AINSWORTH V STEWARTS LAW LLP (Points Of Dispute In Solicitor And Client Assessments) : FULL CASE DETAILS / THE DECISION
This was an appeal against the decisions of Master Gordon-Saker at first instance and His Honour Judge on appeal (which we reported here) to dismiss the Appellant’s Point of Dispute 10 in respect of the costs of work done on documents at a hearing of a solicitor and own client assessment of costs pursuant to section 70, Solicitors Act 1974.
It raised the question of how detailed points of dispute must be on a solicitor and own client assessment, particularly where a challenge is made to all of the items in an invoice on a number of grounds.
A full summary of the decision below can be found in our previous report.
In short, in the course of a detailed assessment between the Appellant (a former client of the Respondent firm) and the Respondent, the Master had summarily dismissed the Appellant’s points of dispute related to work done on documents (Point of Dispute 10), on grounds that they did not further the overriding objective. Specifically, they were not, “to the point”. They did not summarise all of the particular objections to the specific points which the claimant wished to advance at the hearing so that the court and the defendant knew or knew sufficiently the case the defendant had to meet.
“Points of Dispute 10”
The relevant objection “Items 40-45 Documents Time” read as follows:
“The Claimant requests the court to note that over a period of 11 working days the Defendant seeks to claim 46.8 hours of work which is equivalent to approximately 4.3 hours of time every single day. It is the clear opinion of the Claimant that under any stretch of the imagination, the level of time expended can in no way be justified and against the relevant test, the time expended, and its subsequent cost must be deemed to be unusual in nature and amount.
As with the timed attendances upon the Claimant, the Claimant is mindful of the requirements of the Civil Procedure Rules as to the need to keep Points of Dispute brief and succinct. It must therefore be stated that all entries are disputed. By way of general indication however, the Claimant can confirm the main issues with the document time are as follows:
1. Significant duplication between fee earners
2. Wholly excessive time expended by fee earners reviewing documentation provided by the Claimant
3. Too much time claimed generally in relation to preparation
4. An excessive level of time claimed in relation to drafting of communications
5. Unnecessary inter-fee earner discussions arising due to the duplication
6. Excessive time spent collating documentation
7. Significant preparation time claimed in relation to meetings with the Claimant.
It can be confirmed that the above stated list is not exhaustive of the issues but provide a general overview as to the reason why the time claimed is unusual in nature and/or amount. The Claimant reserved their position generally.”
The Respondent’s Reply read:
“The defendant cannot provide any meaningful reply to this general point. In the absence of itemised points of dispute being served (permission to rely on the same being a matter for the court and the Defendant’s position will be reserved), the Court will be asked to dismiss this point”
The First Appeal
His Honour Judge Klein dismissed the appeal, finding that the Master’s decision was robust but one that was open to him in the context of his case management functions and in furthering the overriding objective. He accepted that if the claimant had been allowed “to conduct the hearing in whatever way he liked for as long as he liked” it would have had to have been adjourned part-heard, unnecessarily. He said:
“the claimant would have had to identify each item objected to, state why and then in respect of each the defendant would have had to go into the file and consider the claimant’s instructions on the point. Whether consent was given to incur the item, whether the correct fee earner was involved and whether the time claimed was reasonable.”
The Second Appeal
The Appellant’s Position
For the Appellant it was said that the Chief Master’s refusal to assess the costs in respect of Document Time under Items 40 – 45 at Points of Dispute 10 was wrong and the judge was wrong to uphold it because:
- The Chief Master’s decision amounted to a strike out but he was not referred to and did not consider CPR r3.4 before deciding to do so;
- The Chief Master failed to consider Practice Direction 47 para 8.2 or Precedent G at all;
- The Chief Master struck out that part of the points of dispute, despite the fact that they were adequately and properly pleaded; and
- even if he was correct that there was insufficient time at the hearing and that the matters were insufficiently pleaded, there were fairer courses which could have been taken, including adjourning the matter and giving directions for further, more detailed Points of Dispute.
