SENIOR COURTS COSTS OFFICE
Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
| MILBROOKE CONSTRUCTION LIMITED (in liquidation)
|- and -
Francis George, solicitor- advocate, for the Defendant
Hearing date (on the issue dealt with below): 6 October 2021
Crown Copyright ©
Costs Judge Brown :
(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.
25. First, I do not find it persuasive that a paying party who makes no offer at all, should be in a better position than a paying party who does make an offer but one which is just short. That would place a non-offering paying party at an advantage over a paying party who has tried to settle the costs, but whose offer has not been quite enough. It would provide a potential reward for a paying party, who sits back, having deliberately made no offer, to rest secure in the knowledge that a successful challenge can always be advanced later under CPR 47.20(1)(b) if the bill is reduced by a significant amount after a good day in court. In circumstances such as these, Rule CPR 47.20(1)(b) and (3)(b) could simply be argued in every case where the bill has been reduced without an offer made, in disregard of the Court of Appeal's guidance in Global , that a party who is vulnerable for a smaller sum than the amount claimed, should use Part 36 to protect their position. Moreover, what tariff should be used to decide whether enough has come off to reverse CPR 47.20 : 25%, 30%, 50%, more? There is simply no guidance upon which to draw.
26. Second, whilst rule 47.20(3)(b) indeed requires the court when considering whether to make a different order, to take into account the amount by which the bill has been reduced, I am puzzled (with one exception) how a circumstance could ever arise in which a paying party who has made an offer to settle which has been short (in addition to those who have deliberately made no offer) could successfully deploy that rule. The exception is where a paying party would have no way of knowing whether there has been fraud or other skulduggery by a receiving party, such as claiming costs where it was known that there had been a failure to comply with the indemnity principle. Such a situation would arise where the receiving party had made a bargain with his solicitor not to be liable for any costs so by operation of the indemnity principle, nothing would be recoverable from the paying party. These would be matters to which only the Costs Judge would be privy, since a retainer letter, which would provide the answer, is a privileged document only available for the court to read upon receipt of the receiving party's papers lodged for assessment under CPR 47.19 PD 3.12. Other than that, I cannot think of a circumstance where a paying party whose without prejudice offers have been too low, could successfully argue that the receiving party should be deprived of the costs of assessment. That is particularly the case here where the SSHD's open offer under PD paragraph 8.3 to CPR 47.9 was also way off the mark, with nil having been offered, a deficiency of over £41,000.
12. The terms of r47.20 appear to me to be clear. In the circumstances which arise here the court is required to have regard to the amount, if any, by which the bill of costs has been reduced in deciding whether to make any other order. The words are "must have regard…" (my emphasis). Since the court is required to consider the matter when considering whether to make a different order then it follows, it seems to me, that the reduction on the bill may, when considering all the circumstances, be a basis for a 'different order'. Needless perhaps to say, that does not mean that it must impose a different order; the court must always have regard to all the circumstances of the case. Small reductions in circumstances where sums are reasonably claimed are not likely to be enough. But it does seem to be that it is not open to a court simply to disregard the reduction in the bill as a factor in determining costs without more.