Legal Cost Specialists

Properly drafted bills of costs

I previously discussed the issue of what hourly rate is appropriate for drafting a bill of costs. I suggested that for the vast majority of bills Grade D rates were appropriate.

One reader responded that those bills with “difficult apportionment issues or multiple parties with costs orders going here and there” should justify a higher rate.

I will immediately concede that this type of bill can be very complicated to properly draft. This is in large part due to the uncertainties of the law surrounding these complex areas. How about the following:

“The principles established in Medway Oil and Storage Co Ltd v Continental Contractors Ltd [1929] AC 88, HL concerning the costs of claims and counterclaims have been largely overridden by the introduction of the CPR. Discuss.”

Issues surrounding apportionment of common costs are fiendishly difficult. Other than a brief mention in relation to group actions, I can see no attempt by Cook on Costs 2010 to even try to deal with this area. Civil Costs: Law and Practice gives a detailed analysis of some of the principles that apply but does not put forward any clear guidance as to how some of the problem issues should be resolved. (What does the ALCD training information have to say about this area?)

Although it may well be the case that a properly drafted bill in relation to one of these problem areas would justify above Grade D rates – and I reserve my position on that – unfortunately, it is this type of bill that is often most poorly drafted. I suspect that the majority of the time this has nothing to do with the receiving party deliberately drafting the bill in the most favourable manner arguable, but rather reflects a failure to understand that there is even an issue. Even worse is the situation where an attempt at apportionment, for example, has been made but this appears to have been done in an entirely arbitrary and random manner. Often it is impossible to work out how the apportionment has been applied. The paying party is left to guess.

So, well done to the costs draftsman who drafted the bill I recently saw where the pre-amble explains:

“The Bill of Costs has been prepared to include all costs incurred representing both the First and Second Claimants. Where work has been undertaken in respect of both Claimants, including letters, telephone calls, attendances and documents items, time spent has been claimed in full, however only half the monetary amount payable is claimed in each part of the Bill. All other time claimed relates solely to each Claimant or has been split between the claims already.”

This way, everything was nice and clear from the outset.

Actually, the bill itself was then somewhat confusing as to how common costs had been apportioned or divided.

Oh, and the Bill did claim VAT incorrectly.

Oh, and the relevant information in relation to additional liabilities was not served.

Still, you can’t have everything in life.

7 thoughts on “Properly drafted bills of costs”

  1. Medway Oil? Dont get me started on Medway Oil!!

    I despair of the number of draftsmen whom just dont understand the basic principles in it. More, the number whom act for Part 20 Claimants and simply include everything!

    I have actually seen Replies arguing that liability was wholly an issue of the counterclaim

    Lets stick to Grade D rates for 99% of draftsmen please

  2. Does anyone fully understand Medway Oil? One can’t help recall Lord Palmerston’s remarks on the Slesvig Holstein Question “Only three people ever knew the answer: one is Prince Albert – he is dead; another is a German Professor – he is gone mad; I am the third – and I have forgotten.”

    But the answer to Simon’s question is: the CPR should have overidden Medway Oil but it hasn’t. The overriding mechanism is for trial judges to make percentage costs orders which fairly, if roughly, reflect the true division between claim and counterclaim. If these are made, the Medway Oil approach is ousted. But trial judges often do not make these orders, as neither they nor the counsel before them appreciate the impact that Medway Oil can have on assessment. And, absent such an order, on assessment Medway Oil still reigns. The successful counterclaimant only gets his additional costs – which in a liability dispute may be negligible.

  3. Jacques, you’ve managed to summarise in less than 100 words what would have taken me at least 2,000 words to summarise and it would still have been unclear what the answer was. Damn.

  4. Medway has survived CPR as the post CPR case law state that it is good law – Dyson refers. As Jacques states the only way to resolve them is to deal with it prior to settlement and not after

    Equally sometimes the roles are reversed as to who gets what, see Bateman v Joyce. rare but does happen

  5. CPR didnt do away with Medway, in fact Parker J in Dyson Technology -v- Strutt (2007) reinvigorated its effect and priciples.

    To suggest that the principles are difficult or unsound, highlights the original question posed by Simon, as to what is a complicated factor to justify a draftsmans higher fee.

    The principles are very simple in fact.All costs which would have arisen in the course of the claim and defence thereof, are costs of the claim; only the “extras” arising from identifying the counterclaim i.e. its quantum, are counterclaim costs.

    There is an easy way around the issue, and that is demonstrated in Bateman – Joyce (2008), where both parties get their costs of the whole action. Ah, but then the “loser” is the insurance companies, whom have to fork out for the pleasure of 2 (usually claimant orientated) solicitors arguing liability right to the door of the court, then deciding it was actually a 50/50 (as in many cases was obviously the way to settle from the start), and whacking in huge bills. I can see the queues forming in several prominant firms already!

    The Courts are loathe traditionally to make percentage based Orders, indeed try looking for relevant precedents where such have been made – the very few out there, are very case specific, and offer no “general” guidance.

    Remember also, most frequently the Court simply never gets the chance to be involved in making the final Order – the majority of cases settle on some consent provision or Part 36 payment before the court has to hear and try the issues. Also, hands up all the Trial Judges whom want to hear a case through, then have another 3 hours argument over the rights and wrongs of whom claimed what and how “successful” that party had bee, particularly in the absence of any finding of exaggeration or grossly uunreasonable conduct?

    Consider also the huge injustive meted out in Industrial Disease claims, where an Insurer may only be liable for a small percentage of exposure, yet ends up having to pay huge costs for all investigation work against all potential defendants, whether they were pursued or not, and without any apportionment on costs. I have seen cases where under £500.00 is paid by an insurer for their percentage of damages, there is no recovery against anyone else, and the Insurer gets a £20k + bill unapportioned to pay.

    Lets make it really simple and fair. Costs, is simply a head of claim, like any other. Where there is a determination of only a percentage recovery of the other heads of claim e.g. for liability split, contributory negligence, percentage apportionment for period of exposure, then apply the same percentage to the costs to be recovered. Cuts straight through the need for the court to decide, kills claim/counterclaim arguments dead, and allows fair and proportionate payment of costs all round

  6. Planning the structure of a complex bill is where the premium rate should be justified; also to reflect the focus required to be able to apply the plan consistently.

    I’m not surprised there is little published on apportionment methodology. Most of it is fact sensitive and as our firm tend to handle a fair bit of group litigation I would be reluctant to share any special moves we may have developed with competitors.

    As a very general rule we tend to charge D rates for individual bills in group actions (even very big ones) and something above that for the generic work.

    When partial costs travel in both directions sad to say we have seen some really ropey bills. Brings the game into disrepute at times.

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