The Respondent’s Position
On behalf of the Respondent it was said that the Chief Master and the judge were right for the reasons they gave and, in the alternative, or in addition, the decision should be upheld because it was made on a solicitor and own client detailed assessment where Precedent G does not apply.
LADY JUSTICE ASPLIN:
20. Mr Munro submitted that the Chief Master’s failure to hear the assessment in relation to Items 40 – 45, which comprised over half of the entire bill of costs, was unfair. He submitted that dismissing Points of Dispute 10 was contrary to Mr Ainsworth’s right to be heard and to have a solicitor and own client assessment under section 70, Solicitors Act 1974 and that the Chief Master was under an obligation to assess those costs pursuant to section 70(7). Accordingly, directions should have been given for filing further Points of Dispute and the matter should have been adjourned to be dealt with on another occasion, if necessary. Mr Munro accepted, however, that the process was governed by the procedure set out at CPR r46.10 and that the right to an assessment was subject to the consideration of proportionality both in relation to the costs and time of the parties and court time and resources. He submitted, nevertheless, that even if the paying party on a solicitor and own client assessment failed to serve any Points of Dispute they would have a right to be heard.
21. It seems to me that, at its highest, this is to misunderstand the nature of the right under section 70. Although Mr Ainsworth, as the party chargeable, was entitled to an order for the assessment of Stewart Law’s bill, having requested such an assessment within the relevant period (see section 70(5)) that right, and the concomitant obligation of the “costs officer” under section 70(7) to assess those costs and the costs of the assessment itself, are not absolute. When Parliament provided for a right to apply to court, it must have envisaged that the rules of court would apply to such an application. Both the right and the obligation must inevitably be subject to the rules and procedures which relate to the exercise of that right which include the rules of the court itself.
Had it been intended that the right, and the obligation for that matter, was absolute, it seems to me that section 70 would have been worded very differently. As it stands, in my judgment, the ordinary meaning of section 70 is that the solicitor and own client assessment will be carried out by the court in accordance with the rules by which such matters are governed, including the case management powers of the court.
22. Not only are the words of the statute naturally to be read in that way, if the matter were otherwise, one would reach the absurd position in which all assessments of costs under the Solicitors Act 1974 would be ungoverned and ungovernable by any procedure and the paying party would be entitled to demand a hearing before the court of indeterminate length, whatever that party’s behaviour and whether or not such a hearing would be proportionate in all the circumstances. That cannot be the case.
23. In fact, as I have already mentioned, Mr Munro accepted that the right to an assessment under section 70 is governed by the principles of proportionality and it is part of his case that various provisions of the CPR apply. It is appropriate at this stage, therefore, to turn to the question of whether the Points of Dispute 10 were properly pleaded in accordance with the rules which applied to them.
Which are the relevant provisions of the CPR and what is their effect?
24. Despite the breadth of some of Mr Munro’s submissions in relation to section 70, in fact, there is no dispute that CPR r46.9 and r46.10 apply to a detailed assessment of solicitor and own client costs. They form part of Part 46 which is entitled “Costs – Special Cases”. CPR 46.9 is headed “Basis of detailed assessment of solicitor and client costs” and CPR r 46.9(1) states that it applies to every assessment of a solicitor’s bill to a client except for certain exceptions, for example, where a bill is to be paid under the Legal Aid Act 1988.
25. CPR r46.9(3) provides that costs are to be assessed on the indemnity basis but are to be presumed:
“(a) to have been reasonably incurred if they were incurred with the express or implied approval of the client;
(b) to be reasonable in amount if their amount was expressly or impliedly approved by the client;
(c) to have been unreasonably incurred if—
(i) they are of an unusual nature or amount; and
(ii) the solicitor did not tell the client that as a result the costs might not be recovered from the other party.”
