AN ASSESSMENT OF COSTS BITES THE DUST: COURT RESOURCES, PROPORTIONALITY AND COURT PATIENCE IN THE ASSESSMENT PROCESS.
The decision of Mr Justice Teare in Mount Eden Land Ltd –v- Speechly Bircham  EWHC 169 (QB) is a case of the courts ending a detailed and lengthy costs assessment because of the behaviour of the claimant. It has wider ramifications, not least where the issue of proportionality has to be considered in the process of the assessment of costs.
This was an action by the claimant (Mount Eden) seeking an assessment of their former solicitor’s invoices, the amount in dispute totalled £105,000.
POINTS OF DISPUTE
Directions were made including that Mount Eden file points of dispute. These were duly filed and a date fixed for the assessment.
At the detailed assessment hearing Mount Eden attempted to go considerably beyond the matters set out in the point of dispute. The situation is summarised in the judgment of Teare J.
“ During the course of the hearing the Master gave a ruling on three issues f general application which arose out of the Points of Dispute. He then proceeded to the detailed challenges. One item, worth £325.19, was considered and, after three pages of transcript, was allowed. The second item, worth £8,690.05, was considered. Soon after the debate commenced Speechlys costs lawyer, Mr. Dean, noted that Mount Eden were “straying off piste from the points of dispute…” and added that “if we start embarking on examining every item in detail which has not specifically been raised in the points of dispute we will be needing significantly longer than the three days that we were discussing earlier.” The Master said a little later that “if we do this for every item it is going to take weeks.” Mr. Dean said that “all of these points are being raised for the first time today and they are beyond the scope of the points of dispute……..we must be given some notice of the points that are being made and be given some time to respond adequately to them.” The Master asked Mr. Bishop, Mount Eden’s costs draftsman, “is it your intention to go through this as you have been all the way through just picking out ten minutes here, half an hour there ?”. Mr. Bishop replied “Those are my instructions.” He accepted that the Points of Dispute were “not specific to a particular date” and he took the point that “they are not individual to each item.” He said he was “within the generality of the points of dispute.” The Master said that there were several options; one was not to permit Mount Eden to challenge the costs “line by line” because the points of dispute had not been fully particularised, another was to give the parties time to try to narrow the issues and thereafter to come back to the court with “amended points of dispute”. He said that “as things stand at the moment they are pretty general. Generally the time claimed in these invoices is excessive. It is very difficult to see from Speechly Bircham’s point of view how they can address that when the challenge is so general”. The Master opted for the second option.”
THE CLAIMANT HAD A SECOND CHANCE
The saga continued.
“ On 29 November 2012 the Master made an order which required the parties to meet in order to narrow the issues and said:
“If it is the intention of the Claimant to challenge individual items in the breakdown of the Defendant’s bills on an item-by-item basis, any disputed item should be identified and attempts made at the meeting to resolve that item. Absent any resolution, the Claimant must set out as briefly as possible in a schedule, those items that remain in dispute (which should be served on the Defendant and a copy filed at court). For the avoidance of doubt, the Claimant’s objections are to be limited to those items in the schedule and in the existing Points of Dispute.”
vii) Mount Eden provided a schedule on 16 January 2013. It was in an unorthodox form. Instead of identifying the items challenged by reference to the breakdowns of Speechlys bills (where such breakdowns had been requested and provided) the items challenged were identified by reference to Speechlys time sheets. In relation to the time sheets no more than two objections were taken. One was that the item was excessive, the other was that there was no supporting evidence. The letter explained those terms as follows:
” ‘Excessive’ – this includes our recurring theme that the work often described should only, reasonably, be one unit, rather than the two or more units often charged.
‘No supporting evidence’ – this includes where either the file is silent as to the work claimed for that particular day, or there is no file note of document supporting the time claimed.
Some items carry ticks in both columns. Here we take the view that both heads apply…….”
viii) On 17 January 2013 Speechlys wrote to Mount Eden’s solicitors complaining that they relied on two broad headings “but provide no further details as to the particular concerns in relation to each of the entries which are challenged.”
ix) The parties met but no agreement was reached.”
THE SECOND HEARING BEFORE THE MASTER
Speechleys objected to the second point of disputes on the grounds that they did not comply with the Master’s Order. The Master agreed.
