Legal Cost Specialists

Dividing bills of costs

The Senior Costs Judge Master Gordon-Saker has given definitive guidance as to how bills should be divided in the case of BP v Cardiff & Vale University Local Health Board [2015] EWHC B13:

  • Divided between periods where different proportionality test applies:

“In any case in which both approaches need to be taken it will be necessary to identify the work which falls before and after that date and to identify the sums claimed for the work done before and after that date. In my judgment where the case commenced on or after 1 April 2013, the bill covers costs for work done both before and after that date and the costs are to be assessed on the standard basis it must be both convenient and necessary for the bill to be divided into parts so as to distinguish between costs claimed for work done before 1 April 2013 and costs claimed for work done on or after 1 April 2013.”

  •  Divided by phase where costs management order:

“In order for the paying party and the court to know which items of work are claimed in relation to each phase the bill would need to be drawn in parts which reflect the phases. Although multi-part bills tend to obscure the overall picture, it seems to me that (unless a sensible alternative can be devised) in a case in which a budget has been approved or agreed and the costs are to be assessed on the standard basis it will be both necessary and convenient to draw the bill in parts which correspond with the phases of the budget.”

  •  Divided between work done before and after a costs management order is made:

“Within each part it will also be necessary to distinguish between the costs incurred before and after the budget was agreed or approved. This could be done without further sub-division by use of italics, bold, superscript or some other formatting device.”

  •  Divided to show work relating to costs budgeting work:

“Where a costs management order has been made and the receiving party’s budget has been agreed by the paying party or approved by the court it will be both necessary and convenient that the bill be divided so as to identify the costs of initially completing Precedent H and the other costs of the budgeting and costs management process, unless those costs can be clearly identified in some other way.

I use the phrase “definitive guidance” advisedly. There is absolutely no prospect of a higher court overturning the guidance given by the Senior Costs Judge on matters of costs practicalities. The judgment also gives a costs warning where bills are not clearly divided:

“In the present case it was necessary for the parties to spend time in the hearing to identify the items of work which related to the budgeting and costs management process. Had the overall result been different the [receiving party] may have been expected to pay the costs of that in any event.”

8 thoughts on “Dividing bills of costs”

  1. Charles Wheatcroft

    I foresee difficulties with the identification of the incurred and estimated costs.

    Even if these were identified in the body of the bill, italicised or otherwise, unless those figures are carried forward into a sub-divided summary, the grey areas will remain.

    Maybe it is time to bring back the four/six column bill (if we ever stopped using it) to separate the incurred costs as against the costs incurred which were estimated in the budget?

    As for the different test of proportionality – maybe we should have a six column (not that one) or a nine column bill unless a 20+ part bill is more appropriate. With another part for costs incurred outside the budget which can be the dealt with separately.

    I’m all for obfuscating the process further – solicitors frequently tell me they used to/still could (at a push) draft their own bills. I’d like to see them try…

  2. Melanie Vickery

    I have been preparing 20+ part Bills for over a year now where a CMO has been made, dividing the Bill into numbered parts to reflect the phases and then into (a), (b) and (c) where appropriate for pre budget pre 2013, pre budget post 2013 and post budget (i.e. estimated). Any costs outside the budget form subsequent parts. I also insert a budget/bill comparison table at the back of the Bill as well as a summary of all costs. I have no fancy software and yes, it is laborious but once you have done a couple, you quickly learn how to adapt the practice so as to make the task slightly less time consuming each time.

    Come on guys – we have known all along that at the end of a matter the Court (and paying party) will need to be able to directly compare the estimated costs approved at CMO against the actual costs incurred – I am astonished that as “costs specialists” some of the profession have not catered for this already while a more permanent solution is being devised.

    It is irrelevant that the Bills are lengthy and confusing (anyone seen the proposed new draft Bill????) – they conform with all rules, PDs and guidances issued from the top and the time spent preparing them is justifiable in all of the relevant circumstances.

    Personally, I think putting the “estimated” costs in italics or bold etc would be more confusing than splitting the bill into many parts and the bill would take longer to draft as (as far as I know) excel is unable to only add up the figures in bold/italics but I’m happy to be corrected.

    Right – I’m getting off my perch now. Sorry.

  3. I think Melanie has hit the nail on the head – we are supposed to be costs specialists, and should already have been fulfilling our own duty to the Court, by assisting as much as possible – and that throws up something in itself

    I am sick to death of dealing with supposed specialist cost lawyers, who go out of their way to hide and refusing to explain massive discrepancies in the costs they put into budgets, and N260’s, only to change everything upwards, when they then draw the bill. It is no coincidence, these people charge by percentage of the bill as drawn.

  4. This has always aggravated me as a person who does both sides.

    At the Manchester ACL conference last year not one of the panel would criticise bills that were not split despite the clear assistance that it would provide the parties and the courts. As melanie says, its time consuming but you get paid for it!! why would you not split it then?? Unless perhaps your trying to hard something??

    Whilst i accept that the conclusion may not be accurate all the time, it is the conclusion that tends to leap out at you

  5. Roberto Carassale

    We have been doing exactly the same. We use a software package which does make it slightly easier but you still need to be competent enough to understand how to split it. It can be a little tricky where the client has prepared the budget and then instructed us to prepare the bill as there is obviously some grey areas as to what goes in what phase but overall it is working. There is also the added advantage of the court and paying party seeing exactly where there receiving budget is under agreed/approved phase (or over in some cases!). From my point of view it is interesting because it is only at this stage where some of my clients know whether they were in budget or not – I wonder how many cases there are where CMOs made and parties do not stay in budget and fail to apply for revised budget.

  6. @ RC

    “From my point of view it is interesting because it is only at this stage where some of my clients know whether they were in budget or not ”

    Here, is exactly why solicitors and budgeting DO NOT WORK – because they assume its “just a costs issue” and leave it to their draftsmen. Its not. Its an inclusive collaboration

    The concept of budgeting is sound – its the muppets who implement and are supposed to use it, that is wrong; and a major culture change is needed; the CoA should have left “Mitchell” as the definitive Judgement to force this message through

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