ASSESSING BILLS OF COSTS: GIVE DETAILS OF THE SIGNATORY AND OF THE FEE EARNERS OR YOUR BILL WILL STRUCK OUT: “AN OUNCE OF OPENNESS IS CHEAPER THAN ANY ARGUMENT”

I am grateful to solicitor Benjamin T Petrecz  for drawing my decision to the judgment in  Barking, Havering & Redbridge University Hospitals NHS Trust v AKC [2021] EWHC 2607 (QB) Mrs Justice Steyn (sitting with an assessor Master Brown) allowed a defendant’s appeal. Consequently the claimant’s bill of costs was struck out.  The judgment contains an important warning as to the amount of detail that is needed in a bill of costs. The signatory of the bill of costs needs to be identified as does details of all the fee earners involved in the case.

“In my judgment, paragraph 5.11(2) requires both the status and the hourly rate to be given on an individual basis, rather than by reference to categories of fee earners, and it follows that each fee earner should be named in the bill.”

THE CASE

The court was assessing the claimant’s costs in a clinical negligence case.  The claimant filed a bill partially on paper and partially electronically (as was allowed).  The defendant applied to strike out the bill. The bill was not struck out by the costs judge. The defendant appealed – that appeal was unsuccessful.

THE GROUNDS FOR STRIKING OUT THE BILL

The defendant’s application was based on the fact that the signatory of the bill of costs could not be identified and the bill of costs failed to provide proper fee earner information.

THE DECISION ON APPEAL (1): THE SOLICITOR CERTIFYING THE BILL MUST BE IDENTIFIED

On appeal it was held that the failure to be able to identify the person who signed the bill meant it did not comply with the rules.

1. 1. CPR 47 PD para 5.21, together with Precedent F, requires the various matters specified in Precedent F, including the accuracy of the bill of costs, to be attested formally in the form of a certificate. As is common ground, certification must be by an individual and, if the bill of costs is not certified by the client, the individual must be a solicitor.

1. 1. Certification is an important element of the bill of costs. As the Court of Appeal held in Bailey v IBC Vehicles Ltd (albeit considering the former RSC Ord. 62) a solicitor’s signature certifying that the bill of costs is correct is “no empty formality”. The signature of an officer of the court is afforded a presumption of trust and breach of that trust is a most serious disciplinary offence.

1. 1. The provisions on which the appellant relies do not expressly require the signatory to be identified on the face of the certificate. Nevertheless, I agree with the appellant that as a matter of ordinary interpretation, bearing in mind the purpose of certification, it is implicit that the solicitor who signs the certificates must be readily identifiable on the face of those certificates. It is inherent in the concept of certifying or attesting to a matter before a court of law, at least in circumstances where the CPR requires (as it does here) that a matter is certified or attested by an individual, that the signatory should disclose their identity to the court.

1. 1. It is unsatisfactory if the nature of the certification gives rise to any doubt as to who signed the bill. Although it is not alleged that the current bill has been mis-certified, the interpretation of the rules must recognise that there will be cases, even if (hopefully) rare, where the bill of costs is mis-certified. The risk is that in such a case, if the identity of the signatory has to be ascertained after the mis-certification has been uncovered, the firm may say it is unsure of the identity of the signatory and the purpose of requiring an individual officer of the court to certify would be lost.

1. 1. This interpretation does not impose an onerous requirement. On the contrary, specifying the name of the signatory is a simple and wholly undemanding step, with which certificates on bills of costs ordinarily comply.

1. 1. The respondent’s bill of costs has not been certified by an identified individual and so it has not been properly certified in accordance with CPR 47 PD para 5.21, read together with Precedent F. I consider that the Costs Judge’s interpretation of the rules, and his consequent conclusion that the bill of costs was properly certified, was wrong.

1. 1. Moreover, while identifying the signatory as an unnamed solicitor of a specified firm would be inadequate, in this case it is not even clear that the bill of costs has been certified by a solicitor. It no longer follows, as it once would have done, that a person identified as a partner in a firm of solicitors is themself a solicitor. Neither of the witness statements adduced by the respondent states that the signatory is a solicitor and there is no other evidence to that effect. Indeed, the Court has not even been informed on instructions that the bill of costs was certified by a solicitor. Rather, the Court has been asked to presume that it must have been a solicitor because that is what the rules require. The presumption referred to in Bailey v IBC Vehicles Ltd is a presumption that the statements certified by an officer of the court can be trusted. It does not apply at the stage of considering whether a bill of costs has, in fact, been properly certified by a solicitor. The signatory may have been a solicitor, but there is no presumption that that is the case.