It is not in dispute that those presumptions are rebuttable.
26. CPR 46.10 then sets out the procedure to be followed where the court has made an order for the detailed assessment of costs payable to a solicitor by the solicitor’s client. That rule provides for the service of the breakdown of costs, points of dispute and a reply, and the application for a hearing date. That procedure is to apply, subject to any contrary order made by the court: CPR r46.10(6). That is the procedure which applied in this case.
27. Neither CPR r46.10 nor the Practice Direction 46PD.6 gives any indication as to the form which Points of Dispute are required to take. However, paragraph 6.14 of the Practice Direction provides where relevant that:
“Unless the court gives permission, only . . . and only items specified in the points of dispute may be raised.”
28. Paragraph 6.15 is concerned with varying a breakdown of costs, points of dispute or reply and it is of note that it provides that any amended or supplementary document must be served on all other relevant parties and that although permission is not required, the court may disallow the variation or permit it upon conditions, including conditions as to the payment of any costs caused or wasted by the variation.
29. It is also important to note at this stage that the editorial note to CPR r46.10, numbered 46.10.2, at page 1527 of the present White Book, states, amongst other things, that the procedure set out in Part 47 (Detailed Assessment of Costs and Default Provisions) applies subject to the provisions of CPR 46.10 and to any contrary order made by the court. Mr Munro fairly points out that a previous reference in the note to Precedent G has been removed. Part 47 is concerned primarily with the detailed assessment of costs on a party and party basis.
30. The only indication as to the form which Points of Dispute must take is to be found in the Practice Direction to CPR Part 47. The provisions upon which Mr Ainsworth relies are contained in 47PD.8 which is headed: “Points of dispute and consequences of not serving: rule 47.9”. 47PD.8, where relevant, provides as follows:
“8.2 Points of Dispute must be short and to the point. They must follow Precedent G in the Schedule of Costs Precedents annexed to this Practice Direction, so far as practicable. They must:
(a)Identify any general points or matters of principle which require decision before the individual items in the bill are addressed; and
(b)Identify specific points, stating concisely the nature and grounds of dispute.
Once a point has been identified it should not be repeated but the item numbers where the point arises should be inserted in the left hand box as shown in Precedent G.”
In its previous form, the paragraph had stated that the Points of Dispute “should follow” Precedent G “as closely as possible” rather than “must follow Precedent G”.
31. As CPR Part 47 sets out the procedure for the detailed assessments of costs between the parties, it contains provisions which are not applicable in relation to a solicitor and own client detailed assessment at all, such as CPR 47.9, which contains the rules relating to default costs certificate. Furthermore, the indemnity basis and the presumptions which apply when conducting a detailed assessment of a solicitor’s bill are not relevant to the Part 47 regime. However, Mr Munro says that both 47PD.8 and Precedent G apply to Points of Dispute served in a solicitor and own client assessment under CPR r46.10. Mr Dunne, on the other hand, submits that the Chief Master’s and the judge’s decisions should be upheld on the additional or alternative basis that Precedent G does not apply.
31. Precedent G is now to be found online. It is a hypothetical, simple example of Points of Dispute and is drafted in a way which is directly relevant to a detailed assessment between parties. It adopts a format which is similar to a Scott schedule. The left hand column contains numbered points which are described, for example, as “Point 1 General point”, “Point 2 Point of principle” and “Point 3” which is followed by the reference numbers for the specific items which are complained of in the adjacent box. That box to the right contains the short complaint in relation to each point and space underneath for the Receiving Party’s reply and the Costs Officer’s decision.
32. The example complaints at Point 3 which relate to the specifically referenced items are that: the number of conferences with counsel was excessive and should be reduced to three amounting to nine hours in total; and that there was no need for two fee earners to attend and that one assistant solicitor on each occasion would have been enough. The sample wording for the complaint in relation to time spent on documents which appears at Point 5 of Precedent G, is as follows:
“The total claim for work done on documents by the assistant solicitor is excessive. A reasonable allowance in respect of documents concerning court and counsel is 8 hours, for documents concerning witnesses and the expert witness 6.5 hours, for work done on arithmetic 2.25 hours and for other documents 5.5 hours. Reduce to 22.25 hours.”
