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The high price of a poorly prepared Bill of Costs – Vivienne Jago v Whitbread Group Plc

The proper preparation of a Bill of Costs in any given matter has long been understood to be a key step to the successful recovery of costs on behalf of your client, and is one upon which paying and receiving parties, together with the Court, should rightly have confidence.

But what happens when due care and attention is not paid to that preparation, or if there are errors? What can happen to the level of those costs and what sanctions are available to the Courts on assessment?

In the matter of Vivienne Jago v Whitbread Group Plc, a matter heard back in October last but only recently reported, Master Whalan spelt out precisely what could occur, and it serves as a stark reminder of the importance of attending to preparation of your client’s costs in a thorough and diligent manner.

The claimant in that matter had brought a personal injury claim against the defendant, her former employer, which was resolved in March 2015 for damages of £41,035.37 net of CRU and subject to payment of costs to be assessed in detail if not agreed.

As is occasionally the practice, the claimant’s solicitors attended to the preparation of an informal schedule of costs for presentation to the defendant, which totalled £101,677.21 and which included, inter alia, a success fee of 20% on the base profit costs and 2½ hours for “preparing and checking the statement of costs”. The schedule was signed and certified by a solicitor partner of the claimant’s solicitors, and submitted to the defendant for payment.

The defendant noted (amongst other matters) the success fee and, as might be expected, requested a copy of the claimant’s CFA, which was met with a response from the claimant’s solicitor in short order, commenting “Our client was not subject to a CFA in regards to this matter”, which obviously caused some concern on the part of the defendant and led them to enquire further as to how, therefore, the claimant could claim any success fee and raised further queries as to the retainer more generally.

The claimant’s solicitors did not respond for a number of months to this enquiry until, in November 2015 and rather than addressing the queries raised, the claimant’s solicitor simply served a formal Bill of Costs under a Notice of Commencement.

This Bill of Costs now claimed total costs of £91,474.41, which was some over £10,000.00 less than had originally been claimed and, whilst including a reduced claim for disbursements, also unbelievably and contrary to the claimant’s solicitor’s clear indication that their client had not entered into a CFA, a claim for an increased success fee of 25%. The Bill also included a claim for 3½ hours preparation time by a costs draftsman for preparing the Bill and also a further 1 hour for the solicitor partner (who had also signed the original schedule of costs) for checking and certifying the Bill as accurate and complete.

Perhaps unsurprisingly, the defendant served Points of Dispute which took the claimant to task as to, principally, the veracity of the Bill and the accuracy of the certification, together with serious concerns as to funding which, it was expected, the claimant ought to address either in any Replies or by service of an amended Bill.

Rather than do either of these, the claimant’s solicitor formally served a new Bill of Costs, now claiming £56,719.00, some approximately £35,000.00 less than the formal Bill previously served and over £45,000.00 less than the original schedule of costs.

Within this further Bill, crucially, the success fee until that time maintained without explanation and entirely contrary to the fact that it had been confirmed that the claimant had not engaged her solicitors under a CFA, was finally not included, however disbursements had again inexplicably reduced as had profit costs, by approximately a further £14,000.00 from the original formal Bill in November 2015, and the claim for 3½ hours of the costs draftsman’s time and 1 hour for the same solicitor partner checking and certifying the Bill as accurate were maintained. One noticeable difference in this incarnation of the claim for costs was that, unlike previously, when the solicitor partner signed the Bill, she did not use her name, but rather signed “Davies Solicitors”.

This Bill was, on its own merits and with reference to the previous conduct of the claimant’s solicitors, subject to considerable challenge by the defendant who had, by this stage, clearly lost any confidence in the veracity of the claim being made, and consequently made an application under CPR 44.11(1) & (2) to disallow all of part of the claimant’s costs on the basis that her solicitors had demonstrated “…improper and/or unreasonable conduct…” within the assessment proceedings.

In response to the application the claimant’s solicitors contended, notwithstanding the very clear and obvious shortcomings of their approach to the claim for costs to date and whilst conceding that they had not “…covered themselves in glory…”, that the defendant had suffered no prejudice other than in respect of an increase in the costs of assessment.

Finding that “…the claimant has filed and served, and done so repeatedly, bills that are both inaccurate and mis-certified…”, Master Whalan also found it “…inexplicable to the point of bizarre…” that the first formal Bill of Costs, the second attempt by the claimant to present their costs, had included a success fee when the error had clearly been pointed out and the lack of any CFA had previously been conceded by the claimant’s solicitors themselves.

The Master continued;

“It is clear, without descending into a broad let alone line-by-line detailed assessment, that the bills as filed exhibited repeated errors in claim and calculation, so that Mr Dunne [for the defendant] is certainly right in claiming that not only were the three statements of bills characterised by inaccuracy and mis-certification, but also that the final and indeed existing bill is still undermined, at least in part, in that way…

“There are aspects of the claim proffered in the new bill that are irrecoverable, to the certain knowledge of the claimant’s solicitor by reason of contrary costs orders made by the court during the interlocutory substantive process.”

Whilst the claimant sought to mitigate their position, admitting that the claims for costs included inaccuracies time and again, and the Master had to concede that

“Davies Solicitors LLP are a comparatively small high street firm who do not have the financial resources to engage either experienced or competent costs lawyers or draftsman… Where errors were pointed out, they were acknowledged and the bill was reduced accordingly. This is not a case where dishonesty is either alleged or indeed demonstrated.”

equally, he was “…neither impressed nor persuaded…” by such explanations, noting by way of clear guidance

“First, in any bill – certainly a bill valued at between £50,000 or £100,000 – that facility should be open to any solicitor. The cost of both drafting and checking the bill is included ordinarily and properly in the costs to be assessed and the costs of the detailed assessment are not simply recoverable, but, pursuant to CPR 47.20, ordinarily recovered by the receiving party.

“Second, I see no appreciable difference between the cost of [a trainee legal executive at the firm] undertaking this task at a charge of £110 an hour and the costs, broadly speaking, of an experienced and competent and costs draftsman engaging in the same process.

“Third, and no doubt in the submission of Mr Dunne more particularly, it is notable in this case that, notwithstanding the explanation that the claimant could not somehow afford expert costs draftsmen, the costs of costs draftsmen is claimed nonetheless. All four gestations of the statement and bill includes a cost for drafting, checking and signing the bill.”

concluding that, given the very considerable importance to the proper certification of any Bill and the weight attached to signature of an Officer of the Court (see Bailey v IBC Vehicles Ltd [1998] 3 All ER 570 as per Henry LJ), the claimant’s solicitors were “…guilty of conduct that can be described properly as both improper and/or unreasonable…”, and accordingly it was entirely proper that he should exercise his discretion to impose sanctions on them.

This duly did in two ways; firstly, he ruled that the claimant should be entitled only to 50% of her assessed costs and, secondly, he disallowed “…certain specific items of the claimant’s bill…”,and further totally disallowed the costs claimed for drafting the Bill.

This judgement, whilst at first blush may appear harsh, serves as a salutary reminder both of the importance of the accurate preparation of any Bill and the weight attached to the certification of the same, and further that the costs of having professional and competent assistance in doing so is in most instances recoverable as part of that Bill.

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