What is a Detailed Assessment of Costs?

When litigation ends, the general rule is that the unsuccessful party pays the costs of the successful party (CPR 44.2(2)), and this forms the basis for any detailed assessment of Solicitors costs.

There are two means by which costs can be assessed:

1. Summary Assessment – Generally limited to hearings of a day or less, and usually exercised in relation to interim applications and/or Fast Track Trials.  In essence, the Judge assesses the costs payable of the action/application there and then at the hearing, without delving into too much detail.

2. Detailed Assessment – If costs are significant in value or relate to a more complex dispute, then a Court order for costs to be determined by way of detailed assessment is made.  This essentially means that costs are to be considered by the Court at a later date (if they cannot be agreed between the parties), and will be scrutinised more thoroughly on an item by item basis.

The procedure for detailed assessment is set out in CPR 47, requiring the Receiving Party to prepare a Notice of Commencement (N252), then serving on the Paying Party, and requires the quantification of the legal costs of the proceedings to be particularised in a detailed Bill of Costs, prepared by either a Costs Draftsman or Costs Lawyer.  On service of the N252, the Paying Party then has 21 days to serve Points of Dispute to the Receiving Party (failing which a Default Costs Certificate can be obtained), and the parties can either proceed to negotiate the costs to an agreed resolution, or progress the matter to a detailed assessment hearing, whereby the Court will assess the costs.  Proceeding to a hearing requires payment of a Court fee to the Senior Courts Costs Office (or applicable local Court), the fees for which can be found here.

What is Expected from a Compliant Bill of Costs?

Practice Direction 47 Paragraphs 5.7 – 5.22 sets out the expected contents of a Bill of Costs.

In summary this legal document is an item-by-item analysis of the work done, with each item of work detailed as to the work done, on what date and for what length of time.

The Bill of Costs is also accompanied by a detailed narrative explaining the background to proceedings, and if a budgeted matter, work done will also have to be phased within the context of an electronic (Excel) format bill.

Time claimed is expected to be supported by attendance notes/time records kept by the conducting legal representative, and these records can be analysed on detailed assessment to understand the background of the work done in more detail.

Kapoor v Johal [2024] EWHC 2853 (SCCO)

Kapoor is a notable case with regards to the detailed assessment of Solicitor’s costs at an oral hearing, that addressed issues surrounding the submission of a non-compliant Bill, and fabricated costs within the context of civil litigation proceedings. The judgment handed in the Senior Courts Costs Office (SCCO which is akin to a High Court judgment) down highlighted the Court’s zero-tolerance approach to costs fraud and emphasised the ethical obligations of legal practitioners when handling cost claims.

Through its examination of dishonesty in cost submissions, the case underscored the importance of transparency, accuracy, and honesty in legal cost assessment procedures.

Within the context of Kapoor the assessing Judge determined that the submitted costs bill was filled with false charges and fabricated amounts of costs. Costs Judge James highlighted “significant misconduct” in the preparation of a final bill which had been drafted in the sum of approximately £260,000, which she ultimately assessed at £zero.

Costs Judge James stated that she would report Sukhraj Multani, a sole practitioner with the Southall-based firm RH Solicitors Ltd, to the Solicitors Regulation Authority, providing the judgment as part of the referral.  The Costs Draftsman who prepared the Bill of Costs was unregulated, stressing the importance of ensuring you instruct a specialist in complex costs matters, with Costs Lawyers being specifically qualified in costs law, and regulated by the Costs Lawyers Standards Board (CLSB).

Of particular concern in the detailed assessment of the Solicitor’s costs, the main following issues were flagged:

1. Interim invoices had been rendered to the Receiving Party Client, for which the Bill of Costs had not been split to take account of, nor had the Bill been capped to reflect the value of these invoices.  This was a clear breach of the indemnity principle, in that the conducting Solicitor was seeking to recover more from the Paying Party, than their Client had actually had to pay for costs to their Solicitor.

2. Improper claims were made for extensive work alleged to relate to  multiple hearings which were attended by a Grade D Paralegal, rather than by Multani herself, a Grade A Solicitor (the disparity in applicable rates being significant, and when looking at the guideline rates that are often applied on assessment, more than double between Grades D and A).

3. The litigation in question, was a boundary dispute dating back to 2010, the work for which spanned pre and post April 2013 when the Civil Procedure Rules were amended following implementation of the Jackson Reforms, and for which different proportionality tests applied for each period.  The Bill failed to split the work pre and post April 2013 in contradiction with the requirement of Practice Direction 47, Para 5.8(7). 

