How to Challenge a Bill of Costs: A Guide for Paying Parties

Receiving a Bill of Costs does not necessarily mean you have to pay the full amount claimed. Even where a court has ordered you to pay another party’s legal costs, you may still be entitled to challenge the amount they are seeking to recover.

A Bill of Costs can include solicitors’ fees, counsel’s fees, expert fees and other expenses incurred during a legal case. Depending on the complexity of the proceedings, the total can be substantial.

However, the costs claimed must be assessed according to the applicable rules. The paying party can challenge costs that appear excessive, unreasonable, disproportionate or outside the scope of the costs order. Understanding how to challenge a Bill of Costs, particularly the deadlines involved, is essential.

Can you challenge a Bill of Costs?

Yes. If the parties cannot agree on the amount of legal costs payable, the dispute can be resolved through detailed assessment proceedings.

The party seeking payment is known as the receiving party, while the party responsible for paying the costs is the paying party.

A costs order establishes an entitlement to recover costs, but it does not necessarily establish how much should be paid.

For example, a receiving party might submit a Bill of Costs totalling £150,000. The paying party may consider that the reasonable amount is substantially lower because of excessive solicitor time, unreasonable hourly rates or unnecessary work. The purpose of detailed assessment is to determine the amount properly recoverable. However, paying parties must follow the correct procedure and respond within the relevant deadlines.

Check the costs order

Before challenging a Bill of Costs, examine the underlying costs order. The wording determines which costs the receiving party is entitled to recover and the basis upon which those costs should be assessed.

The two principal bases are the standard basis and the indemnity basis.

On the standard basis, the court considers whether costs were reasonably incurred, reasonable in amount and proportionate. Any doubt is generally resolved in favour of the paying party.

On the indemnity basis, the court considers reasonableness, but proportionality does not operate as a separate test. Doubts about reasonableness are generally resolved in favour of the receiving party.

It is also important to establish whether the order covers the entire proceedings or only a particular application or period. Costs falling outside the scope of the order may not be recoverable.

Check when you received the Notice of Commencement

The receiving party will usually begin detailed assessment proceedings by serving a Notice of Commencement, together with the Bill of Costs and the required supporting documents. This is an important stage because it triggers the deadline for responding.

Under CPR Part 47, the paying party normally has 21 days from service of the Notice of Commencement to serve Points of Dispute. Missing this deadline can have serious financial consequences.

If the paying party fails to serve Points of Dispute within the required period, the receiving party may request a default costs certificate. This can result in the receiving party obtaining a certificate for the costs claimed without the usual examination of the individual items.

Consequently, anyone receiving a Notice of Commencement should seek advice promptly.

Review the Bill of Costs

The next stage is to examine the Bill of Costs in detail. A properly prepared Bill should identify the work undertaken, the relevant fees and the disbursements claimed.

The paying party should consider whether the expenditure was reasonably incurred and whether the amounts claimed are reasonable.

Several areas commonly give rise to disputes.

Solicitors’ hourly rates

The hourly rate charged by a solicitor is not automatically the rate recoverable from the opposing party.

The paying party can examine the relevant guideline hourly rates, the solicitor’s experience, the complexity of the proceedings and the nature of the work undertaken.

A higher rate may be justified in certain circumstances, but it should not automatically be accepted.

Excessive time spent

Even where an hourly rate is reasonable, the time spent undertaking particular tasks may be challenged.

For example, the receiving party might claim several hours for reviewing routine correspondence or preparing a relatively straightforward document.

The paying party can question whether the time recorded was reasonable for the work involved.

Unnecessary or duplicated work

A Bill may include work undertaken by several fee earners.

There may be legitimate reasons for multiple solicitors to work on a complex matter. However, unnecessary duplication or excessive internal discussions may be challenged.

Counsel’s fees and expert costs

Disbursements should also be examined. Questions may arise about whether particular expert evidence was necessary, whether counsel’s fees were reasonable or whether the amounts charged were supported by appropriate documentation.

Consider the approved costs budget

Where proceedings have been subject to costs management, the approved or agreed costs budget can be particularly important. The paying party should compare the costs claimed against the relevant budget and identify any significant differences.

