CPR 47.8 – The Importance of Serving a Bill of Costs on Time

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What is Civil Procedure Rule 47?

CPR 47 deals with the detailed assessment of costs process, and is the means by which costs can be formally determined by the Court in the event that parties cannot come to an agreement as to costs. CPR 47.8 deals specifically with the consequences of failing to serve a Bill of Costs in a timely fashion, pursuant to CPR 47.7.

 

When Should a Bill of Costs be Served?

When a party gains a costs order in their favour, either for being successful in litigation (pursuant to the general rule under CPR 44.2(2)(a), or has a deemed costs order in their favour in line with CPR 44.9 (for instance acceptance of a Part 36 Offer, or on filing of a Notice of Discontinuance), then they are entitled to claim costs from the Paying Party, and are required to prepare and serve a compliant Bill of Costs.

Pursuant to CPR 47.7, strict timescales are given requiring the Receiving Party to serve a Bill of Costs with Notice of Commencement, thereby initiating the detailed assessment process, within 3 months of the costs instrument (order or acceptance of Part 36 Offer).

Failure to serve a Bill of Costs in line with Rule 47.7 can lead to potential adverse costs consequences, as set out in CPR 47.8. It is important to note that there is no strict guidance on how long after the 3 month time period that a Bill of Costs can be validly served however, we were successful in a related dispute recently whereby a Bill of Costs served 12 years after the date of the costs order was dismissed, and our clients costs of the application to strike out the bill were awarded in full.

 

What are the Consequences Set Out in CPR 47.8?

The potential sanction for delay in serving a Bill of Costs, and commencing detailed assessment proceedings, is dependant upon whether a Paying Party proactively applies for a penalty, or not. Quite often a Paying Party may not raise a concern as to any delay in commencing detailed assessment proceedings, as they can remain in funds for longer, or they may believe that the Receiving Party’s costs entitlement has been forgotten. This does not mean however, that if a Bill is served late, that no costs consequences apply as otherwise a Receiving Party would otherwise escape any sanction whatsoever for late service.

Making an Application Pursuant to CPR 47.8(1)

If the Receiving Party fails to serve a Bill of Costs in line with the 3 month timescales set out in CPR 47.7, then the Paying Party may apply proactively for an unless order to strike out the claim for costs. Such an application should be made on notice, and any attempt to make such an application by stealth will likely result in costs of the application being disapplied, and would be contrary to the overriding objective.

Nevertheless, if notice has been given to the Receiving Party of the intention to apply for an order, and in the absence of receipt of any Notice of Commencement/Bill of Costs, then an application may be made for the Bill of Costs to be served within a fixed time period, failing which the claim for costs will be struck out pursuant to CPR 47.8(2).

Generally speaking once an application is made, then by the time the Court has considered the same, the Court is likely to make an Order requiring the Receiving Party to act within 14 – 21 days for the Bill to be served before the claim for costs is struck out, and the applying Paying Party will likely be awarded their costs of the application, on a summary assessment basis.

What if a Receiving Party Serves a Bill of Costs Out of Time but no Application has been Made?

Quite often, particularly in high value or complex costs disputes, the parties may agree an extension to service of the Bill of Costs beyond the normal 3 month-rule limit. Even in the absence of agreement, it is not uncommon for a Bill of Costs to be served beyond the 3 month timeframe.

In such circumstances where the Receiving Party commences proceedings after three months, costs consequences can still apply, but they are much less severe than in the event an application has been made. Pursuant to CPR 47.8(3), the Court may disallow any interest for the period of delay caused by late service (usually the time period between 3 months and the date of service of the Bill), and will not apply any other sanction save for in relation to any issue of misconduct pursuant to CPR 44.11 (for instance extreme delay or improper costs being claimed, for which part of the costs may be disallowed). It is important to note the use of the word “may” in CPR 47.8(3), and sometimes a period of delay in commencing detailed assessment can be justified, for instance when the parties had been engaging in informal negotiations.

Usually the Paying Party will object to interest for the period of delay in the Points of Dispute as otherwise permitted by (i) section 17 of the Judgments Act 1838; or (ii) section 74 of the County Courts Act 1984. This is often raised as a Preliminary Point as one of the first issues to be resolved by the Court on assessment.

Unlike an application, no adverse costs can be claimed for dealing with a Bill simply because it has been served after 3 months, and the normal detailed assessment process will follow once the Notice of Commencement has been served effectively.

How can ARC Costs Assist with Compliance of CPR 47.8?

As independent experts, we can assist Claimant or Defendant, and Receiving or Paying parties.

For Receiving Parties, we can ensure that you comply with the preparation of your detailed Bill of Costs in line with the scope of Rule 47 and LASPO 2012 (Legal Aid aid Sentencing and Punishment Order which disallowed recovery of additional liabilities such as success fees and ATE premiums in the majority of litigation) and serve this in a timely fashion in line with the timescales set out in CPR 47.7. Similarly, we have assisted many legal representatives and Litigants in Person, who have received an unless order made pursuant to CPR 47.8 and require urgent assistance in having the preparation and service of their Bill expedited in short timescales of 14 – 21 days.

For Paying Parties, we can advise on the merits of making any proactive application for an unless order, as well as assisting with settling of Points of Dispute and conducting negotiations on your behalf, once a Bill of Costs is received.

Ultimately, if parties cannot reach an amicable resolution to costs, then we can assist in requesting a detailed assessment hearing, and provide any representation at the same if an attended hearing is listed.

Irrespective of whom you represent, get in touch with one of our experts via our contact form, or speak to one of the team on 01204 397302.  You can also email the team on info@arccosts.co.uk.

 

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