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2016 - What role will a phased Bill of Costs and the Precedent Q play in absence of a new format Bill of Costs?

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The compulsory use of a new format bill of costs has been delayed again and this time, the delay is indefinite. Originally slated for April 2016, and then pushed back to October 2016, the Civil Procedure Rule Committee (CPRC) has decided that the practical challenges of implementing the new format across the entire profession are too numerous to allow for an accurate deadline.

The vision is that a new bill drafting process will pull all of the relevant information from firms’ electronic case management systems and present them in a phased bill document. This will require the entire industry to utilise the J-code system in their time recording process so that, when the final button is pressed, an automated bill of costs appears on your screen. Whilst achieving this practical step may simply be a matter of time and money for most firms; there are more intricate problems that stand in the away of producing such a perfect and uniform document.

What do we do with the pre-J-coded costs? What if the fee earner’s use of the J-codes is incorrect, or inconsistent? What happens where a previous Solicitor on the file is no longer in business? These are just a few of the questions that jump to mind, and to which the CPRC are probably still seeking a workable solution.

This indefinite delay leads on to a question: what happens now, in this ongoing and uncertain interim period? Some firms already have the capabilities to produce a phased Bill of Costs that can not only provide the totals of costs included under each phase of an approved or agreed Precedent H, but which can also present the Bill of Costs in a way that identifies the phase of each individual item. Clearly, however, some firms do not have this ability, which is one of the reasons why a compulsory new bill format has yet to be enforced. So should those who can produce a phased bill, do so?

At the time of writing, the only requirement is for a receiving party to disclose a Precedent Q document with the Bill of Costs when serving the Notice of Commencement. Whilst this document does provide the paying party and the Court with a breakdown of the total costs incurred under each phase on either side of the date of a Costs Management Order (CMO); it does not identify how each item has been phased. Therefore a Defendant seeking to challenge a Bill cannot readily identify whether an item in a bill may have been included incorrectly in a phase; and would actually breach the total allowed under the CMO if allocated to the correct phase. Similarly, a Judge may disallow certain items on assessment but would have no way of being sure how the reduction has impacted on the total sums claimed in the bill under each phase. Will the parties be sent away from the Detailed Assessment Hearing to recalculate the assessed Bill of Costs, redraw the Precedent Q and then return to the Court on another date to allow for a determination on the impact of the CMO on the final assessment?

These problems have already been addressed by Senior Costs Judge Master Gordon-Saker in his Judgment in BP v Cardiff & Vale University Local Health Board [2015] EWHC B13 (Costs) back in August of last year. In his view it is “both necessary and convenient to draw the bill in parts which correspond with the phases of the budget” in order for the Court to conduct a proper assessment of that Bill of Costs under CPR r. 3.18. Master Gordon-Saker even suggested that schedules setting out the individual items of costs claimed under each phase could be served where the initial Bill of Costs does not conform to his suggested split.

Given Master Gordon-Saker’s position as Senior Costs Judge, his view on these matters will undoubtedly have considerable bearing on the Court's expectations when it comes to Bill formatting. Indeed, an update to the CPR which brings in a requirement to serve a phased Bill of Costs is already underway.

It is going to be interesting to see how Master Gordon-Saker’s Judgment, and the proposed amendment to the CPR, is going to impact on the preparation of Bills of Costs. This development seems at odds with the indefinite delay to the introduction of a new formatted Bill of Costs, as surely both visions encounter the same pitfalls? If the CPRC are still encountering practical barriers to implementing electronic Bill formatting programmes across England and Wales, surely practitioners will encounter the same barriers when trying to produce their own accurate Bill of Costs that is split by phase?

Subject to the implementation of Master Gordon-Saker's views via an amendment to the CPR, the Precedent Q will undoubtedly be the most effective tool in the post-Jackson costs assessment process. The Precedent Q has to be served with the N252 –regardless of any problems the draftsman faces with J-codes, changes in Solicitors and inaccurate phasing.

I anticipate that the collision of the obligatory Precedent Q document with the potentially inconsistent, inaccurate or incomplete recording of phased costs across case management systems is going to lead to some very interesting case law developments in 2016. When and how should the Precedent Q totals be considered during an assessment? Can paying parties demand sight of a Precedent Q before making pre-N252 offers? How does ADR fit into this timetable? And, most interestingly, what constitutes a 'good reason’ for the Court to depart from an approved or agreed budget & at what point do receiving parties make that argument during the costs assessment process?

These questions become even more interesting when a phased Bill of Costs is added to the mix. How should the phased Bill of Costs be presented? What will be the consequence of failing, or simply not being able to serve a phased Bill of Costs? Does the Precedent Q become redundant on service of a phased Bill of Costs?

Will a Bill even be necessary? According to a High Court Judge who recently heard a CCMC in Bristol, the Costs Budget is the starting point for the receiving party when considering costs, so unless they seek to recover more than the approved or agreed budget, their costs could be rubber stamped in full at the end of the trial. Applying this logic, matters become even more complicated when one considers claims that settle by agreement. However this concept is rather at odds with Lord Justice Moore-Bick's comments in Troy Foods v Manton [2013] EWCA Civ 615 and there is no provision for this within the rules.

As we start 2016 there appear to be more questions than answers when it comes to the assessment of costs in the post-Jackson era. It will be interesting to see how far the use of the Precedent Q and phased Bills of Costs go to answering these questions before the new format Bill of Costs is introduced.