The left hand column contains a number in brackets which is intended to refer to the item complained of.
33. Mr Munro submits that Points of Dispute 10 was quite sufficient to comply with Precedent G and 47PD8 para 8.2 and is consistent with Sir Rupert Jackson’s Review of Civil Litigation Costs: Final Report, 2009. He referred us, in particular, to Chapter 45 at paragraphs 2.7 and 5.11. They are as follows:
“2.7 Points of dispute and points of reply. Points of dispute are said to be overlong, therefore expensive to read and expensive to reply to. Points of reply are similarly prolix. Both of these pleadings are in large measure formulaic and are built up from standard passages held by solicitors on their databases. In addition, there are lengthy passages in the points of dispute and points of reply dealing with time spent on documents. It would be better if the points of dispute…concentrated on the reasoning of the bill, not the detailed items…
. . .
5.11 Points of dispute and points of reply. Both points of dispute and points of reply need to be shorter and more focused. The practice of quoting passages from well know judgments should be abandoned. The practice of repeatedly using familiar formulae, in Homeric style, should also be abandoned. The pleaders on both sides should set out their contentions relevant to the instant cases clearly and concisely. There should be no need to plead to every individual item in a bill of costs, nor to reply to every paragraph in the points of dispute.”
34. Mr Munro points out that as a result, the requirements in the Practice Direction in respect of Points of Dispute were changed, in April 2013, to omit the requirement to “identify each item in the bill of costs which is disputed”.
35. He also took us to the headnote of the report of Mount Eden Land Ltd v Speechly Bircham LLP 2  Costs LR 337. Mr Munro relies upon it for the proposition that points of dispute in proceedings under section 70, Solicitors Act 1974 should identify those issues challenged by the client as if the assessment had been taking place between the parties, unless the court has ordered otherwise. It seems to me that that distilled explanation does not provide the reader with an accurate view of the case.
36. That case, to which the pre April 2013 Costs Practice Direction applied, was concerned with two decisions made by a master in the course of a detailed assessment of various bills rendered by solicitors to their client. The former client, having served discursive Points of Dispute, sought to challenge the solicitor’s costs line by line at the hearing and raised matters which went beyond the Points of Dispute. The Master gave directions that the parties meet to narrow the issues and that in the event that it did not prove possible to resolve their differences, Mount Eden (the paying party) should serve a schedule setting out the items that remained in dispute “as briefly as possible.” The schedule which was later provided did not comply with the Master’s order. It relied on two broad headings: “excessive” and “no supporting evidence” and identified the items challenged by reference to the solicitor’s timesheets rather than the breakdown of their bills. At a further hearing, the Master held that neither the Points of Dispute as originally served nor as amended would enable a detailed assessment to be carried out at proportionate cost without loss of fairness to the defendant and that it would not be dealing with the case justly to permit the client a third opportunity to put its case into an intelligible form. Accordingly, he stayed the assessment. Teare J gave permission to appeal but dismissed the appeal.
It seems to me quite clear, that although CPR r46.9 and r46.10 apply in relation solicitor and own client assessments, it is necessary to look to CPR Part 47 for assistance in relation to the form which points of dispute should take. In my judgment, therefore, the notes in the White Book at 46.10.2 are accurate. They provide that the procedure in Part 47 applies to a solicitor and own client assessment subject to CPR r 46.10 itself and any contrary order of the court.
