Court gives guidance on prescribed format of Bill of Costs - Potentially serious implications where required information is not given
Posted on 29th September 2021 at 14:56
By Sean Linley, Costs Draftsman
In the case of Barking, Havering & Redbridge University Hospitals NHS Trust v AKC [2021] EWHC 2607 (QB) (29 September 2021) the Court considered issues relating to the certification of the Bill of Costs and also the format of the Bill of Costs, namely whether there was a failure to “properly give the name, the SCCO grade, the date from which rates were effective for each fee earner and to identify the work done by each fee earner contrary to the requirement of CPR Part 47; and failed to provide other particulars required.”
The case related to both an appeal and application for permission to appeal against the order of Master Nagalingam, the Costs Judge, seeking to dismiss the appellant’s application to strike out the respondent’s bill of costs for non-compliance with the Civil Procedure Rules and to require the Claimant to serve a CPR-compliant Bill of Costs.
Certification
The Defendant alleged that the bill certificate was illegible and that there was a failure to provide the identity and status of the signatory; consequently, the Defendant argued that neither them or the Court could be certain that the Bill was accurate.
The Claimant argued that the certificate had been signed and that there was no requirement for a print name.
In the initial hearing the Costs Judge found that the person signing the certificate must be a solicitor and subsequently the "only question thereafter is whether I ought to accept the bill has been certified by a solicitor or presume a wilful breach of the rules, absent the provision of a name that one could use to undertake some detective work to check against". The Costs Judge took the view that he ought to accept the bill had been certified by a solicitor, given the absence of any requirement in rules or Precedent F that the person certifying the bill be named.”
In a cutting remark, the Costs Judge added that it would have taken the Claimant "less effort to simply provide the name of the fee earner who certified the bill than to prepare a reply".
In the appeal, the Court recognised that the certification of the Bill was ‘no empty formality’. It further stated that “The signature of an officer of the court is afforded a presumption of trust and breach of that trust is a most serious disciplinary offence.”
It was held that a Bill should be certified by an identified individual. In its judgment, the Court added that:
40. Moreover, while identifying the signatory as an unnamed solicitor of a specified firm would be inadequate, in this case it is not even clear that the bill of costs has been certified by a solicitor. It no longer follows, as it once would have done, that a person identified as a partner in a firm of solicitors is themself a solicitor. Neither of the witness statements adduced by the respondent states that the signatory is a solicitor and there is no other evidence to that effect. Indeed, the Court has not even been informed on instructions that the bill of costs was certified by a solicitor. Rather, the Court has been asked to presume that it must have been a solicitor because that is what the rules require. The presumption referred to in Bailey v IBC Vehicles Ltd is a presumption that the statements certified by an officer of the court can be trusted. It does not apply at the stage of considering whether a bill of costs has, in fact, been properly certified by a solicitor. The signatory may have been a solicitor, but there is no presumption that that is the case.
41. I reject the respondent's submission that the remedy sought is Draconian. The effect of the order sought is to require the respondent to re-submit the bill of costs, amended to remedy any defects the Court finds. As far as this first ground is concerned, the only amendment required is to provide a fresh signed certificate, clearly identifying the solicitor who is the signatory. It will take very little effort to make such an amendment. Indeed, given how little effort or cost it would have taken to have provided the name of the signatory for which the appellant asked in November 2019, I confess to some astonishment that the respondent chose instead to withhold the information and argue the point. As Henry LJ observed in Bailey v IBC Vehicles, "an ounce of openness is cheaper than any argument".
Failure to provide required fee earner information
The Court looked at the issue of the requirements under CPR 47 as to the information required in the electronic Bill of Costs. It was alleged that the paper bill was defective because it failed give the name and status for each fee earner and to identify the work done by each fee earner. Moreover, it was alleged that the electronic bill was defective because it failed to give the name, the SCCO grade, the date from which rates were effective for each fee earner and failed to identify the work done by each fee earner.
In the initial judgment, the Costs Judge considered that Part 18 responses given by the Claimant went someway to addressing the comparable SCCO Guideline Grade and it was found that 5.11(2) of CPR 47 PD did “not expressly require that fee earners be named and he rejected the contention that such a requirement may be inferred.”
The Costs Judge sought to draw a distinction between status and the grade and also the use of the phrase ‘should’, the latter suggesting that compliance was optional rather than mandatory.
The Costs Judge observed that:
"A receiving party who chooses to limit the information provided in a bill of costs must at all times remember that pursuant to CPR 44.3(2)(b), doubt will be resolved in the paying party's favour. Further, one must recall at all times that if information relevant to the detailed assessment of costs only reveals itself at the eleventh hour, then any adverse costs that result can be remedied in the costs of assessment."
