Legal Cost Specialists

detailed assessment

Recovery of interest paid on disbursement funding loan

By on Jul 13, 2020 | 4 comments

Last week in Marbrow v Sharpes Garden Services Ltd [2020] EWHC B26 (Costs) (10 July 2020) the Senior Costs Judge Master Gordon-Saker handed down a reserved judgment in relation to three discreet issues where I acted for the Defendant paying party. None of the issues were novel, but they are ones that have continued to trouble the lower courts, which was no doubt part of the reason for the reserved judgment. The issue I will deal with today is the decision relating to whether the interest paid on a disbursement funding loan was recoverable as an item of cost or, alternatively, by way of allowing interest to run from an earlier period. The Claimant claimed, as an item of costs, the interest payable under a loan agreement with his solicitors in relation to the funding of disbursements. The agreed interest rate was 5%. The Claimant relied on the decision of the Court of Appeal in Secretary of State for Energy v Jones [2014] EWCA Civ 363 as authority that such an item was recoverable as an item of costs.  The Master rejected that on the basis the Court in that case was concerned with the rate of interest that could be allowed on costs from a date earlier than judgment where, as here, the claimants had incurred a liability to pay interest to their solicitors in respect of the funding of disbursements. In Hunt v RM Douglas (Roofing) Ltd [1987] 11 WLUK 221 the claimant sought to recover on the taxation of his costs the interest that he had incurred under an overdraft to fund the disbursements required for his claim.  The Court of Appeal held that funding costs had never been included in the categories of expense recoverable as costs and to include them would constitute an unwarranted extension. The Master held that it was clear following Hunt that interest incurred under a disbursement funding loan cannot be recoverable as costs and so disallowed the item within the bill. However, the Master then considered CPR 44.2(6)(g), which does allow the court to order the payment of interest on costs from a date before judgment.  He distinguished Jones on the basis it was a different case to the present:...

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Accepting offer after detailed assessment has commenced

By on May 29, 2020 | 0 comments

Can a “Calderbank” offer made during the course of detailed assessment proceedings be accepted by a receiving party after the detailed assessment hearing has commenced and once it has become clear that the receiving party will ultimately recover less than the amount of the offer?  Yes, ruled Mr Justice Morris in MEF v St George’s Healthcare NHS Trust [2020] EWHC 1300 (QB). Various offers and counter-offers had been made during the detailed assessment proceedings.  These concluded with an offer on 19 August 2019 by the paying party to settle for £440,000 (the same amount as had previously been offered) with the following condition attached: “The Defendant’s offer dated 27/09/18 is only capable of acceptance subject to the agreement of the Defendant’s costs of Detailed Assessment incurred since that date.” It was not in dispute that this was not a Part 36 offer. The matter was listed for a three day detailed assessment due to commence on 17 September 2019. At the end of the second day of the hearing, the Bill of Costs had been reduced – as a consequence of concessions already made by the receiving party and by decisions made by the costs judge – to below £440,000.  Just before the end of the second day, the receiving party sent an email purporting to accept the 19 August 2019 offer.  The paying party argued it was too late for the offer to be accepted. The matter initially came before Master Rowley for determination as to whether the detailed assessment proceedings had been compromised.  He concluded that the matter was subject to common law principles of offer and acceptance.  As there was no time limit placed on acceptance of the offer, he held that the offer had been properly accepted. On appeal before Mr Justice Morris, it was decided that Master Rowley had not expressly applied the contractual principle of an offer being capable of lapsing after a reasonable time.  However, applying that principle to the facts of the case, where none of the earlier offers had contained a time limit, he concluded that the offer had not lapsed and was therefore still capable of acceptance. Although it was held that the prior offers were “highly relevant context”,...

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Guidance on remote costs hearings

By on Apr 24, 2020 | 0 comments

Guidance on remote costs hearings has now been produced.  This has apparently been produced by a group of costs professionals with the support of the regional costs bench.  It has been met with approval by the costs judges at the Senior Courts Costs Office.  The guidance can be found on the Association of Costs Lawyer’s website...

