In civil litigation, when one party is ordered to pay the costs of another, those costs are often subject to detailed assessment if the parties cannot reach agreement on the amount payable. The rules governing this process are set out in Part 47 of the Civil Procedure Rules (CPR), supported by the Practice Direction 47 (PD 47).

CPR 47 Practice Direction 5.1 sets out the requirements for the format of bills of costs submitted for detailed assessment in civil litigation. Introduced as part of the wider reform of costs procedures, this provision is aimed at improving the clarity and efficiency of costs assessments. It establishes when a bill of costs must be submitted in electronic format and when traditional paper bills remain acceptable.

The rule distinguishes between mandatory and discretionary use of electronic bills, depending on the nature of the case and the time period in which the work was carried out. In doing so, it supports the overarching aim of the Civil Procedure Rules to manage cases justly and at proportionate cost.

An overview of CPR 47 PD 5.1

CPR 47 PD 5.1 states the following:

“In the circumstances provided for in this paragraph, bill of costs for detailed assessment must be in electronic spreadsheet format and compliant with paragraphs 5.A1 to 5.A4 (“electronic bills”) while in all other circumstances bills of costs may be electronic bills or may be on paper (“paper bills”) and compliant with paragraphs 5.7 to 5.21. Precedents A, B, C and D in the Schedule of Costs Precedents annexed to this Practice Direction are model forms of paper bills of costs for detailed assessment. The circumstances in which bills of costs must be electronic bills are that-

(a) the case is a Part 7 multi-track claim, except—

(i) for cases in which the proceedings are subject to fixed costs or scale costs;

(ii) cases in which the receiving party is unrepresented; or

(iii) where the court has otherwise ordered; and

(b) the bills of costs relate to costs recoverable between the parties for work undertaken after 6 April 2018 (“the Transition Date”).”

Commencement of detailed assessment proceedings

Detailed assessment proceedings are required when any substantive proceedings/dispute has been resolved, but the issue as to how much one party owes the other for legal costs remains in dispute.

On conclusion of the case, the first step for the receiving party is that they must file a detailed Bill of Costs. This outlines the costs for any work done in conducting the case, as well as disbursements. The bill should then be served on the paying party alongside a Notice of Commencement, commencing the detailed assessment of costs process.

Following an update in 2018, the traditional three-column bill was replaced in multi-track cases by the Electronic Bill of Costs. Use of the electronic bill became mandatory in the Senior Courts Costs Office and County Courts from 6 April 2018. However, for costs incurred before this date, both the old three-column bill and the new electronic bill may be used in combination.

For service purposes, the Excel version of any electronic bill must be served on the other side (usually via email service) which enables the Paying Party, and the Court on assessment, to scrutinise the Bill of Costs utilising filters in respect of types of work and phases.

Once the Paying Party has received the Bill of Costs, they should then serve their Points of Dispute within 21 days of service of the Bill. Points of dispute are used as a tool to negotiate a Bill of Costs.  Points of Dispute on electronic bills are usually split by phases, and by codes for types of work, such as attendances on the client, other side and documents work.

If the Receiving Party does not accept the Points of Dispute, they may prepare and serve Points of Reply within 21 days.

During detailed assessment, a Receiving Party might make a Part 36 offer to accept a specific amount of their costs claim. If the Paying Party fails to beat that offer at the assessment hearing, the court can impose penalties.

When are Electronic Bills of Costs required under CPR 47 PD 5.1?

In accordance with CPR 47 Practice Direction 5.1, electronic bills of costs are mandatory in certain types of cases. Specifically, where:

• The case is a Part 7 multi-track claim (except where fixed or scale costs apply, the receiving party is unrepresented, or the court orders otherwise); and
• The costs sought relate to work under after 6 April 2018 (“the Transition Date”)

A Costs Judge uses this format to navigate the bill efficiently, identify disputed items, and apply proportionality and reasonableness tests. Where these conditions apply, bills of costs must be submitted in electronic spreadsheet format and must comply with paragraphs 5.A1 to 5.A4 of the Practice Direction.

The electronic bill itself was designed to be utilised alongside costs budgeting (which typically applies to Multi Track cases).  However, there are instances where the electronic bill is required, by virtue of the matter having been allocated to the Multi Track, but whereby budgeting has not taken place.  In such instances, phasing of the electronic bill is not required, and the items of work completed can remain “unassigned” to a phase.

For the avoidance of doubt, if a matter is likely to be a Multi Track case, but has not yet been allocated, the 3 column bill can still be utilised, though it is often good practice to instruct a costs expert to prepare an electronic bill irrespective to avoid opportunistic challenges to the Bill.

In all other cases, parties may opt to submit either an electronic bill or a traditional paper bill, following paragraphs 5.7 to 5.21. Paper bills should be prepared using the model forms (Precedents A-D) annexed to the Practice Direction.

This requirement has a direct impact on the format, preparation, and submission of Bills of Costs in detailed assessment proceedings, and failure to comply can result in procedural complications or adverse cost consequences.

Compliance and consequences under CPR 47 PD 5.1

Compliance with CPR 47 PD 5.1 is essential in detailed assessment proceedings, particularly where electronic bills are required. Failure to comply can result in serious procedural and financial setbacks.

Rejection of the Bill by the Court

Where an electronic bill is required but not provided, the court may reject the bill entirely. This means the receiving party could be prevented from proceeding with the detailed assessment until a compliant bill is submitted, and this is likely to result in wasted costs being payable to the paying party for any wasted Court time and resources.

Adjournment of Assessment Proceedings

Non-compliance can result in the adjournment of detailed assessment hearings. This may occur where:

• The bill does not comply with PD 5.1 and cannot be reasonably assessed; or
• The paying party has not had a fair opportunity to respond to a non-compliant bill.

Adjournments increase costs for both parties and may attract further scrutiny or negative commentary from the court.

Adverse Costs Sanctions

The court has discretion to impose costs penalties for non-compliance, such as:

• Refusing to award the costs of the assessment hearing to the defaulting party;
• Ordering the defaulting party to pay the costs of any wasted hearings or applications caused by the defective bill;
• Making costs orders on the indemnity basis against the non-compliant party.

How can ARC Costs assist with regards to CPR 47 PD 5.1?

At ARC Costs, our Costs Draftsmen and Costs Lawyers can assist in the preparation, service and negotiation of Electronic Bill of Costs under CPR 47 PD 5.1. We ensure that every electronic bill is drafted with a high degree of accuracy. We pride ourselves on our average recovery of 72%+ of all Bills, achieved in the majority of cases within 1 month of service of the Bill of Costs upon the paying party.

By reviewing the specifics of the case, and analysing your file of papers, our team of costs experts can help draft realistic and defendable costs bills which they are happy to defend on detailed assessment. Our team will also ensure that all recoverable costs are included in your Costs Budget and subsequent Bill of Costs, to maximise recovery of your legal fees, including time costs, expert witness fees, court fees, and other disbursements.

We can assist through the process of detailed assessment through the preparation of your bill of costs, negotiations and points of reply, and our costs lawyers can provide representation at detailed assessment hearings, if required.

As independent experts, we can also represent Paying Parties, and our costs team are adept at settling Points of Dispute as well as advising on, and negotiating on your behalf if you wish, the maximum possible reductions to be achieved.

For assistance with your costs related queries, contact one of the team at info@arccosts.co.uk, or speak to one of our experts by calling 01204 397302.

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