What is Practice Direction 47?

Practice Direction 47 supplements CPR 47 and sets out the minutiae of how to prepare a Bill of Costs, and also the specifics of the detailed assessment procedure. In this article, we run through a summary of the key points raised with Practice Direction 47, and how to ensure you correctly adhere to the requirements of the detailed assessment process.

What are the Contents of a Bill of Costs?

PD 47 Para 5.7 – 5.22 sets out what a compliant Bill of Costs should detail. Particular points of importance are highlighted as follows:

Para 5.8 – A Bill of Costs should be split into parts to reflect when the Receiving Party has been represented by different legal representatives, or has acted as a Litigant in Person. Generally speaking, we would always recommend that Bills of Costs are always split into parts to reflect different retainers (for instance when a client switches between Legal Help and a Legal Aid Certificate, or from a private retainer to a Conditional Fee Agreement), and also to reflect costs of multiple Claimants or Defendant.

In respect of the latter circumstances with multiple parties involved, it is generally best practice to split the Bill into Parts for generic costs of all parties, and specific costs of each Claimant/Defendant.

Paras 5.9 – 5.18 – With regards to the contents of the Bill of Costs, this should split work between routine communications (letters out or telephone calls of 6 minute units) and attendances, as against each party communicated with. If appropriate, such attendances/long telephone calls should be detailed in a schedule where possible to provide further detail however, routine communications do not require a detailed explanation as to the work done.

Documents work (such as preparation and consideration of documents) should be detailed in a schedule of work, detailing each item by item entry providing the date, detail and length of work done.

Para 5.19 – This clarifies that costs of preparing the Bill of Costs and checking the same are the only costs of detailed assessment which may be included in the Bill. As such, any attempt to recoup charges for costs negotiations, preparing other costs documents which would otherwise be subject to the provisional assessment cap of £1,500 + VAT, should be excluded from the Bill.

Para 5.21 – Ensure you serve any Bill of Costs with the correctly signed certificate. As per Barking, Havering and Redbridge University Hospitals NHS Trust v AKC [2021] EWHC 2607 (QB), the backsheet must be signed by an identified individual who is regulated (a Solicitor or CILEX for instance, or alternatively the Receiving Party directly). Failure to serve a Bill with a signed backsheet leads to questions being asked as to accuracy of the document if it has not been properly checked and certified.

Preparing a Bill of Costs can be an extremely complex task, particularly when an electronic bill is required and further complexities arising as to phasing of the costs and partitioning of the items into Parts for incurred and anticipated costs. We would therefore always recommend that you obtain the input of an experienced Costs Draftsman or Costs Lawyer to assist, as failure to serve a compliant Bill can lead to your costs being significantly reduced or your Bill being struck out.

What are Points of Dispute?

Once a Bill of Costs has been prepared and served on the Paying Party with a Notice of Commencement, the Paying Party has 21 days (unless the deadline has been extended by agreement) to serve Points of Dispute.

These are the formal legal arguments that the Paying Party intends to make at any detailed assessment hearing in order to reduce the costs claimed against them. It is important to note that whilst Points of Dispute should be ‘short and to the point’, a failure to challenge an item in the bill, or to adequately plead your contention (such that the Receiving Party is unable to respond) will lead to the unchallenged items being permitted, or your Point being dismissed.

As such, Points of Dispute should be prepared with care and precision, and we provide pointers here on the most frequent arguments raised to achieve the biggest reductions possible.

Practice Direction 47, Paragraphs 8.1 – 8.3 reiterate that Points of Dispute should follow the Precedent G format, but also that when serving Points of Dispute, the document should be accompanied by an ‘open offer’. This is an offer that is not marked ‘without prejudice’ in any way, and will be considered by the Court alongside the Points of Dispute. It should therefore reflect the Paying Party’s best position (if they were to succeed on all their Points) and it is not uncommon for such an offer to be £0.

It should be noted for any Receiving Party however, that any such offer is unlikely to be the Paying Party’s best position, and Points of Dispute are often accompanied by a second ‘without prejudice save as to costs of detailed assessment’ offer which reflects a truer at-risk position of the Paying Party.

In the event the Paying Party fails to serve Points of Dispute as per the deadline set out in the Notice of Commencement, Paragraphs 10.1 – 10.6 of Practice Direction 47 specifies the format in which an application should be made for a Default Costs Certificate. This enables the Receiving Party to recover the costs claimed in full, and on obtaining of such a Certificate, an order will be made for the sums to be payable within 14 days.

Can I Respond to Points of Dispute?

It is common for a Receiving Party to want to reply or rebut submissions raised in the Points of Dispute. Paragraph 12.1 of PD 47 stipulates that optional Points of Reply can be filed and served however, such a document should not contain general denials and one should confine responses to substantive counter-submissions, or in making any reasonable concessions.

In our experience at ARC Costs, it is always in the favour of the Receiving Party to serve Points of Reply, as other significant arguments in the Points of Dispute can go unanswered, and failure to respond means you cannot later raise additional arguments in defence of the work completed/costs claimed.

When preparing Points of Dispute or Points of Reply, we would again recommend the input of an experienced costs professional, given that this is the aspect of the costs proceedings which will involve in depth analysis of common law decisions, and reliance upon the same in support or against of the costs being claimed.

What is a Detailed Assessment Hearing?

If, following service and exchange of Points of Dispute and Reply, the parties still cannot reach a negotiated agreement on costs, then the Receiving Party will need to lodge for a provisional/detailed assessment hearing. This will incur a further Court fee, and so the Receiving Party should obtain professional advice on the risks of proceeding to assessment based on any offer that is currently on the table to consider.

Litigation is always risky, and proceeding to a detailed assessment hearing can lead to a lesser financial sum being awarded to a Receiving Party and, if the Paying Party has made a better offer than is achieved on assessment, may result in the Receiving Party having to pay the detailed assessment costs of the Paying Party.

Detailed assessment hearings can be split into one of two categories- a Detailed Assessment Hearing, or a Provisional Assessment Hearing.

Bills of Costs valued below £75,000 will, by default, be lodged for a Provisional Assessment if the parties cannot agree the amount of costs to be paid. A Provisional Assessment is completed on the papers alone, consisting of the detailed Bill of Costs, Points of Dispute, Points of Reply and potentially the file of papers.

If the prepared Bill of Costs is valued at more than £75,000, or if the Court otherwise orders, the matter will proceed to a Detailed Assessment hearing. This is an attended hearing where one of our experienced costs lawyers will make oral submissions in support of the Bill of Costs, and the paying party will also have an advocate present to provide submissions before a Judge.

Whereas the costs of Provisional Assessment are capped at £1,500 + VAT + Court fees, the costs of a Detailed Assessment hearing are uncapped. As such, the costs consequences of running a meritless case to a Provisional Assessment or Detailed Assessment hearing can be significant. ARC Law Costs Draftsman have success in excess of 90% of the cases we take to any assessment hearing, and thus we ensure only matters of merit proceed to any contested hearing.

How can ARC Costs Assist with Practice Direction 47 /Detailed Assessment?

ARC Costs are a highly experienced team of Costs Lawyers and Costs Draftsmen. We can assist in recovering or disputing legal costs whether you are the paying or receiving party.

If you are the receiving party, we can help by drafting your bill of costs, as well as Points of Reply and negotiating your bill of costs with the other side before advising on whether the claim should proceed to a Detailed Assessment Hearing.

As independent costs experts, we can alternatively be instructed by the paying party to settle Points of Dispute and to minimise the costs claim be made against them.

If you have a legal costs query, 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.

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