“He concluded that the schedule did not comply with his order. In the course of his judgment the Master made the following observations about the November 2012 hearing:
“9. .…..it was obvious from the slow progress made at the hearing that the assessment could not proceed in a way which was proportionate to the court time allotted to it, unless the Claimant put its arguments with more clarity. What the Defendant needed to know was what, precisely, was the case being taken against the firm in the invoices. That was certainly not as clear as it should have been from the Points of Dispute which had been served in order to comply with paragraph 4 of my Order of 5 September 2011. Specifically, the Points had been general in nature….”
“10. ….In my opinion, the Points of Dispute, as they then stood, were unfocussed and discursive. For that reason I stood over the assessment after the short adjournment on the first day of the hearing on 29 November 2012 so that the very experienced costs lawyers for the parties could meet in order to narrow the issues and report back to the court on 7 February 2013. In the event that it did not prove possible at the meeting to resolve their differences, I directed that the Claimant must serve a schedule setting out those items that remained in dispute “as briefly as possible”….”
“11. The intent behind that wording was that the Points (as amended) should not be prolix. That said, it was my belief also that the parties knew full well what was required and that the revised Points should identify precisely what was in issue in the bills. They would have known that not only from the course of the arguments that had taken place before me but also due to the difficulty the court had experienced with the bill that had been assessed through the absence of a focussed set of Points of Dispute.”
- The Master referred to the Costs Practice Direction paragraph 35 which required the nature and grounds of the dispute to be stated concisely and that where practicable a figure should be suggested as to the sum to be allowed in respect of items in respect of which a reduction is sought. He held that
“21. …….in asserting hundreds of times in relation to items of work that each is “excessive” and that there is “no supporting evidence”, the objections fail to comply with the Practice Direction, still less do they enable the Defendant to understand the complaint being made against the work undertaken in anything more than the most general terms, even though the Claimant has had access to all the Defendant’s papers. If that were not enough, in most cases no attempt has been made to suggest an alternative figure.””
THE RESULT: THE MASTER STAYED THE ASSESSEMENT
The Master ordered a stay of the assessment (effectively bringing the action to an end). The claimant applied to set that stay aside. That application was refused. Amongst other things the Master observed:
“30. Mr Carpenter also expresses concern that if the detailed assessment ends now, his client will not benefit from the reductions he has achieved already, nor from those which would be won on the line-by-line assessment. He also advances the proposition that the Court appears to have pre-judged the outcome of the assessment and has been unduly favourable to Speechly Bircham in treating the risk of the excessive costs that the detailed assessment might involve if it is permitted to proceed, as a point which has weighed against Mount Eden. Again, I disagree. Under the CPR, this assessment proceeds on the indemnity basis so any doubt will be resolved in favour of Speechly Bircham, not Mount Eden. That puts Mount Eden at a disadvantage from the outset. Moreover, it is a fact that I have already decided the five minute unit point against Mount Eden, likewise the recovery of costs from third parties point. Against that factual background, explaining to Mount Eden the realities of the situation which it now faces is, in my opinion, a matter that it is appropriate for the court to raise in furthering the overriding objective. Put differently, the expense of another five days’ detailed assessment (even assuming that the Points of Dispute are in order, which they are not) would extinguish any saving that Mount Eden might achieve in reductions to the bills many times over. As Mr Browne has correctly pointed out, proportionality includes both the costs as between the parties and the needs of other Court users (see the speech of Lord Dyson MR 22 March 2013 to the Judicial College). I agree with him that having regard to the facts and circumstances I have described, a stay is appropriate.”
THE APPEAL TO TEARE J
The claimant’s appeal to Teare J was unsuccessful.
- The Master’s Order clearly envisaged that the points of dispute would be in the terms of the Costs Practice Direction.
- The Master was entitled to find that the points of dispute filed were in breach of both of his orders.
- It was not now open to the claimant to assert that they now wanted a more general assessment and not a line by line assessment.
- There was every chance that the claimant would score only a Pyrrhic victory. The costs of a 5 day assessment would vastly outweigh any reduction in the bills.
