Reem Zuhri v Vardags Ltd

Hearing dates: 18 and July 2023

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

COSTS JUDGE Leonard

This judgment addresses the application of Part 36 of the Civil Procedure Rules (“CPR”) to this court's assessment, under section 70 of the Solicitors Act 1974 and rules 46.9 and 46.10 of the CPR, of bills rendered by the Defendant solicitor to its client, the Claimant.

The relevant statutory provisions, for the purposes of this judgment, are as follows.

Section 70 of the Solicitors Act 1974 empowers the court to order the assessment of a solicitor's bill of costs on the application of a solicitor or a solicitor's client.Section 70, subsections (7), (9) and (10) provide:

“(7) Every order for the assessment of a bill shall require the costs officer to assess not only the bill but also the costs of the assessment and to certify what is due to or by the solicitor in respect of the bill and in respect of the costs of the assessment…

(9) Unless—

(a) the order for assessment was made on the application of the solicitor and the party chargeable does not attend the assessment, or

(b) the order for assessment or an order under subsection (10) otherwise provides,

the costs of an assessment shall be paid according to the event of the assessment, that is to say, if the amount of the bill is reduced by one fifth, the solicitor shall pay the costs, but otherwise the party chargeable shall pay the costs.

(10) The costs officer may certify to the court any special circumstances relating to a bill or to the assessment of a bill, and the court may make such order as respects the costs of the assessment as it may think fit.”

CPR 44.1, under the heading “Interpretation and application”, reads, insofar as material:

“(1) In Parts 44 to 47, unless the context otherwise requires…

‘costs’ includes fees, charges, disbursements, expenses, remuneration, reimbursement allowed to a litigant in person under rule 46.5 and any fee or reward charged by a lay representative for acting on behalf of a party in proceedings allocated to the small claims track…

‘detailed assessment’ means the procedure by which the amount of costs is decided by a costs officer in accordance with Part 47…

‘paying party’ means a party liable to pay costs…

‘receiving party’ means a party entitled to be paid costs…

(2) The costs to which Parts 44 to 47 apply include –

(a) the following costs where those costs may be assessed by the court—

(i) costs of proceedings before an arbitrator or umpire;

(ii) costs of proceedings before a tribunal or other statutory body; and (iii) costs payable by a client to their legal representative; and

(b) costs which are payable by one party to another party under the terms of a contract, where the court makes an order for an assessment of those costs…”

For the purposes of this judgment I should highlight that Parts 44 to 47 of the CPR do not apply in their entirety to each of the categories of costs referred to at subparagraph (2) of CPR 44.1. For example CPR 46.9 and 46.10, together with part 6 of Practice Direction 46, incorporate specific provisions, both procedural and as to the applicable principles, for assessment between a solicitor and a client which have no application to the any other kind of costs. Similarly, CPR 44.5 incorporates specific provisions for costs payable under a contract, expressly excluding a contract between a solicitor and a client.

The application of the provisions of CPR 44–47 (and CPR 47 in particular) to assessments between a solicitor and a client was considered in some detail by Mr Justice Morris in John Poyser & Co Ltd v Spencer[2022] EWHC 1678 (QB), discussed below.

It is not necessary for present purposes to set out in full the provisions of CPR 46.9 and 46.10, but, as it is referred to in John Poyser & Co Ltd v Spencer, I should mention paragraph 6.8 of Practice Direction 46, which reads:

“The provisions relating to default costs certificates (rule 47.11) do not apply to cases to which rule 46.10 applies.”

CPR 47.20 reads as follows:

“(1) The receiving party is entitled to the costs of the detailed assessment proceedings except where –

(a) the provisions of any Act, any of these Rules or any relevant practice direction provide otherwise; or

(b) the court makes some other order in relation to all or part of the costs of the detailed assessment proceedings…

(3) In deciding whether to make some other order, the court must have regard to all the circumstances, including –

(a) the conduct of all the parties;

(b) the amount, if any, by which the bill of costs has been reduced; and

(c) whether it was reasonable for a party to claim the costs of a particular item or to dispute that item.