Under CPR 3.18, where costs have been budgeted, the court will generally have regard to the receiving party’s last approved or agreed budget and will not depart from it without good reason. However, the existence of an approved budget does not mean that every individual item of expenditure is automatically recoverable.

The distinction between incurred and budgeted costs, together with the relevant phases of the litigation, must be considered. A detailed review can identify whether the receiving party is claiming costs that require further examination.

Prepare and serve Points of Dispute

If the parties cannot agree on the amount payable, the paying party should prepare formal Points of Dispute. These set out the objections to the Bill of Costs. They should identify the items or categories being challenged and explain the reasons for the objections.

Simply stating that the Bill is excessive is unlikely to be sufficient. For example, where the hourly rate is challenged, the Points of Dispute should explain the basis of that challenge. Where excessive time is alleged, the objection should identify the relevant work and explain why the time claimed is disputed.

The receiving party may then serve Replies addressing the objections raised. Well-prepared Points of Dispute can establish a stronger negotiating position and help narrow the issues requiring determination.

What happens if you miss the 21-day deadline?

If the deadline for serving Points of Dispute has passed, the position depends partly on whether a default costs certificate has already been obtained. Where no certificate has been issued, the paying party may apply to the court for an extension of time.

If a default costs certificate has already been issued, the paying party may need to apply to the court to have it set aside. An application to set aside a default costs certificate is not automatically successful.

The court will consider the relevant circumstances and applicable procedural requirements. Acting quickly is particularly important because delays can make the position more difficult and increase the costs involved.

Can you negotiate a Bill of Costs?

Yes. Many costs disputes are resolved through negotiation without proceeding to a detailed assessment hearing. Once the Bill has been reviewed and Points of Dispute prepared, the parties may have a clearer understanding of their respective positions.

Settlement negotiations can take account of the strength of the objections, the amount in dispute and the additional costs associated with continuing the assessment.

Part 36 offers may also be used in detailed assessment proceedings, with potentially significant costs consequences. A realistic assessment of the Bill can help paying parties decide whether settlement is commercially preferable to continuing the dispute.

What happens at detailed assessment?

If the parties cannot agree, the remaining disputes may be determined by the court.

Depending on the amount claimed and the applicable procedure, the case may proceed through provisional assessment or an attended detailed assessment hearing.

Provisional assessment is generally available where the costs claimed do not exceed £75,000. The court ordinarily determines the disputed costs on the papers without requiring the parties to attend a hearing. Larger or otherwise unsuitable cases may proceed to an attended assessment.

The matter will be considered by the appropriate court, which may include the Senior Courts Costs Office.

At an attended hearing, the costs judge or other appropriate judicial officer considers the disputed items and determines the amount recoverable.

The judge may reduce hourly rates, disallow unnecessary work or make other adjustments in accordance with the applicable assessment principles. The outcome will depend on the evidence, the costs order and the objections properly raised.

Who pays the costs of challenging a Bill?

Challenging a Bill of Costs can generate additional expenditure. The costs of the detailed assessment proceedings are subject to their own rules, and the outcome of the assessment can affect responsibility for those costs.

The court may consider the parties’ conduct, settlement offers and the extent to which the receiving party’s Bill has been reduced. This is why paying parties should consider the commercial value of their objections.

A challenge that results in a substantial reduction may justify the additional expenditure. However, pursuing minor disputes through an expensive assessment process may not be commercially sensible.

How ARC Costs can help you challenge a Bill of Costs

ARC Costs regularly acts for paying parties who have received substantial Bills of Costs following litigation. We can review the costs order, examine the Bill of Costs and identify areas where the amount claimed may be challenged.

Our services include preparing Points of Dispute, advising on settlement and Part 36 offers, conducting negotiations and providing representation throughout detailed assessment proceedings.

We can also assist where a Notice of Commencement has been received and the deadline for responding is approaching.

If you have received a Bill of Costs and believe the amount claimed is excessive, obtaining specialist advice at an early stage can help you understand your position, preserve your procedural rights and avoid paying more than is properly recoverable.

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