Blog - Wednesday 17 February 2016

 

BP v Cardiff & Vale University Local Health Board

 

Jackson’s Final Report recommended a new format bill of costs should be devised to ensure the long term aim of harmonising the procedures and systems which will be used for costs budgeting, costs management, summary assessment and detailed assessment.

With this in mind Practice Direction 51L was devised which provided for a mandatory pilot scheme to run in the Senior Courts Costs Office from 01 October 2015 to 01 April 2016.  The start date of the Pilot Scheme was however delayed and the current position is that the October 2016 start date has now been abandoned for further consideration.

Clearly the current formats of the Costs Budget and the Bill of Costs bear as much relation to each other as an apples and oranges; they both relate to costs but you can’t make an apple pie with oranges!

This prevents an inevitable difficulty for Judges when assessing costs on the standard basis pursuant to CPR 3.18.  How will a Judge know whether a party has, in their final Bill of Costs, departed from a phase in the Costs Budget let alone assess whether there was good reason to do so.

It was hoped that the requirement of the Precedent Q would provide some comparison of the Budget and the Bill, whilst further consultation and consideration is undertaken in order to assist the development of the truly harmonised procedure and system envisaged in Jackson’s Final Report.

However, the case of BP v Cardiff & Vale University Local Health Board [2015] EWHC B13 (Costs) (17 August 2015) throws doubt on this.  Here Master Gordon-Saker stated that the Precedent Q Form “will show only the total sums for costs incurred before and after the budget which are claimed in each phase.  It will not identify the phase into which the individual items of work in the bill fall”. 

Master Gordon-Saker went on to say “ In order for the paying party and the court to know which items of work are claimed in relation to each phase the bill would need to be drawn in parts which reflect the phases.  Although multi-part bills tend to obscure the overall picture, it seems to me that (unless a sensible alternative can be devised) in a case in which a budget has been approved or agreed and the costs are to be assessed on the standard basis it will be both necessary and convenient to draw the bill in parts which correspond with the phases of the budget.  Within each part it will also be necessary to distinguish between the costs incurred before and after the budget was agreed or approved”.

Master Gordon-Saker appreciates in his judgment that the new format bill should avoid these difficulties.  However, as we approach Easter we are clearly in a ‘chicken and egg’ situation. 

On the one hand it looks as if parties will have to prepare phased Bills without knowing what the new and final Bill format will be, meaning any software currently produced may have to undergo serious revision following completion of the mandatory Pilot Scheme and the consideration process.  However, without a phased Bill, Judges will have difficulty complying with CPR 3.18.

At present, paragraph 2.1 of Practice Direction 51L states that if detailed assessment proceedings are in the SSCO that the party commencing detailed assessment proceedings may use the New Bill of Costs.  It is therefore still possible for parties to argue that a Bill and Precedent Q prepared and served pursuant to CPR 47.6(1) are fully compliant and the assessment procedure should be allowed to continue on the basis of these documents.

However, we cannot rest on our laurels as it is possible for any Court to consider the documents served and seek further documentation, including a phased bill or Schedules (as envisaged by Master Gordan-Saker), by specific Order.

Therefore, without firm knowledge and hindsight of what the future holds for the format of the Bill we have to be prepared to provide a detailed breakdown and comparison to any approved Costs Budget.  To do this we must:

  • Ensure the Costs Budget is properly prepared at the outset.  A phased Bill will inevitably highlight any deficiencies in a Costs Budget for example; in assessing other parties’ Budgets.   I have often seen the obtaining and cost of medical records, the drafting of witness statements and the obtaining and consideration of medical reports in the Pre-action phase.  If there is any incorrect allocation to a phase in the Budget then it is necessary to (a) follow this mistake through into the Bill or (b) allocate the work to the correct phase and face being over for that phase.  Neither is ideal; it is best to get it right at the outset

 

  • Regularly review and audit the Costs Budget.  A phased Bill will make it clear what work has been done that was not envisaged and where additional work was required due to the complexities of the case.  Judges will be able to look closely at these costs in considering whether this led to a good reason to depart from the Budget.  Whilst a case may take a sudden and unexpected turn and, for example, require evidence of an expert not previously anticipated a Judge is unlikely to look upon the associated costs sympathetically if there has been no consideration of updating the Budget in accordance with paragraph 7.6 of Practice Direction 3E.  Remember, it is better to seek permission than forgiveness!

 

  • Ensure consistency between the Bill and the Costs Budget.  There is little point in ensuring that the Costs Budget has been carefully and properly prepared if the Bill bears no relation to the same.  It will be necessary to ensure that the incurred costs in a Costs Budget are reflected in the Bill and that the appropriate phases are used when dealing with the further work done.

 

  • Any approved Costs Budget must be put at the front of the folder and not hidden at the back!  Whilst it is too easy to put a Costs Budget at the back of the folder and get on with the real issues in the case; you risk doing work for free!  The pitfalls can be avoided and we are here to assist.     

 

 

By Jennifer Garbutt - Solicitor

 

 

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