(4) The provisions of Part 36 apply to the costs of detailed assessment proceedings with the following modifications –

(a) ‘claimant’ refers to ‘receiving party’ and ‘defendant’ refers to ‘paying party’;

(b) ‘trial’ refers to ‘detailed assessment hearing’;

(c) a detailed assessment hearing is “in progress” from the time when it starts until the bill of costs has been assessed or agreed;

(d) for rule 36.14(7) substitute “If such sum is not paid within 14 days of acceptance of the offer, or such other period as has been agreed, the receiving party may apply for a final costs certificate for the unpaid sum.”;

(e) a reference to ‘judgment being entered’ is to the completion of the detailed assessment, and references to a ‘judgment’ being advantageous or otherwise are to the outcome of the detailed assessment.

(5) The court will usually summarily assess the costs of detailed assessment proceedings at the conclusion of those proceedings.

(6) Unless the court otherwise orders, interest on the costs of detailed assessment proceedings will run from the date of default, interim or final costs certificate, as the case may be.

(7) For the purposes of rule 36.17, detailed assessment proceedings are to be regarded as an independent claim.”

Part 36 of the CPR provides that offers of settlement which comply with the requirements of Part 36 (a “Part 36 offer”) will have specified consequences. The following extracts are relevant.

CPR 36.1:

“This Part contains a self-contained procedural code about offers to settle made pursuant to the procedure set out in this Part (‘Part 36 offers’).

CPR 36.2(3):

“A Part 36 offer may be made in respect of the whole, or part of, or any issue that arises in… a claim, counterclaim or other additional claim…”

CPR 36.6(1):

“… a Part 36 offer by a defendant to pay a sum of money in settlement of a claim must be an offer to pay a single sum of money.”

CPR 36.17 sets out the consequences of failing to better an opponent's Part 36 offer. Where a claimant fails to obtain a judgment more advantageous than a defendant's part 36 offer then the court must, unless it considers it unjust to do so, order that the claimant he the defendant's costs from the date of expiry of the offer, with interest.

Where a judgment against a defendant is at least as advantageous to a claimant as the proposals contained in that claimant's Part 36 offer, then the court must, unless it considers it unjust to do so, order that the claimant is to receive interest on the whole or part of any sum of money awarded to the claimant at up to 10% above base rate for some or all of the period from the date of expiry of the offer; costs on the indemnity basis from that date; interest on those costs at a rate not exceeding 10% above base rate; and an additional amount added to monies recovered by the claimant from the defendant, variable according to amount and subject to an overall limit, but normally 10%.

John Poyser & Co Ltd v Spencer

In John Poyser & Co Ltd v Spencer Morris J allowed an appeal against a Costs Judge who had found that CPR 44.11 (under which the court can penalise unreasonable or improper conduct) applied to the assessment of solicitors' bills under CPR 46.9 and 46.10.

In finding that it did not, it was necessary for Morris J to consider the extent to which CPR 47, which governs the assessment of costs between parties in civil litigation, can be said to apply to an assessment between solicitor and client. His conclusion was that almost all of it does not.

Morris J's key reasoning is set out at paragraphs 79 to 84 of his judgment and it includes two specific conclusions that are particularly pertinent to the issue I have to address. The first is that CPR 47.20 has no application to an assessment under section 70 of the Solicitors Act. The second is that such an assessment is not a “detailed assessment” as defined in CPR 44.1.

I have set out below an extract from Morris J's judgment, in which I have highlighted the most pertinent passages for present purposes:

79. … the master relied upon CPR r 44.1(2), stating that: “The costs to which Parts 44 to 47 apply include … (iii) costs payable by a client to their legal representative.” However, properly interpreted, those words do not mean that each and every provision in each of CPR Pts 44 to 47 inclusive applies to each of the different types of costs enumerated in CPR r 44.1(2) (a)(i) to (iii) and (b). Rather the effect of that provision is to identify the different types of costs to which some or all of the provisions of CPR Pts 44 to 47 might apply.CPR Pts 44 to 47 covers a number of different costs regimes,...