Bills of Costs – not fit for purpose?
Ever since the advent of the Jackson Reforms to the CPR, which brought in (amongst other things) costs budgeting, there has been a tension between the Rules and the guidance provided in PD 47 as to the format of Bills of Costs.
CPR 3.18, in its most recent incarnation, provides that
“3.18 In any case where a costs management order has been made, when assessing costs on the standard basis, the court will –
(a) have regard to the receiving party’s last approved or agreed budget for each phase of the proceedings; and
(b) not depart from such approved or agreed budget unless satisfied that there is a good reason to do so.”
and thus it is perfectly clear that, at least on the standard basis, the court is obliged to have regard to not only the total amount of the agreed or approved budget of the receiving party, but also to have regard to each phase in assessing whether or not costs are reasonable and proportionate.
Recent decisions in, amongst others, Yeo v Times Newspapers Ltd  EWHC 209 (QB) and CIP Properties v Galliford Try Infrastructure Ltd and Others  EWHC 481 (TCC) are of particular relevance in this regard to the approach currently being adopted.
However, neither of these approaches addressed the manner in which the ultimately receiving party was expected to prepare their Bill of Costs and the tension remained between the rule and the expected format of the Bill of Costs within PD 47.
Observing, in BP v Cardiff & Vale University Local Health Board  EWHC B13 (Costs), a fatal medical negligence claim involving a woman who died in 2010 from an infection linked to a severe brain injury which was sustained during a quadruple heart bypass operation, the Senior Costs Judge, Master Gordon-Saker, has found that in the same way that it is “…convenient and necessary…” for Bills of Costs to be split into 2 parts to distinguish between work carried out before and after 1 April 2013 in cases where the issue of proportionality is relevant, it is similarly “…convenient and necessary…” where a costs management order has been made, for such bills also to be drawn up “…in parts which reflect the phases…[of the approved or agreed budget]…”.
The matter arose following the death of BP, whereupon her son, MP, sued as administrator of her estate, with proceedings being issued in June 2013, seeking total damages exceeding £440,000.00. The matter was settled shortly prior to trial at a JSM in January 2015, for £205,000.00, with settlement being approved by the court and damages divided between 4 of BP’s children.
In undertaking the Assessment, the Master observed that it had been a “…complex clinical negligence case in which both liability and causation were disputed throughout” and further noted that in undertaking the assessment in which he allowed total base costs pre-1 April 2013 of £45,000.00 and for the period thereafter total base costs of £138,203.00, both bearing in his view a “…reasonable relationship…” to the matters in issue
“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. This could be done without further sub-division by use of italics, bold, superscript or some other formatting device.
The new format of bill, which is shortly to be the subject of a pilot in the Senior Courts Costs Office, should avoid these difficulties.
Where a bill has already been drawn without being divided into phases, one possible course to avoid re-drawing the bill would be to serve schedules setting out the individual items of costs claimed in relation to each phase. I understand that a number of courts have directed this.”
It will, of course, remain to be seen how the pilot scheme will function and, indeed, the findings following the same (one only has to remember the success of the Provisional Assessment pilot in the County Court at Leeds, compared to the current Provisional Assessment regime where many would question its success), however it is hoped that, at the very least, this new approach will assist in bridging the chasm between budgeting and assessment.
What is certain, however, is that now more than ever it will be imperative that Bills of Costs are prepared by skilled and knowledgeable costs practitioners.