Is there a presumption that revised or supplementary costs documents can be relied upon?
Is there a presumption that revised or supplementary costs documents can be relied upon?
This question was considered in the case of Celtic Bioenergy Ltd v Knowles Ltd [2022] EWHC 1223 (QB) and is of specific relevance to any costs advocate or indeed, any receiving party who receives late Points of Dispute or a paying party who intends to object to a bill. In general, the case is of relevance to any party who regularly serves costs documents.
The case involved an appeal from the Defendant to a decision of Master Campbell made on 18th February 2020, in which he refused to allow the Defendant permission under CPR 47PD to amend once more its Points of Dispute in the course of an assessment of the Claimant’s costs. The Defendant, referred to as the Paying Party, sought to raise for the first time in the third version of their Points of Dispute, an issue with respect to the Claimant’s (“the Receiving Party”) Conditional Fee Agreement.
Background to the case
The Receiving Party is a bioenergy firm, and the Paying Party is a consultancy.
The Receiving Party in 2010, was engaged by Devon County Council (“DCC”) on a design and construction project. Disputes arose between the Receiving Party and DCC about the amount to be paid under the construction contract, and there were claims for loss and expense and the deduction of liquidated damages. Consequently, in 2010, the Receiving Party instructed the Paying Party to provide advice and representation in those disputes which were dealt with, some in adjudication, and others by way of commencing arbitration. In due course, the Receiving Party assigned its rights against DCC to the Paying Party, reserving, in the Deed of Assignment, a right to enforce payment or claim damages. Thereafter, as between the Receiving Party and the Paying Party, issues arose as to the Paying Party’s entitlement to payment for services in the course of adjudications. They too became the subject of arbitration, and an ad hoc Arbitration Agreement was made allowing for all of the disputes to be resolved in arbitration.
Thereafter, an Award was made by the Arbitrator on 6 September 2016 following the Paying Party’s applications under Sections 39 and 47 of the Arbitration Act 1996. The Award included declarations that the Paying Party had complied with certain of the ad hoc Arbitration Agreement terms, which involved the withdrawal of invoices it had served, and the provision of indemnities it had offered as to not pursuing sums under the 2010 assignment of rights to them.
The Receiving Party contended that the declarations from the Arbitrator had been obtained by misrepresentations on the part of the Paying Party. An application was made to the High Court and on 20th March 2017, Jefford J allowed the Application on the basis that the Paying Party had acted fraudulently in obtaining the Arbitrator’s Order of September 2016. Costs were awarded. The Receiving Party made an application to the Judge for indemnity basis costs which was dismissed in January 2019.
Of importance is the fact that in the course of the Receiving Party’s unsuccessful application for indemnity basis costs, their solicitors made a statement dated 4th January 2019, revised on 9th January 2019, in which they explained certain details of their retainer, including that their contract of retainer was a discounted Conditional Fee Agreement. They explained in the statement that it provided for ‘success’ in the event that:
“The Client receives from the Opposing Party the sum of or a sum in excess of £250,000 in payment in aggregate of the costs incurred or to be incurred by the Client.”
On 17 July 2019, the Receiving Party served (late) a Notice of Commencement and a Bill of Costs for £168,837 inclusive of VAT. The narrative to the Bill of Costs referred to the existence of the Conditional Fee Agreement but did not repeat the detail that had been included in the January 2019 solicitors’ statement referred to above.
Thereafter, on 24th July 2019, the Defendant requested an extension of time for service of the Points of Dispute which were due on 9th August 2019. The Receiving Party agreed to extend the service date to 6th September 2019. On that day a document entitled “Holding Points of Dispute” was filed by the Paying Party but accompanied by a further request for more time in the following terms:
“As previously envisioned and advised, reinforced now by advice from counsel, we will require a little more time to serve Full Points of Disputes. In the interests of saving the time and costs of making a protective application we would prefer if this could be dealt with by agreement between ourselves. We anticipate we will require a further 21 days and we shall be grateful if this can now be agreed.”
On 25th September 2019, the Receiving Party served Replies to the Points of Dispute.
Around 27th September 2019, a further document entitled “Detailed Points of Dispute” was served by the Paying Party and Replies to these were served in due course on 3rd October 2019. The “Detailed Points of Dispute” made no mention of any point arising under the CFA.
A detailed assessment hearing was requested by the Receiving Party on the 21st October 2019, and it was set down in November to be heard on 18th February 2020.
On 14th January 2020, a further document entitled “Supplementary Points of Dispute” was served by the Paying Party. It raised a new point centred on the CFA and queried whether the indemnity principle had been complied with, raising an issue as to what they argued was the apparent circularity of the definition of success in the CFA.
Decision on 18th February 2020
At the detailed assessment hearing before the Master on 18th February 2020, the Receiving Party submitted that the operative Points of Dispute were those that were first to be served and took objection to the second and third sets of Points of Dispute. The Master was invited to refuse to admit the Points of Dispute served late.
Readers are reminded of the content of the Civil Procedure Rules and in particular CPR 47.9(2) which states that
(2) The period for serving points of dispute is 21 days after the date of service of the notice of commencement.
And further that
(3) If a party serves points of dispute after the period set out in paragraph (2), that party may not be heard further in the detailed assessment proceedings unless the Court gives permission.
In terms of varying a costs document, reference is made to PD47 rule 13.10 which states
13.10
- If a party wishes to vary that party’s bill of costs, points of dispute or a reply, an amended or supplementary document must be filed with the Court and copies of it must be served on all other relevant parties.
