75% Costs Sanction for defective Bill of Costs served a day late

The SCCO considered the late service of the Claimant's Bill of Costs and the Defendant's application to strike out the claim for costs due to multiple failures across the Bill. In short, the solicitor is liable for any shortcomings of their Costs Draftsman/Lawyer and the court was very critical of the solicitor for "serving an unchecked bill without any caveat". Here Deputy Costs Judge Roy KC allowed relief for late service but disallowed 75% of the Claimant's bill, meaning the Claimant can only recover 25% of the agreed or assessed amount.  

In Hyder v Aidat-Sarran & Anor [2024] EWHC 3686 (SCCO) (09 December 2024) the Claimant had been ordered to serve their Bill of Costs by a prescribed date. The Bill was ultimately served a day late and the Defendant had alleged that it "was seriously defective". The Claimant sought relief from sanctions whilst the Defendant applied under CPR 44.11 to strike out the claim for costs due to misconduct. 

Practice Points 

The case is a powerful reminder that the authorised individual retains responsibility for the Bill of Costs and it cannot be abdicated to the costs specialist. That said it's clear that the practitioner must have faith in the expertise of their costs professional. Here the initial bill drawn was defective and the second bill contained additional defects without fixing the previous defects.  

From a practical point of view, Hyder is a reminder that: 

Practitioners must ensure that they properly check and certify any Bill of Costs. It goes, without saying, you should never serve an uncertified bill.  

Where defects are identified they ought to be acknowledged and addressed as soon as possible.  

Strike-out is only a last resort, though repeated breaches and defects will impact the sanction.  

Furthermore, the court will take a dim view of a failure to acknowledge or apologise for any failings. This will also impact the level of sanction.  

There is a difference between an unless order providing for service of a bill of costs and service of a compliant bill of costs.  

Service of a bill of costs a day late is not in and of itself serious or significant.  

Unreasonable conduct simply means "conduct which does not admit a reasonable explanation". 

Sanctions as to the entitlement to interest will take into account a failure by the paying party to pay in the proceedings. Voluntary interim payments can and will mitigate interest accrual. Here the SCCO disallowed part of the interest entitlement as opposed to disallowing it completely. 

Getting the costs claim right the first time out is critical. Here a reduction of the assessed or agreed costs by 75% is significant.  

Key Points 

The key points are as follows: 

1. There was a clear breach of the court order in serving the Bill of Costs a day late. If that was the only breach then relief would likely follow. 

2. The order had just required a service of a bill rather than a compliant bill of costs. A bill was served within the meaning of the order and given it was only served a day late, relief from sanctions was granted.  

3. On the issue of CPR 44.11 and misconduct, the SCCO accepted that there were "multiple significant failures" including "claiming costs which are clearly irrecoverable because there is no order giving rise to any entitlement to them". This was viewed as serious. 

4. The second Bill prepared did not rectify the defects despite them having been flagged up in the Points of Dispute. Deputy Costs Judge KC stated that this was "absolutely astonishing". 

5. The second Bill contained further defects which the court found "even more astonishing in the circumstances where the need to ensure that the bill was defect free had been clearly flagged up in the points of dispute". 

6. The Claimant had been made aware of all defects by the Defendant. Despite this and the Defendant's application to strike out the Claimant still did not rectify the defects, did not provide any evidence to address the failings and did not either apologise or acknowledge the failures before the hearing. An apology and acknowledgement only came part way through the application hearing. The lack of insight and contrition was "highly relevant to the level of appropriate sanction".  

7. It was not open to the Claimant solicitor to blame the costs draftsman. The draftsman is the solicitor's agent and the solicitor is vicariously responsible for their failings as if the solicitor had performed the work themselves.  

8. Further the solicitor was responsible for having oversight of the costs draftsman and the defects were so obvious the solicitor should have identified them, particularly in the second bill.  

9. The fact the solicitor only received the bill from the costs draftsman a short time before it had to be served in compliance with the unless order was not relevant. The solicitor should have been proactive.  

10. The failure to certify the Bill was the solicitor's responsibility.  

11. The solicitor "could not have had any basis to place any reliance upon the costs draftsman" in light of the witness evidence of the Defendant.  

The SCCO held that as a result of the above there had been non-compliance with the rules and unreasonable conduct. The court made clear that only meant "conduct which does not admit a reasonable explanation".  

Deputy Costs Judge KC could not make a finding of improper conduct without a full picture but stated "serving an unchecked bill without any caveat must come very close".  

What sanction to apply? 

It was concluded that there been multiple breaches which were both serious and persistent. Despite the court elected not to strike-out the Claimant's costs claim for the following reasons: 

"22. Firstly, the Court of Appeal said in numerous contexts and numerous cases that strikeout is the most draconian tool in the court's armoury. A judge should therefore always give very anxious consideration whether any other lesser sanction could properly meet the justice of the case. 

23. Secondly, I note that in Gempride itself, despite what on any view was very serious misconduct, there was a substantial reduction but the bill was not struck out entirely. This tends to point against strikeout being the appropriate sanction here. 

24. Thirdly, and building on those last two findings, the very powerful and legitimate concerns Mr Gibbs raises about proportionality and whether or not the court and the defendant can have confidence in any redrawn bill can, I have decided, be addressed by the orders that I am proposing to make. We have not got in any detail to what orders I should make if I went down this road, so I am open to further argument about the detail although not as it were the substance. 

25. Taking all these matters into account, strike out would be too draconian. However, a severe sanction is in my view clearly warranted. The appropriate level of sanction is a 75% reduction. 

26. I pause there. I recognsie that this is that is a stern sanction by CPR 44.11 standards. I have reflected on whether it is too stiff. I remain of the view that it is an appropriate one given that the claimant and his solicitors can consider themselves quite fortunate that the bill is not struck out entirely. 

27. Therefore, for the reasons given: 

(1) I grant relief from sanction. 

(2) Pursuant to CPR 44.11, I disallow 75 per cent of the claimant's bill, ie. whatever the bill is assessed at, the claimant will recover 25 per cent of that. 

Deputy Costs Judge Roy KC declined, however, to disallow interest: 

"28. I disallow interest on the claimant's costs from 30 July to whatever dates it is agreed that the redrawn bill should be served by. My initial inclination was to disallow all interest. However, Ms Mukith has persuaded me that this would, in circumstances where I have already disallowed 75 per cent of the costs, amount to double jeopardy. 

29. In this context, there is force in the point that there has been historically unhealthy conduct by the defendant in this regard in not paying and so forth. I consider that this historical conduct by the defendant is relevant to this element of sanction (i.e. deprivation of interest). However, I do not consider with any materiality to the later misconduct relating to the bill. That seems to me an entirely distinct matter." 

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