On appeal, the Court considered what information was required by paragraph 5.11(2) of CPR 47 PD.
92. The starting point is that paragraph 5.11(2) does not expressly require the names of fee earners to be provided. Nor does it expressly require a fee earner's SCCO grade or years of post-qualification experience to be set out. The issue is whether, applying ordinary rules of interpretation, having regard to the purpose of the provision, such requirements are implied.
93. It is clear on the face of paragraph 5.11(2) that the hourly rate and "status" of "each" fee earner must be provided in the bill of costs. While paragraph 5.7 states that a bill of costs "may consist" of the sections specified, including a "background information" section, as appropriate, and paragraph 5.11 uses the word "should" rather than "must", in my judgment, in any case where costs are claimed in respect of a legal representative's employee(s), the effect of paragraph 5.11 is to require each employee's status and hourly rate to be included in the bill of costs. The language of the provision, considered in context, is mandatory. In this regard, I agree with the view expressed by District Judge Baldwin in Sharp v Aviva at [30] that the receiving party should anticipate an appropriate sanction being imposed if the bill does not set out the hourly rate and status for each fee earner.
94. In my judgment, paragraph 5.11(2) requires both the status and the hourly rate to be given on an individual basis, rather than by reference to categories of fee earners, and it follows that each fee earner should be named in the bill. First, this follows from the language of paragraph 5.11(2) which refers to the status of the "employee" (singular) "in respect of whom costs are claimed" and to the "hourly rates claimed for each such person"
The Court went further and held that:
95. Without a breakdown of work undertaken by individual fee earners, it is impossible to know whether, for example, two different fee earners within the same status category each spent one hour working on a letter, on consecutive days, or whether only one fee earner spent two hours across two days working on it. This kind of information is capable of revealing that work has been duplicated, in whole or in part. It is also impossible to detect, for example, if a claim has been made that an individual fee earner undertook, say, 10 hours work on disclosure on a day when a claim has also been made for the same fee earner's attendance at a one day hearing, giving rise to questions about the accuracy of the claim. Such anomalies are hidden if work is claimed by reference to categories of fee earner. In addition, the provision of the names of fee earners enables the paying party to check the expertise and experience of individual fee earners, when considering whether the rate claimed is reasonable.
Considering the contrast between ‘status’ and ‘grade’, the Master recognised that whilst there was a subtle difference “it is important that the bill should provide information about the experience and expertise of each fee earner, in particular, the number of years of post-qualification experience for fee earners with a professional qualification.”
It was also added that:
101. Thirdly, bearing in mind that the court is required when assessing whether the costs claimed are reasonable and proportionate to take into account all relevant circumstances, including "the skill, effort, specialised knowledge and responsibility involved" (CPR 44.4), and that the paying party will take into account the same information when making offers to settle the costs bill, in my judgment, to comply with paragraph 5.11(2) the description of each fee earner's status should encompass their professional qualification (if any) and (if the SCCO grade is not given) their number of years of post-qualification experience.
The Master found that:
“102. An interpretation of the rules and practice direction which enables receiving parties to withhold such basic information would be liable to result in bills of costs becoming less transparent, which in turn would be likely to inhibit the ability of paying parties to make offers and of the court to assess costs.
103. Accordingly, I agree with the Costs Judge that the respondent was not required to specify the SCCO grade of each fee earner in the paper bill of costs. I also endorse his observation that, if a receiving party chooses not to provide such information, doubt will be resolved in the paying party's favour.”
The Claimant’s Bill of Costs failed to provide the detail of all the work undertaken in each phase and failed to provide the reference formulae in a transparent manner, as required by the CPR and also alluded to in LJ Jackson’s keynote address to the Law Society’s Civil Litigation Conference on 21 April 2016.
The Master therefore concluded that:
109. First, the respondent's electronic bill does not include the names (or initials) of fee earners. This is part of the "detail" which must be provided whether the Precedent S spreadsheet format or another spreadsheet format is used. Who has undertaken each item of work is a key part of the detail and, without it, the bill is opaque. In order to be fully functional, the spreadsheet must enable the paying party and the court to see what work any particular fee earner has undertaken, in the way described in the SCCO Guide (see paragraph ?59 above).
110. In this case, the respondent used the Precedent S spreadsheet format but did not provide the information sought in the columns headed "LTM" or "LTM name". Filling the column which seeks the name of each legal team member with a code indicating a status category has the same effect as if the respondent had left the column blank. It is impossible to filter the work undertaken by reference to individual fee earners. This lack of transparency may hide claims where more than one fee earner at the same level has duplicated the work of another.
