Bill of Costs reduced by 75% because of CPR 44.11 misconduct

Last year I represented the paying partying in a detailed assessment where CPR 44.11 misconduct allegations were raised. The  £258,583.78 claim for costs was assessed at £nil and the receiving party’s solicitor referred to the SRA (Kapoor v Johal, Johal & Johal [2024] EWHC 2853 (SCCO)). The case received significant coverage in the legal press. Not long afterwards, I acted for another paying partying where CPR 44.11 misconduct allegations again featured. A transcript of the judgment has only just become available (Hyder v Aidat-Sarran & Aidat-Sarran [2024] EWHC 3686)).

When detailed assessment proceedings were originally commenced, the Bill of Costs should have been, at least in part, in electronic format. However, the Bill as initially served was in traditional paper “red line” three column format. Further, the Bill had myriad errors. The extempore judgment did not list the specific problems with the Bill but the judge “read in” the problems from the witness statement filed on behalf of the paying party:

i. The Claimant failed to serve the certificates as required by PD 47 para.5.7(6) and 5.21, in particular a Certificate as to Accuracy that there was no breach of the indemnity principle.

ii. In breach of PD 47 para.5.A4, the Bill was not, for the relevant periods, in electronic form.

iii. In breach of PD 47 para.5.8(8), the Bill was not divided by phase and did not distinguish between incurred and budgeted work, notwithstanding there being a costs management order in place.

iv. The Bill did not include the names and SCCO grades of the fee earners.

v. Work was claimed in respect of applications where there was no order for costs (e.g. see Order of 7 December 2018 (STG3 pages 53-54 at paragraph 2) – item 33 in paper Bill).

vi. Work was claimed in respect of costs that had already been summarily assessed (i.e. Part 8 of the Bill – Order of 2 April 2020 (STG3 page 6 at paragraph 4). Page 4 of 9.

vii. Significant work was claimed in relation to funding (e.g. item 14 in the Bill).

viii. The Bill referred to various Schedules of Documents (e.g. Schedules 1, 2, 3, etc.) but no such Schedules were attached to the Bill.

ix. Part 7 of the Bill (totalling £72,676.52) simply referred to an “attached bill”. No such further bill was attached. This further bill apparently covered the period 1 September 2020 to October 2022. The final Order in the underlying proceedings was made on 2 April 2020. These costs clearly did not relate to the proceedings subject to the Order for costs.

These problems were all set out in the Points of Dispute served for the paying party.

No Replies were served in response.

When a request for a detailed assessment hearing was finally requested by the receiving party, an electronic Bill was served. This was materially different to the original paper Bill. The new electronic Bill had corrected virtually none of the problems with the previous one, despite these problems all being clearly pleaded in the original Points of Dispute. Further, additional significant problems arose with the new Bill. Again, as set out in the witness statement:

i. The Claimant has again failed to serve the certificates as required by PD 47 para.5.7(6) and 5.21, in particular a Certificate as to Accuracy that there was no breach of the indemnity principle.

ii. Again, in breach of PD 47 para.5.8(8), the Bill does not distinguish between incurred and budgeted work, notwithstanding there being a costs management order in place. This makes any detailed assessment impossible because there is no way to determine whether the Claimant is over-budget for any given phase. The problem cannot be solved by filtering by date because the Bill does not give dates for routine communications.

iii. There is a second breach of PD 47 para.5.8(8). Although the Bill is superficially drafted by phase (giving the Phase Code in column N but not the Precedent H Phase in column R), this has been done in a materially defective (and largely random) manner. For example:

(a) Work relating to preparing the Precedent H (e.g. items 97 and 100) is claimed in the Issue/Statements of Case phase rather than the Budgeting phase. (This is also in breach of PD 47 para.5.8(9).)

(b) Work relating to preparing the DQ and draft Directions (e.g. items 95 and 96) is claimed in the Issue/Statements of Case phase rather than the CMC phase.

(c) Work attending a site visit (item 147) is claimed in the CMC phase.

(d) Work in relation to expert evidence (e.g. items 185, 186 and 187) is claimed in the Disclosure phase rather than the Experts Reports phase.

(e) Work in relation to expert evidence (e.g. items 346-353) is claimed in the Witness Statements phase rather than the Experts Reports phase.

(f) Work is claimed in relation to preparing a Schedule of Loss (item 482) in the PTR phase rather than the Issue/Statements of Case phase.

(g) Work is claimed considering the Defendants’ counter-Schedule of Loss (item 509) in the Trial Preparation phase rather than the Issue/Statements of Case phase.

(h) Work is claimed in relation to preparing a witness statement (item 534) in the Trial phase rather than the Witness Statements phase.

(i) Work is claimed in relation to an application (e.g. item 530) in the Trial phase for an application months after the trial had concluded.

(j) Work is claimed in relation to costs submissions/costs judgment (e.g. items 631-635) for the purposes of the trial in the ADR/Settlement phase rather than the Trial phase.

iv. In breach of PD 47 para.5.A2(a) the Bill does not report the work by tasks and activities.

v. In breach of PD 47 para.5.A2(b) the Bill does not report summary totals. This function is broken in the main “Bill” tab, “Phase Summary” tab, “Part Summary” and “Task Summary” tab.

vi. In further breach of PD 47 para.5.A2(b) the Bill does report “summary totals in a form comparable to Precedent S” as the “Budget v Bill” tab has been left blank. This is particularly significant here as this is a case subject to a costs management order.

vii. In breach of PD 47 para.5.A2(d) the Bill does not automatically recalculate intermediate and overall summary totals if input data is changed.

viii. Work is again claimed in respect of applications where there was no order for costs (e.g. items 217-219). This is despite the fact this very issue had been raised in the original Points of Dispute (Point 26).

ix. Significant work is again claimed in relation to funding (e.g. items 33 and 34 in the Bill). This is despite the fact this very issue had been raised in the original Points of Dispute (Point 7).

x. Significant work is claimed in September-December 2021 (over a year after the main action had concluded) in relation to an application in the detailed assessment proceedings. HHJ Parfitt ordered there be “no order as to costs” in respect of this application (STG3 page 7 at paragraph 4).

xi. Significant work is claimed in March/April 2022 (two years after the main action had concluded) in relation to a further application in the detailed assessment proceedings (e.g. items 666, 669 and 673-678). Costs Judge Nagalingam has already summarily assessed those costs (STG3 page 58).

xii. The Bill claims a total of £13,676.27 including VAT in respect of routine “letters in” in clear disregard for PD 47 para.5.22(1). The original paper Bill did not claim for routine letters in. Although these routine letters in are claimed as 3 minute units, bizarrely the hourly rates applied for considering routine letters in are double the hourly rates applied for all other work. It is inconceivable that the terms of the retainer provide for two simultaneous hourly rates for each fee earner with a rate 100% higher than the normal rate for considering letters in.

In a scathing judgment, the judge concluded:

“I am entirely satisfied that both limbs of CPR 44.11(a) and (b) are met here. Under (a), there has clearly been non-compliance with the rules, et cetera.  Under (b), there has certainly been unreasonable conduct, simply meaning conduct which does not admit a reasonable explanation. … In summary, I find there have been multiple compound breaches. They have been serious. They have been persistent. They are unexplained, and they are inexcusable for the most part.”

On a “very narrow balance”, the judge did not strike out the Bill (originally in the sum of £128,452.48) entirely. The sanction applied was a 75% disallowance of the otherwise recoverable costs.