Costs News

19 November 2015
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Rule committee agrees to divide bills that straddle Jackson reforms

Amendments to practice direction 47 to allow application of the appropriate proportionality test for costs pre- and post-1 April 2013 to bills submitted for assessment are set to come into force in January 2016, the Civil Procedure Rule Committee has agreed.

The additions will be to paragraph 5.8, which outlines situations in which it is “necessary or convenient” to divide a bill of costs into two or more parts, and effectively formalise Senior Costs Judge Gordon-Saker’s ruling in BP v Cardiff & Vale University Local Health Board [2015] EWHC B13 (Costs).

In a newly released paper to the committee’s October meeting, Master Gordon-Saker (pictured) said it was “probably impossible” to apply either the pre- or post-Jackson proportionality test without knowing which costs were claimed for work done before and after that date. 

“In a case in which a costs management order has been made on detailed assessment, the court will have regard to the receiving party’s last approved or agreed budget for each phase of the proceedings and not depart from that budget unless satisfied that there is a good reason (CPR 3.18). It is not possible to do this properly unless the work claimed for each phase is identified.

“The costs of preparing the budget and of the other recoverable costs of the budgeting and costs management process are capped at 1% (or £1,000 if higher) and 2% respectively of the approved or agreed budget (PD 3E para 7.2). In the current form of bill, these costs can appear anywhere and be spread across the bill. If it is not possible to identify the individual items, it is impossible to apply the caps.”

He continued: “It had been assumed that receiving parties, when drawing bills, would find some way to accommodate the changes to detailed assessment introduced on 1 April 2013 as appropriate to the particular case. It was also hoped that a suitable alternative to division between phase would be devised. We are now seeing the first bills in budgeted cases and, although multi-part bills are difficult to assess, there would seem to be no sensible, transparent alternative to division between phases.

“The breakdown of costs by phase form (precedent Q) approved by the committee in July 2015 will be helpful as a summary but, by itself, it does not allay the fear that costs may have been attributed to the phases incorrectly. The new spreadsheet form of bill will avoid these difficulties but, until the new bill becomes used universally, it would appear necessary to spell out the need for appropriate division.”

The committee agreed the proposed amendments subject to minor modification and they will be included in the next update to the CPR.

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