duplication of fee-earners reviewing the same document: dated 2.3.18, 4.5.18 and 6.6.18.”
HHJ Gosnell went on: “This would give the solicitor a reasonable opportunity to consider the objection and either concede the same or prepare a reasoned response. It is therefore possible to prepare points of dispute which are concise and state the nature and grounds of dispute.”
The approach taken here was likely to produce a disproportionately long and complex detailed assessment, the judge said.
“This is no doubt why the respondent’s costs lawyers suggested a ‘broad brush’ approach. This would have meant much less work for them having to actually justify grounds for objection and tactically might well have produced a better result as the judge might have been tempted to just make a blanket deduction based on a percentage of the overall costs.
“This might well have been unfair, however, unless the judge was satisfied that those costs were unreasonable in amount or unreasonably incurred with the benefit of the doubt going to the receiving party . A difficult task to do fairly without considering the individual entries on the schedule. Also perhaps an unfair process if the receiving party is not given the opportunity to know the case it has to meet.”
Allowing the appeal, HHJ Gosnell concluded that the district judge should have dismissed these two PoDs because they failed to adequately set out the nature and grounds of the dispute.
“I accept that this produces a rather draconian result but as explained by Lady Justice Asplin in paragraph 44 of Ainsworth the respondent has known since receiving the replies to the points of dispute that this issue would be raised.
“There was ample opportunity for the respondent to seek to amend the points of dispute to raise the appropriate amount of detail to satisfy the test in CPR 47 PD par 8.2 but he chose not to so thus presenting the rather stark choice which the district judge had to make.”
Mr Meehan (instructed by Kain Knight Costs Lawyers) for the defendant/appellant. Mr Ian Simpson (instructed by JG Solicitors) for the claimant/respondent.