1. I reject the respondent’s submission that the remedy sought is Draconian. The effect of the order sought is to require the respondent to re-submit the bill of costs, amended to remedy any defects the Court finds. As far as this first ground is concerned, the only amendment required is to provide a fresh signed certificate, clearly identifying the solicitor who is the signatory. It will take very little effort to make such an amendment. Indeed, given how little effort or cost it would have taken to have provided the name of the signatory for which the appellant asked in November 2019, I confess to some astonishment that the respondent chose instead to withhold the information and argue the point. As Henry LJ observed in Bailey v IBC Vehicles, “an ounce of openness is cheaper than any argument”.

THE DECISION ON APPEAL 2: IDENTIFICATION OF FEE EARNERS

Similarly the failure to identify the fee earners involved was also a breach of the requirements.

1. 1. In respect of the paper bill of costs, the key question is what is required by paragraph 5.11(2) of CPR 47 PD. In particular, does this provision require the following information to be set out in the bill of costs: (a) the name of each fee earner; (b) each fee earner’s SCCO grade; and (c) each fee earner’s professional qualification and years of post-qualification experience (if any)?

1. 1. The starting point is that paragraph 5.11(2) does not expressly require the names of fee earners to be provided. Nor does it expressly require a fee earner’s SCCO grade or years of post-qualification experience to be set out. The issue is whether, applying ordinary rules of interpretation, having regard to the purpose of the provision, such requirements are implied.

1. 1. It is clear on the face of paragraph 5.11(2) that the hourly rate and “status” of “each” fee earner must be provided in the bill of costs. While paragraph 5.7 states that a bill of costs “may consist” of the sections specified, including a “background information” section, as appropriate, and paragraph 5.11 uses the word “should” rather than “must”, in my judgment, in any case where costs are claimed in respect of a legal representative’s employee(s), the effect of paragraph 5.11 is to require each employee’s status and hourly rate to be included in the bill of costs. The language of the provision, considered in context, is mandatory. In this regard, I agree with the view expressed by District Judge Baldwin in Sharp v Aviva at [30] that the receiving party should anticipate an appropriate sanction being imposed if the bill does not set out the hourly rate and status for each fee earner.

1. 1. In my judgment, paragraph 5.11(2) requires both the status and the hourly rate to be given on an individual basis, rather than by reference to categories of fee earners, and it follows that each fee earner should be named in the bill. First, this follows from the language of paragraph 5.11(2) which refers to the status of the “employee” (singular) “in respect of whom costs are claimed” and to the “hourly rates claimed for each such person”.

1. 1. Secondly, the provision must be interpreted purposively. A bill of costs in which claims are made for work done by reference to categories of fee earners, rather than by specifying the work undertaken by each individual fee earner, is intolerably opaque. It results in the paying party and the assessing judge being unable to consider “all the circumstances” when reaching conclusions as to the amount of costs likely to be or to be awarded when applying CPR 44.4 (see Sharp v Aviva at [30]).

1. 1. Without a breakdown of work undertaken by individual fee earners, it is impossible to know whether, for example, two different fee earners within the same status category each spent one hour working on a letter, on consecutive days, or whether only one fee earner spent two hours across two days working on it. This kind of information is capable of revealing that work has been duplicated, in whole or in part. It is also impossible to detect, for example, if a claim has been made that an individual fee earner undertook, say, 10 hours work on disclosure on a day when a claim has also been made for the same fee earner’s attendance at a one day hearing, giving rise to questions about the accuracy of the claim. Such anomalies are hidden if work is claimed by reference to categories of fee earner. In addition, the provision of the names of fee earners enables the paying party to check the expertise and experience of individual fee earners, when considering whether the rate claimed is reasonable.

1. 1. Given the paying party’s exposure to the costs of detailed assessment the paying party has a strong incentive to reach an agreement, but it is more difficult for a paying party to make offers if the bill of costs is opaque.

1. 1. I have borne in mind the contraindications contained in Precedent A, namely that the model is not populated with names of (fictional) fee earners and reference is made to “Other fee earners”. Ultimately, I have reached the conclusion that these indications in Precedent A are insufficient to compel an interpretation which is inconsistent with what I consider to be the proper interpretation of paragraph 5.11(2).

1. 1. The word “status” is not defined. In my judgment, the statement in Cook on Costs at paragraph 26.2 (quoted in paragraph ?75 above) that in a paper bill the “description of the fee earners may be along traditional lines – partner, solicitor, trainee solicitor”, and that there is no requirement for such descriptions to tie in with the SCCO grades, is correct. However, I also agree with the authors’ suggestion, in the same passage, that it is important that the bill should provide information about the experience and expertise of each fee earner, in particular, the number of years of post qualification experience for fee earners with a professional qualification.