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Failure to serve electronic bill of costs

By on Dec 10, 2018 | 8 comments

PD 47 para.5.1 requires an electronic bill of costs for any work  undertaken after 6 April 2018 where the claim is a Part 7 multi-track claim. The Practice Direction contains no sanction for failing to comply with this requirement. CPR 44.11 provides:         “(1) The court may make an order under this rule where – (a) a party or that party’s legal representative, in connection with a summary or detailed assessment, fails to comply with a rule, practice direction or court order; … (2) Where paragraph (1) applies, the court may – (a) disallow all or part of the costs which are being assessed” There appear to be a number options open to the Court where there is a failure to comply with PD 47 para.5.1, including: Tutting and proceeding with the assessment regardless. Refusing to proceed with the assessment until a compliant electronic bill (and amended paper bill) is served/filed. Making an unless order requiring a compliant electronic bill (and amended paper bill) to be served/filed by a certain date failing which all costs will be disallowed. Disallowing any post-6 April 2018 work (which may not be straightforward where the bill does not clearly identity all such work). Making a percentage reduction to the bill (perhaps roughly reflecting the proportion of post-6 April 2018 work claimed). Disallowing all...

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Interim costs payment following acceptance of Part 36 offer

By on Nov 30, 2018 | 2 comments

I had anticipated that the case of Culliford & Anor v Thorpe [2018] EWHC 2532 (Ch) would be the last word we would hear on the subject of interim payments for costs.  In that case the court had to decide whether it had the power to order an interim costs payment after the original costs order had been made. The judge concluded: “In my judgment, it is not the law that, once an order for costs has been made, drawn up and sealed, no further application can be made to the court for an order for a payment of a sum on account of those costs. There is nothing in the rules which so requires, and there may be good reason why payment of the sum on account is not considered at the time the order was made. My decision in Ashman v Thomas [2016] EWHC 1810 (Ch) does not decide to the contrary. It was a case where the court was asked to revisit its order before it had been drawn up and entered. So it turned on the so-called Barrell jurisdiction. There was no need to decide what would have happened if the order had already been entered. Although CPR 44.2(8) contemplates that the court will decide this question at the time of making the order for costs, to my mind this does not exclude the possibility that the court should decide it later. I see no justification in the rules or authorities for the Claimants’ view that, if an application is not made at the time, the next opportunity arises only after detailed assessment proceedings have been commenced.” However, barely had the ink dried on that judgment before another decision on this topic has been reported (although the case was actually heard several months before Culliford). In Finnegan v Frank Spiers [2018] EWHC 3064 (Ch) the High Court ruled that the court has no power to order a payment of costs on account after a Part 36 offer has been accepted.  This is because Part 36 is a self-contained code and it makes no provision for payments on account following acceptance of a Part 36 offer. We now have two different principles governing interim payments on account: Where the...

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Timing of payments on account

By on Oct 17, 2018 | 0 comments

The Legal Costs Blog keeps being pulled back to the issue of the timing of orders for interim payments of costs between the parties.The current wording of the relevant rules is to be found at CPR 44.2(8): “Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so.” and CPR 47.16(1): “The court may at any time after the receiving party has filed a request for a detailed assessment hearing – (a) issue an interim costs certificate for such sum as it considers appropriate; or (b) amend or cancel an interim certificate.” This distinction between an order for a payment on account and an interim costs certificate has been around (with only minor variations) since the introduction of the Civil Procedure Rules.  It is therefore surprising that the extent of any tension between the two rules, if such exists, has remained unresolved for so long. I had always read the two rules to mean there were two stages at which such an order could be made: 1. At the same time an order for costs is being made (usually following a trial). 2. After a request has been filed for a detailed assessment hearing. If an order for a payment on account had not been made when the costs order was being made, the next opportunity to obtain an order for an interim payment would not arise until after a request for a detailed assessment hearing had been made.  This has been the view shared by the authors of Cook on Costs. The last time we looked at this issue was in the case of Ashman v Thomas [2016] EWHC 1810 (Ch) (19 July 2016). Chancery Master Matthews had given judgment and awarded costs to the defendant but not made an order for an interim payment.  Subsequently, when trying to agree the terms of the order, the parties fell out over an attempt by the defendant to include a term for a payment on account of costs, which the claimant objected to.  The matter was referred back to the Master for a decision to...

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