- Permission is not required to vary a bill of costs, points of dispute or a reply but the Court may disallow the variation or permit it only upon conditions, including conditions as to the payment of any costs caused or wasted by the variation.
The Master at the SCCO allowed the Defendant to rely on the two sets of Points of Dispute served in September 2019, and stated that
“Given also the date on which they are served back in September 2019, there are no questions of any ambushes arising. I am satisfied here that those points should be admitted, and I accept the application for variation to the “holding” points so that the paying party is entitled to rely on them.”
However, the issues surrounding the Points of Dispute served on 14th January 2020 were more contentious. The Receiving Party argued that the supplementary Points of Dispute could have been served at the outset, and the late delivery of the document put them in difficulties and would require the detailed assessment hearing to be adjourned so they could prepare a witness statement addressing the wide-ranging points raised.
The Master referring to the overriding objective refused to admit the Points of Dispute delivered to the Receiving Party on 14th January 2020. The Master concluded that the Court has an overriding objective to deal with cases justly and at proportionate cost and has a duty under Rule 1.1 to ensure that the case, here the detailed assessment, proceeded promptly and fairly. The Master acknowledged that if the Points of Dispute served on 14th January 2020 were allowed to stand there would need to be an adjournment of the detailed assessment, which had been listed for months, and as such, an adjournment was not a just or reasonable outcome so far as the Receiving Party was concerned.
Crucially, the Master concluded that the issues as to the Receiving Party’s CFA could have been made earlier particularly in light of the information disclosed by the Receiving Party as to the CFA in January 2019 when making an application for indemnity basis costs and when serving the bill of costs.
The Master concluded that
“The point was there for the taking months ago. To raise it within a few weeks or less than a month of the hearing, with no application being made before today when it was clear that the Claimant was objecting, and giving, in my view, the receiving party inadequate notice of it, inevitably will require today’s hearing to be adjourned. That is not in my view a just outcome.”
Appeal to the Queen’s Bench Division
The Defendant (Paying Party) appealed the decision of the SCCO Office that refused to allow them permission under CPR PD 47 to amend once more its Points of Dispute in the course of an assessment of the Receiving Party’s costs and made reference to the provision within PD47.13(10) in that permission is not required to vary Points of Dispute.
The Queen’s Bench Division refused the Paying Party’s appeal against the decision of the Senior Court Costs.
The Court held, among other things, that the argument that there was a presumption under the rules that documents would be accepted, no matter how late or how many new points they raised had no merit.
The Court referred to the issue of ambush when quoting from the case of Edinburgh v Fieldfisher LLP Case 34 [2020] Costs LR 549.
“….the default position under that paragraph is that parties may vary points of dispute if they so wish. That default position is, however, subject to a general discretion to disallow the variation or to allow it upon conditions. This is an important discretion, without which it would be possible for parties to ambush their opponents by waiting to the last minute to file supplemental points of dispute raising points not previously heralded. This would be productive of unfairness. Paragraph 6.15 does not prescribe how the discretion to disallow supplemental points of dispute should be exercised, but the overriding objective (enabling the Court to deal with disputes of this kind) “justly and at proportionate cost” should be borne in mind …“
The Court held that the overarching objective required regard to be given to the issues of proportionate cost and overall justice when exercising its discretion to allow or disallow the Points of Dispute served on 14th January 2020 and that the Senior Court Costs Office had had regard to the relevant points and the issues of proportionate cost and overall justice.
Mrs Justice Foster concluded
- The reason the Master gave on the transcript for refusing permission to appeal is, in essence, the reason I refuse this substantive appeal:
“I’ve read the overriding objective and …….. It seems to me if I had given permission to widen its PODS yet again this would not have been dealing with the case expeditiously and fairly. Had the paying party complied with rules in first place there would have been no point. The indemnity principle was there for the taking from the beginning.”
Conclusion
The present case is in essence a simple one: the advisers to the Paying Party overlooked the detail contained in the January 2019 communication and the importance to the potential costs’ liability. Thus, this was not a case of a new development or piece of information becoming available. The Court considered it of vital relevance that the Paying Party could have made the objections much earlier when the Points of Dispute were served in September 2019.
The case held that there is no presumption under the rules that supplementary documents will be accepted – rather, the Costs Judge has a wide discretion in light of all the circumstances, including the overriding objective to deal with cases justly and at proportionate cost.
The case thus demonstrates the need to ensure all costs documents, albeit a bill of costs, Points of Dispute or Points of Reply are drafted with full information being made available to the drafter and that the documents cover all relevant issues and are correct as at the time of service particularly as the Court held that the argument that there was a presumption under the rules that documents would be accepted, no matter how late or how many new points they raised had no merit. Thus, it is of importance to ensure that Points of Dispute and Points of Reply contain details of all the points that the party wishes to make at any future assessment hearing.
Should a costs document require revision, it is of extreme importance to ensure the revision is dealt with as a matter of urgency. The Paying Party in the above case was criticised for a delay of two months. The Court found that
“Even when Counsel was instructed and brought the matter, necessarily, to the attention of the solicitors, there was a period of about two months until late January 2020 before anything was done.”
Here at PIC Legal we have a team of Costs Lawyers, Costs Consultants and Costs Advocates who are aware of the need to ensure any costs document is drafted correctly and covers all relevant issues at the time of service so as to try and avoid any need for future revision. Strong objections will also be made by our Costs Advocates to revised or late supplementary Points of Dispute that we feel do not comply with the overriding objective.
Sam Risebrow, Senior Costs Consultant
30.06.22