4. VAT was inconsistently claimed in the Bill of Costs however, invoices sent to the Client did not claim VAT.  This was not actually an issue raised during the assessment, and was only identified by the Judge when writing up their judgment, when it was noted that the Receiving Party was not VAT registered and did not have a VAT number, yet had claimed VAT in the Bill of Costs with no intention of such sums recovered to be paid to HMRC.

5. Further irregularities included non-contemporaneous attendance notes with uniform fonts and layouts, suggesting they were created much later. The judge identified a specific claim of 12 hours to prepare supporting documents as “substantially fabricated.”  Whilst it is not improper to estimate time when it is clear work has been done, but not recorded on the file, such claims must be reasonable and supported with evidence (such as the actual work done).

How is Estimated Time Approached by the Courts on Assessment?

It is not uncommon for a Costs Draftsman or Lawyer to encounter work in a legal representatives file of papers which has not been properly accounted for in the time recording, and consideration may therefore be given to estimating time for the work done. 

The approach taken in any detailed assessment of Solicitor’s costs always begins with reference to Brush –v- Bower Cotton & Bower [1993] 4 All ER 741, which set the principle that estimated time should be approached with caution, and it was encouraged in Ikin & ors –v- Shawbrook Bank [2023] EWHC 1075 (Costs) that such estimated entries should be highlighted in the Bill to the Paying Party and Court.  The main contention in Ikin however, was that there would be no tolerance for estimated time which was clearly unsupported by the file of papers.

What were the Consequences Arising from  Kapoor v Johal?

The Solicitor who signed the Bill as accurate is responsible for the accuracy of its contents, irrespective of whether it was drafted by another, even if it was an external costs professional.

It was clear from the general fabrication of the Bill, various breaches of the indemnity principle and non-compliance with the Rules, that the costs claimed were unreasonable and improper.  The Bill was therefore assessed at nil, with costs ordered against the Receiving Party for the detailed assessment procedure, highlighting the cost that can arise by failing to instruct a legal costs specialist.

In this case the conducting Solicitor, Sukhraj Multani, has also been reported to the SRA amid the abundance of concerns and clear misconduct issues arising from the Bill of Costs.  The draftsman has not been reported as they are not regulated, though Costs Judge James stated they would have no hesitation reporting them to the CLSB if they were a qualified Costs Lawyer.

It is important to note that at the time of writing, Multani stated that she is appealing the decision and awaiting communication from the SRA on the referral. She contended that the Costs Draftsman had admitted full responsibility for the misconduct, pending verification from a transcript.

What is the Expected Recovery on any Detailed Assessment of Solicitors Costs?

The recovery of a Bill on detailed assessment is dependent upon whether a standard or indemnity costs order is made.  Generally, if the hourly rates remain unaffected, it is reasonable for between 70 – 80% of the time claimed in a Bill of Costs to be recovered inter-partes however, there can be other influencing factors including the level of time claimed, proportionality of the sums incurred , and reductions applied to any ‘large ticket’ items, such as disbursements or hourly rates.  On an indemnity basis (a type of penalty costs order made in special circumstances, generally in relation to unreasonable conduct and/or for beating your own Part 36 Offer), it would not be unusual for 90%+ on a Bill of Costs to be recovered however, such costs are still subject to reasonableness (but not proportionality).

If a Costs Management Order has been made, it is not unusual for recovery on a Bill of Costs to be between 80 – 90% so long as the Costs Budget has been adhered to and has not been exceeded.

How can ARC Costs Assist You?

We are an expert team of independent Costs Draftsmen and Costs Lawyers that regularly help Paying and Receiving Parties with costs disputes and detailed assessment of Solicitor’s costs.

We deal with costs for a range of claims, including personal injury, medical negligence, and housing disrepair, as well as also having a specialist legal aid costs drafting and processing team.

Our costs specialists pride themselves on their average recovery of 72% of all Bills for Receiving Parties, achieved in the majority of cases within 1 month of service of the Bill of Costs upon the paying party.  On settlement, we always seek payment of outstanding costs to the Receiving Party within 14 days of agreement.

For Paying Parties, we are adept at preparing Points of Dispute, and in some cases have secured reductions of up to 80% through our negotiation service.

We can be contacted via email at info@arccosts.co.uk, or by telephone on 01204 397302. For more information on legal costs, please find out more about our speciality areas of expertise and our services on our legal costs page.

Follow Us