1. 1. First, paragraph 5.11(2) uses the word “status” rather than “grade”. I recognise that the word “status” can be used to refer to “grade status”. Nevertheless, the word “grade” is a term of art, in this context, which is readily understood to refer to the SCCO grades A-D and so the omission of any reference to grades is of some significance. Secondly, the descriptions of status given in Precedent A (which paragraph 5.1 describes as a “model” form of paper bill of costs for detailed assessment) are along traditional lines: “partner”, “assistant solicitor” and “other fee earners”; and no information is given regarding SCCO grade. While it is good practice to specify each fee earner’s SCCO grade – and, if it is not given, a paying party may request such information and the court may order its provision – I do not consider that the rules and practice direction require fee earners’ SCCO grades to be specified in a paper bill of costs.

1. 1. Thirdly, bearing in mind that the court is required when assessing whether the costs claimed are reasonable and proportionate to take into account all relevant circumstances, including “the skill, effort, specialised knowledge and responsibility involved” (CPR 44.4), and that the paying party will take into account the same information when making offers to settle the costs bill, in my judgment, to comply with paragraph 5.11(2) the description of each fee earner’s status should encompass their professional qualification (if any) and (if the SCCO grade is not given) their number of years of post-qualification experience.

1. 1. I have borne in mind that the absence of information regarding fee earners’ experience in Precedent A weighs against there being such a requirement. On the other hand, such information is ordinarily provided and regarded as necessary information in their assessment by paying parties and assessing judges: see, for example, Sharp v Aviva and G v Kingston upon Hull City Council (18 September 2013). As a matter of ordinary language, and particularly in the context of costs, a legal professional’s status is indicated not only by their professional qualification but also by their level of experience. An interpretation of the rules and practice direction which enables receiving parties to withhold such basic information would be liable to result in bills of costs becoming less transparent, which in turn would be likely to inhibit the ability of paying parties to make offers and of the court to assess costs.

1. 1. Accordingly, I agree with the Costs Judge that the respondent was not required to specify the SCCO grade of each fee earner in the paper bill of costs. I also endorse his observation that, if a receiving party chooses not to provide such information, doubt will be resolved in the paying party’s favour.

1. 1. However, for the reasons that I have given, I consider that respondent’s paper bill did not comply with the requirements to specify, in respect of each individual named employee, their hourly rate(s) and status, including, for any fee earner with a professional qualification (such as a solicitor or Fellow of the Chartered Institute of Legal Executives), the number of years of post-qualification experience. Accordingly, I allow the appeal on ground 2 to the extent I have indicated.

1. 1. Whereas the proper interpretation of paragraph 5.11(2) is very finely balanced, it is with much less hesitation that I have concluded that ground 3 is well founded. The bill of costs for detailed assessment was required to be in “electronic spreadsheet format and compliant with paragraphs 5.A1 to 5.A4”, in respect of work undertaken after 6 April 2018. In order to meet the requirements of paragraph 5.A2 of CPR 47 PD electronic bills must either be in “Precedent S spreadsheet format” or “any other spreadsheet format” which, like Precedent S:

“(a) reports and aggregates costs based on the phases, tasks, activities and expenses defined in Schedule 2 to this Practice Direction;

(b) reports summary totals in a form comparable to Precedent S;

(c) allows the user to identify, in chronological order, the detail of all the work undertaken in each phase;

(d) automatically recalculates intermediate and overall summary totals if input data is changed;

(e) contains all calculations and reference formulae in a transparent manner so as to make its full functionality available to the court and all other parties.”

1. 1. The practice direction does not require parties to use any particular proprietary format. But whichever spreadsheet format is used, the electronic bill must, amongst other requirements, allow the user to identify “the detail” of all the work undertaken in each phase, in chronological order and must contain all calculations and reference formulae in a “transparent manner”.

1. 1. The rules with respect to electronic bills reflect the aims described by Lord Justice Jackson in his Keynote Address to the Law Society’s Civil Litigation Conference on 21 April 2016:

“2.1 The problem. The current form of bill of costs has a long and distinguished pedigree. It is based upon the style of a Victorian account book. Despite those historic virtues, the format is neither helpful nor appropriate in the twenty first century. The current form of bill makes it relatively easy for a receiving party to disguise or even hide what has gone on. What is required is a bill which (a) gives relevant information to the court and to the paying party and (b) is transparent. …

2.3 Conclusions reached during the Costs Review. The need for reform was clear. FR Chapter 45 sets out the three requirements which any new bill would need to meet:

(i) It must provide a transparent explanation about what work was done and why;

(ii) It must provide a user-friendly synopsis of the work done, how long it took and why;

(iii) It must be inexpensive to produce.