TEARE J’S CONCLUSIONS
“18. The decision to stay the assessment was certainly a robust decision but it was taken in circumstances where it appeared to the Master, for good reason, that the assessment which Mount Eden wished to carry out could not be done at proportionate cost. The Master, when the decision to stay was challenged, gave very full reasons for the exercise of his discretion to stay the assessment. Those reasons included (at paragraph 25) the Master’s assessment that, having regard to the background against which the order of November 2012 had been made, Mount Eden “were, or ought to have been, fully aware of the consequences were the schedule not to be admitted.” In similar vein he said (in paragraph 26) that “a fair reading of the transcript can lead to only one conclusion, that this was the ‘last chance saloon’ for Mount Eden and if the Points of Dispute could not be particularised in a form which permitted Speechly Bircham to understand the case being made against the firm at proportionate cost, the assessment could not proceed further and would effectively be at an end.” Mr. Carpenter did not specifically challenge these reasons but in so far as the points he made with reference to the transcript were intended to challenge them I was not persuaded that the transcript did not support them. In the circumstances I am not persuaded that the Master’s decision to stay the assessment was plainly wrong.
19 Finally, Mr. Carpenter submitted that the decision to stay the assessment was a breach of Mount Eden’s rights to a fair trial under Article 6 of the ECHR. This submission was not supported by any reference to the Strasbourg jurisprudence. The Master rejected the submission on the grounds that it was not the court which had frustrated the assessment “but Mount Eden’s instructions to Mr. Bishop that it take place line by line, only to be followed by its failure to particularise its complaints in a way which would enable the Court to deal with the case fairly and at proportionate cost.” Far from seeking to deny Mount Eden a fair trial the Master had adjourned the assessment to enable Mount Eden to prepare a schedule of amended Points of Dispute so that an assessment of the type required by Mount Eden could take place. Mount Eden failed to prepare the required schedule with the result that the assessment it required could not be conducted at proportionate cost. I was not persuaded that the stay was, in the circumstances, a breach of Mount Eden’s Article 6 rights.”
THE CLAIMANT’S ACTION REMAINED STAYED: WHAT WOULD HAVE HAPPENED POST-MITCHELL?
It is worth noting that all of this took place prior to the decision in Mitchell –v- NGN. If the matter were being considered today – in the post-Mitchell world – there is every likelihood that a court would conclude that the original points of objection, and certainly the second points of objection, did not comply with the Practice Direction and Order. The claimant, therefore, required relief from sanctions. Such relief would not readily be given. Indeed given that these appeared to be deliberate acts based upon a decision it appears highly unlikely that relief from sanctions would be granted.
LESSONS TO LEARN: PARTICULARLY FOR THOSE DRAFTING POINTS OF DISPUTE
It is clearly essential that points of dispute comply with the Costs Practice Direction.
“8.2 Points of dispute must be short and to the point. They must follow Precedent G in the Schedule of Costs Precedents annexed to this Practice Direction, so far as practicable. They must:
(a) identify any general points or matters of principle which require decision before the individual items in the bill are addressed; and
(b) identify specific points, stating concisely the nature and grounds of dispute.
Once a point has been made it should not be repeated but the item numbers where the point arises should be inserted in the left hand box as shown in Precedent G.
8.3 The paying party must state in an open letter accompanying the points of dispute what sum, if any, that party offers to pay in settlement of the total costs claimed. The paying party may also make an offer under Part 36.”
“ADVOCACY” AT ASSESSMENTS GENERALLY
There has not been much consideration of advocacy in relation to assessment hearings. Generally the rule (I have taken soundings on this) appears to be to take every conceivable point. As the Mount Eden case shows this can be counter-productive, even directly harmful to a litigant’s case. Further it runs directly contradictory to the principles of advocacy generally, particularly in civil proceedings.
- Prepare the case carefully by way of written submissions if necessary.
- Pick the best points in your case, abandon the weak and hopeless ones.
- Tell the judge why you should win.
- Tell the judge why your opponent should lose (only if necessary).
- Shut up. Treat the judge’s time as being at a premium.
Every major work of advocacy emphasises the need to be selective in the points taken and emphasises brevity as a virtue. “Brevity is the soul of wit for trial lawyers” is one example of many.
It may well be that these issues need to be considered at detailed assessments. Carefully picking the battles you fight can stop you losing the war.