Looking for your Assessment Costs in full? Better Produce a Reasonable Bill
Milbrooke Construction Limited (in Liquidation) -v- Timothy Jones  EWHC B20 (Costs)
Master Brown reduced the Claimant’s Bill of Costs by 39% and in turn made ‘some other Order’ under CPR 47.20(1)(b) whereby the Claimant’s recovery of their assessment costs was reduced by 30%.
The issue raised by the Defendant was that as the Claimant’s Bill of Costs was reduced by 39%, of which the document time was reduced by over 50%, the Defendant argued that this should be reflected in the costs of the assessment.
(1) The receiving party is entitled to the costs of the detailed assessment proceedings except where –
(a) the provisions of any Act, any of these Rules or any relevant practice direction provide otherwise; or
(b) the court makes some other order in relation to all or part of the costs of the detailed assessment proceedings.
(3) In deciding whether to make some other order, the court must have regard to all the circumstances, including –
(a) the conduct of all the parties;
(b) the amount, if any, by which the bill of costs has been reduced; and
(c) whether it was reasonable for a party to claim the costs of a particular item or to dispute that item.
Factors Considered by Master Brown sitting in the SCCO
- Master Brown considered the decision of Deputy Master Campbell in Mullarag -v- Secretary of State for the Home Department  WL 01601117, where the Bill of Costs was reduced by 44.05%, and agreed with him that rule 47.20(1) created, in effect, a presumption that the receiving party would receive its costs.
- The Master observed that the amount allowed on the Bill was significantly above the offers made by the Defendant. The Claimant had not beaten its own Part 36 offers but had beaten some of its own Calderbank offers.
- The Master found that the Documents time was the main battleground between the parties and that a substantial part of the assessment day was spent dealing with the time spent on Documents. On this matter, the Master found the Defendant was clearly largely successful with reductions of over 50% being made. The time spent in challenging and preparing for the hearing in respect of the Documents time alone was likely to have been substantial.
- The Master recorded that a significant overstatement in a Bill would not only have made achieving a settlement more difficult, it could also increase the length of an assessment hearing and so greater costs are incurred.
- The Master concluded that it was difficult to see why the costs of resisting what to his mind was clearly a claim that was unreasonable in amount should not, in some way, be reflected in a 'different' order. Master Brown also did not accept the characterisation of a 'different' order as a penalty.
Having regard to all the factors, Master Brown held that a reduction of 30% best reflected the justice of the situation.
The application of CPR 47.20(1) will be determined on a case-by-case basis. In the case of Mullarag, the Bill of Costs was reduced by 44% however the Court took into consideration offers and with the Defendant’s open offer being nil against an assessed Bill of £41,000, the Court considered that the Defendant was way off the mark, and so the Court did not make any other Order.
In the present case, despite the Claimant having bettered the Defendant’s offers “significantly” and having beaten their own Calderbank offers, there appears to have been particular focus by the Court on the level of the document schedule, how much this was reduced by, and the impact this had on prospects of settlement and increased costs at the hearing.
While the Court makes a valid point that an unreasonably high Bill can distort expectations and hinder prospects of settlement, where a Claimant has made an offer which was beaten on an assessment, you would argue that the Defendant had an opportunity to walk away accepting a reasonable offer and avoiding an assessment hearing altogether. Possibly if the Claimant’s offer was made by way of Part 36, an alternative outcome may have been reached, although arguably the Court in those circumstances may have reached a similar conclusion but rather than reducing the assessment costs by a percentage amount, would instead consider it unjust to allow the additional benefits (CPR 36.17).
What is interesting is that in passing, Master Brown at para.19 of his Judgment states that a no order for costs may have been appropriate if the extent of the recovery or success on the claim was very modest so that recovery overall was limited to substantially less than 50% of the costs claimed. Perhaps a warning in cases with significant proportionality issues.
Whether the decision is fair or unfair, what is clear is the importance of producing a “reasonable claim for costs” which “wouldn’t suffer a too significant reduction” on an assessment.