111. Secondly, the respondent's electronic bill does not include the grade for each (or indeed any) fee earner. In Precedent S there are columns for both status and grade, reflecting the fact that these descriptions seek different information. In this context, as I have said, the word "grade" is a term of art meaning SCCO grade. While the SCCO rates may be more material on summary assessment than on detailed assessment, they are relevant, at least as a starting point, and are invariably relied upon by parties, in the context of detailed assessment; and the SCCO grades provide basic information as to post-qualification and litigation experience which is important in considering matters such as whether the rates claimed are reasonable, whether the work should reasonably have been delegated or is excessive in time. While I have found that it is not a breach of paragraph 5.11(2) not to provide the SCCO grades in the paper bill, electronic bills are required to be more informative and more transparent than was required for paper bills to be compliant.
112. I have addressed the concept of "status" in the context of paper bills. If the electronic bill had included the SCCO grade of each fee earner in the "grade" column, the information the respondent has provided in the "status" column – save to the extent that it is not provided in respect of named individuals – would suffice. But as the SCCO grades have not been given, the required information regarding fee earners' experience cannot be discerned from either the status or the grade columns. Although a bill of costs is not required to be in Precedent S spreadsheet format, in my judgment, paragraph 5.A2 requires the same level of detail to be given even if a different spreadsheet format is used, and that includes giving each fee earner's SCCO grade.
113. In the grade column of the respondent's electronic bill of costs, the respondent has not provided any grades. Although the grade column has been filled by repeating information provided in other columns, the effect is the same as if the grade column had been left blank. The respondent has provided the names of fee earners in the part 18 response and has gone some way towards providing their SCCO grades, albeit the grades remain unclear in relation to a number of fee earners (either because the grade has not been provided at all or sufficiently clearly). But the provision of a list of fee earners separate from the electronic bill of costs does not remedy the breaches which I have found. Even with such information, neither the appellant nor the court is able to filter items of work by reference to individual fee earners.
114. In my judgment, the Costs Judge was wrong to conclude that because a bill of costs does not have to be in Precedent S format, there is no requirement in the practice direction that electronic bills must disclose the status and SCCO grade in respect of each individual named fee earner. It is apparent from paragraph 5.A2 that the same level of detail, and the same functionality, is required whatever spreadsheet format is used. A contrary conclusion would undermine the intended benefits, in terms of transparency and functionality, of the new rules for electronic bills.
Conclusion
The Court granted permission to appeal on all grounds and consequently, it’s unlikely to be the last we hear of this matter.
What is, however, clear from Mrs Justice Steyn DBE judgment is that certification is important and it ought to be clear and identifiable as to who has signed the Bill. Moreover, it must be a qualified solicitor and legal executive who certifies the Bill.
The failure to certify a Bill of Costs is significant and whilst the issue remains subject to appeal, the Court made it clear that seeking a re-submission of the Bill of Costs, amended to remedy the defects found was not draconian. This could have significant adverse costs implications for the Claimant also.
It also highlights that where a matter is unclear, that steps should be taken at the earliest opportunity to address and rectify the same. Undoubtedly, the Claimant is now in a weaker position than had it sought to either identify who had certified the Bill or simply served a fresh certificate.
The issue of the format of the paper and electric Bills highlights that not providing the requisite information can have serious implications. It shows the danger in not ensuring that the Bill of Costs is accurate from the outset.
For clarity:
1. In a paper bill it is not necessary to specify the SCCO grade of each fee earner, but if such information is withheld, doubt will be resolved in favour of the Paying Party.
2. The paper bill must specify, in respect of each individual named employee, their hourly rate(s) and status, including details of any professional qualification and the number of years of post-qualification experience.
3. With the electronic bill it must:
a. Provide the detail of all the work undertaken in each phase.
b. Provide the reference formulate in a transparent manner and it must meet the ‘full functionality’ requirement under CPR PD 47 5.11(2).
c. Must include the names of each fee earner.
d. Must specify who has undertaken each item of work.
e. Must include the SCCO grade of each fee earner (unlike the paper bill where this is optional).
f. Providing such fee earner information on a separate spreadsheet would not remedy a breach, as the electronic bill must have the functionality to filter items of work by reference to individual fee earners.
Should you be uncertain about any aspect of certification or of the format of the Bill of Costs then please do not hesitate to get in touch with our friendly team either via phone 01482 534567 or e-mail info@carterburnett.co.uk.
Tagged as: Bill of Costs
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