Costs Update #22

Points of Dispute: The importance of doing the best you can with what you have been given

Mr O’Sullivan was involved in an accident. He was awarded personal injury damages of £80k. His solicitors agreed their costs between the parties at £45k and sought to recover a costs shortfall of approximately £17k from Mr O’Sullivan.

Mr O’Sullivan changed solicitors and began a solicitor client assessment to challenge the amount of the shortfall. DJ Batchelor carried out a provisional assessment.

The breakdown of costs included two schedules of documents time. For each schedule the points of dispute were confined to the following broad objection. ‘The time claimed in respect of documents is disputed as being either unnecessarily incurred and/or unreasonable in amount.’ Against the aggregate time claimed for each fee earner an offer was made, but there was no indication or explanation of why the times had been challenged.

In its reply, the Defendant firm pursued an argument that the objections to the documents time were so generalised as to be non-compliant, and that the time claimed should therefore be allowed in full.

The District Judge decided that the court was properly able to decide the point and made reductions to both documents schedules. For the first schedule he allowed what was offered by Mr O’Sullivan for three fee earners, and a compromise figure for the fourth fee earner. For the second schedule the judge allowed the figures offered by Mr O’Sullivan for all three fee earners.

The oral hearing took place before the same District Judge and confirmed the paper assessment.

The Defendant solicitors appealed to the High Court and the matter came before HHJ Gosnell - O'Sullivan v Holmes and Hills LLP.

HHJ Gosnell highlighted at paragraph 36 of his judgment that the District Judge had a binary choice to make on assessment – either the Points of Dispute were compliant, or they were not.

The appeal could only succeed if the District Judge was wrong to find that the Points of Dispute complied with paragraph 8.2 of the Practice Direction to Part 47 as interpreted by the Court of Appeal in Ainsworth v Stewarts Law. In that case, the Court of Appeal had upheld the decision of the Senior Costs Judge to exclude a general challenge to documents time which was not sufficiently particularised.

In Mr O’Sullivan’s case, the law firm argued that Points of Dispute, when dealing with an item like the documents section, must descend into some detail identifying the nature and grounds of dispute in relation to individual ‘entries’ in the schedule.

Mr O’Sullivan argued that the receiving party was entitled to set out challenges to ‘items’ only – and that the documents time formed one ‘item’ for the purposes of an assessment.

After a detailed consideration of the difference between items and entries, HHJ Gosnell concluded that when Lady Justice Asplin referred to ‘items’ in the lead judgment in Ainsworth, she was referring to entries on the documents schedule rather than items in the bill.

HHJ Gosnell decided that Mr O’Sullivan’s Points of Dispute were inadequately particularised. Further, that to say that time was either unnecessarily incurred or unreasonable in amount was an assertion of two alternative allegations which were completely different.

Mr O’Sullivan had had ample opportunity to amend his Points of Dispute to provide more detail but had chosen not to. In what was accepted to be ‘a rather draconian’ outcome, the appeal was allowed.

Commentary by Andy Ellis

• My first reaction was that the District Judge had given too much latitude to the paying party given that the process is intended to be adversarial and as between solicitor and client the indemnity basis resolves any doubt as to whether costs should be allowed in favour of the solicitors. It should not be for the court to do the paying party’s work for them in that respect and the Claimant was, after all, legally represented.

• I was not surprised by the outcome given the decision in Ainsworth. Although comments about the compliance of Points of Dispute are of general application, it is relevant to Mr O’Sullivan’s case that in a solicitor client assessment there is usually a right of inspection of the solicitors’ files. This should make it easier for the paying party to identify specific objections than is the case in assessments between the parties when the paying party does not get to look under the bonnet.

• I have always thought that the term ‘item’ is doing a lot of heavy lifting when applied to the entirety of the time spent on planning, preparing, drafting, and reviewing documents and consideration of the matter generally.

• On the appeal, HHJ Gosnell makes the key point (paragraph 51) about the alternative courses which were open to Mr O’Sullivan. He could have produced a counter-schedule of document time. Another method would have been to annotate the schedules with specific objections attached to the Points of Dispute. Alternatively (and this is common practice at Practico) the paying party can group specific objections together under identified headings (which may be case-specific workstreams) and cross-reference these to specific entries in the schedules.

• The electronic bill format lends itself to this latter approach as groups of entries can be filtered by topic.

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