Costs News

10 September 2015
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‘Nil bill’ on provisional assessment is not a sanction, circuit judge rules

A bill assessed at nil on provisional assessment (PA) after the receiving party failed to file a disputed conditional fee agreement (CFA) was not a sanction that required an application for relief before an oral hearing could take place, a circuit judge has ruled.

HHJ Graham Wood QC went on to say that a PA hearing is not an appeal and so new evidence can be submitted.

HHJ Wood was ruling in Mehmi v Pincher, where the defendant in a minor road traffic claim put the claimant to proof over the existence of a valid retainer, but the claimant did not file the CFA – it was not clear whether this was because his solicitor was misled by the erroneous wording of the N258 (which refers to a dispute as to the receiving party’s “ability” to pay, when it should read “liability”) or because she was confusing the requirement for disclosure and the Pamplin election procedure with simple filing. Either way, on the PA paper hearing, District Judge Woodburn assessed the bill at nil as a result.

The claimant’s solicitor then applied both for an oral hearing and relief from sanctions. District Judge Baker, hearing the application for relief first, declined to grant it on the basis of the Court of Appeal’s decision in Denton.

On appeal, HHJ Wood decided that a nil assessment was not a sanction from which the solicitor needed to apply for relief. He said: “It seems to me that the process involved in the provisional assessment must mirror, albeit without oral representations, that which would ensue in a detailed assessment hearing. If the costs judge had parties in front of him or her in such circumstances, but could not be satisfied as to the validity of the retainer, either because the documents had not been provided or because the receiving party elected not to disclose the retainer, would that amount to a sanction or a judicial determination? I am quite satisfied that it would be the latter, and therefore I see no difference with the paper decision.”

Further, he noted: “There is a built-in entitlement to an oral review on any aspect of the provisional assessment. The provisional assessment is not binding if there is such a review and therefore its effect is nullified”. As a result, DJ Baker’s decision was set aside.

HHJ Wood went on to rule that an oral PA hearing was not an appeal. “Insofar as the [PA] procedure had been devised to be a component part of detailed assessment and was introduced by amendments to the rules and practice directions as a proportionate means of dealing with expensive hearings where bills were challenged, and was not intended to be a substitute for the detailed assessment procedure, as opposed to an alternative modified version, in my judgment the power of the judge under paragraph 13.13 [of Practice Direction 47] has not been curtailed, and when an oral hearing is requested under CPR 47.15(7), although the hearing is limited to those items in the bill which are challenged under sub-paragraph (8) and thus is circumscribed, it is in other respects a detailed assessment, in which the judge must surely have the power to direct the receiving party to produce documents to enable it to ‘reach its decision’.

“Having said that, a party who deliberately or carelessly fails to provide the necessary documentation to enable a decision to be reached will face significant costs consequences – a factor which is likely to act as a deterrent and to prevent oral reviews proceeding with material which was not previously available.”

The judge also noted that the regional costs judges in Liverpool, faced with an increasing number of cases where the practice direction was misunderstood and receiving parties were withholding the CFA or other retainer fearing it would be disclosed when filing the N258, have drawn up a specimen direction to deal with the situation.

He acknowledged the concern expressed by the defendant’s counsel “that giving receiving parties a ‘second bite of the cherry’ with an oral review would lead to a proliferation of unscrupulous costs solicitors who want to maximise their profit and deliberately frustrate the provisional process by failing to file documents”.

But HHJ Wood said: “While each case must be decided on its merits and it is not inconceivable that this may occur, in my judgment is highly unlikely when one considers the costs consequences of disabling a provisional assessment in this manner. It is highly unlikely that the costs of the assessment process will be recovered in full, or even substantially in part, which would defeat the purpose of such a tactic.

“It seems to me that the failures which are occurring to date arise more out of a genuine misunderstanding in respect of arguments about retainer validity, rather than a policy to costs build or a lackadaisical approach to compliance with a procedure which is in its relative infancy.”

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