2.4 Recommendations. FR chapter 45 para 5.4-5.8 argued that a new bill of costs should be developed which was capable of being automatically generated from time-recording software. It would contain all the necessary information required for the paying party – or a judge – to understand the receiving party’s costs in a clear, transparent and intelligible way while producing considerable savings in time.

2.5 I therefore made the following two recommendations:

“106 A new format of bills of costs should be devised, which will be more informative and capable of yielding information at different levels of generality.

107 Software should be developed which will (a) be used for time recording and capturing relevant information and (b) automatically generate schedules for summary assessment or bills for detailed assessment as and when required. The long term aim must be to harmonise the procedures and systems which will be used for costs budgeting, costs management, summary assessment and detailed assessment.

2.6 Acceptance of the recommendations. Following publication of the Final Report the Judicial Executive Bord announced that it accepted the recommendations. The Judicial Executive Board expressed no reservations about the recommendations for a new form bill of costs, although everyone accepted that this was a long term project and likely to be achieved after the main implementation date.” (Bold emphasis added)

1. 1. In my judgment, the respondent’s electronic bill of costs failed to provide the detail of all the work undertaken in each phase and failed to provide the reference formulae in a transparent manner. The respondent’s electronic bill of costs does not meet the “full functionality” requirement. I have reached this conclusion for the following reasons.

1. 1. First, the respondent’s electronic bill does not include the names (or initials) of fee earners. This is part of the “detail” which must be provided whether the Precedent S spreadsheet format or another spreadsheet format is used. Who has undertaken each item of work is a key part of the detail and, without it, the bill is opaque. In order to be fully functional, the spreadsheet must enable the paying party and the court to see what work any particular fee earner has undertaken, in the way described in the SCCO Guide (see paragraph ?59 above).

1. 1. In this case, the respondent used the Precedent S spreadsheet format but did not provide the information sought in the columns headed “LTM” or “LTM name”. Filling the column which seeks the name of each legal team member with a code indicating a status category has the same effect as if the respondent had left the column blank. It is impossible to filter the work undertaken by reference to individual fee earners. This lack of transparency may hide claims where more than one fee earner at the same level has duplicated the work of another.

1. 1. Secondly, the respondent’s electronic bill does not include the grade for each (or indeed any) fee earner. In Precedent S there are columns for both status and grade, reflecting the fact that these descriptions seek different information. In this context, as I have said, the word “grade” is a term of art meaning SCCO grade. While the SCCO rates may be more material on summary assessment than on detailed assessment, they are relevant, at least as a starting point, and are invariably relied upon by parties, in the context of detailed assessment; and the SCCO grades provide basic information as to post-qualification and litigation experience which is important in considering matters such as whether the rates claimed are reasonable, whether the work should reasonably have been delegated or is excessive in time. While I have found that it is not a breach of paragraph 5.11(2) not to provide the SCCO grades in the paper bill, electronic bills are required to be more informative and more transparent than was required for paper bills to be compliant.

1. 1. I have addressed the concept of “status” in the context of paper bills. If the electronic bill had included the SCCO grade of each fee earner in the “grade” column, the information the respondent has provided in the “status” column – save to the extent that it is not provided in respect of named individuals – would suffice. But as the SCCO grades have not been given, the required information regarding fee earners’ experience cannot be discerned from either the status or the grade columns. Although a bill of costs is not required to be in Precedent S spreadsheet format, in my judgment, paragraph 5.A2 requires the same level of detail to be given even if a different spreadsheet format is used, and that includes giving each fee earner’s SCCO grade.

1. 1. In the grade column of the respondent’s electronic bill of costs, the respondent has not provided any grades. Although the grade column has been filled by repeating information provided in other columns, the effect is the same as if the grade column had been left blank. The respondent has provided the names of fee earners in the part 18 response and has gone some way towards providing their SCCO grades, albeit the grades remain unclear in relation to a number of fee earners (either because the grade has not been provided at all or sufficiently clearly). But the provision of a list of fee earners separate from the electronic bill of costs does not remedy the breaches which I have found. Even with such information, neither the appellant nor the court is able to filter items of work by reference to individual fee earners.

1. 1. In my judgment, the Costs Judge was wrong to conclude that because a bill of costs does not have to be in Precedent S format, there is no requirement in the practice direction that electronic bills must disclose the status and SCCO grade in respect of each individual named fee earner. It is apparent from paragraph 5.A2 that the same level of detail, and the same functionality, is required whatever spreadsheet format is used. A contrary conclusion would undermine the intended benefits, in terms of transparency and functionality, of the new rules for electronic bills.