37. Accordingly, 47PD.8 para 8.2 is directly relevant. It makes it absolutely clear that
points of dispute should be short and to the point and, therefore, focussed. Furthermore, sub-paragraphs (a) and (b) leave no doubt about the way in which the draftsman should proceed. General points and matters of principle which require consideration before individual items in the bill or bills are addressed, should be identified, and then specific points should be made “stating concisely the nature and grounds of dispute.”
Such an approach is entirely consistent with the recommendations and observations made in the Review of Civil Litigation Costs: Final Report, 2009 to which we were referred.
38. Common sense dictates that the points of dispute must be drafted in a way which enables the parties and the court to determine precisely what is in dispute and why. That is the very purposes [sic] of such a document. It is necessary in order to enable the receiving party, the solicitor in this case, to be able to reply to the complaints. It is also necessary in order to enable the court to deal with the issues raised in a manner which is fair, just and proportionate.
39. As I have already mentioned, the complaint should be short, to the point and focussed. As para 8.2(b) of 47PD.8 indicates, that requires the draftsman not only to identify general points and matters of principle but to identify specific points stating concisely the “nature and grounds of the dispute”.
In the case of a solicitor and own client assessment, it seems to me, therefore, that in order to specify the nature and grounds of the dispute it is necessary to formulate specific points by reference to the presumptions contained CPR 46.9(3) which would otherwise apply, to specify the specific items in the bill to which they relate and to make clear in each case why the item is disputed. This need not be a lengthy process. Having explained the nature and grounds of dispute succinctly, the draftsman should insert the numbers of the items disputed on that ground in the relevant box. The principle is very simple. In order to deal with matters of this kind fairly, justly and proportionately, it is necessary that both the recipient and the court can tell why an item is disputed. The recipient must be placed in a position in which it can seek to justify the items which are in dispute.
40. It follows that in my judgment, the sample wording which appears in the hypothetical example at Precedent G is of no assistance to Mr Munro. Para 8.2 itself provides that Precedent G should be followed “as far as practicable”. It is only an example and is premised upon a party and party detailed assessment in which the paying party will not have had sight of the relevant documentation and the presumptions in CPR 46.9(3) do not apply. Nevertheless,
it seems to me that points of dispute in a solicitor and own client assessment should adopt the format of Precedent G to the extent practicable and that the numbers attributed to the individual items to which a complaint relates should be set out in the appropriate box.
41. It follows that were it necessary to do so, I would reject Mr Dunne’s alternative submission that Precedent G does not apply at all to solicitor and own client assessments. In my judgment, it provides the form which should be adopted, the content having been explained at 47PD.8 para 8.2. Precedent G is, after all, only a simple example of the kind of challenges to items which might arise in a party and party assessment.
42. The relevance of 47PD.8 and the form of Precedent G is of no assistance to Mr Munro, therefore. Points of Dispute 10 was general in nature and stated that all items were disputed, that the list provided was not exhaustive of the issues but provided a general overview and that Mr Ainsworth reserved his position generally. It did not contain cross references to the numbers of the items disputed on particular grounds. In fact, it was accepted that it did not state why any item in the bill was disputed. In my judgment, therefore, it did not comply with 47PD.8 para 8.2, nor, for that matter, did it take the form of Precedent G.
Was it wrong to dismiss the assessment in relation to Points of Dispute 10?
43. Was the Chief Master wrong, nevertheless, to dismiss the assessment in relation to Points of Dispute 10? I have already addressed and rejected Mr Munro’s argument that because the assessment arose under section 70, Solicitors Act 1974, Mr Ainsworth had an absolute right to be heard. I also reject Mr Munro’s submissions about the way in which the Chief Master could have dealt with matters at the hearing. He sought to use the three examples which Stewarts Law had been directed to produce by Longmore LJ and the comments upon them to show that there were matters which the Chief Master had already dealt with under other heads which fed through to the work on documents, and could easily have been dealt with at the hearing. That was not the way in which Mr Poole, on behalf of Mr Ainsworth, said that he intended to proceed, however. In effect, he said that he intended to pick out items as he went along, without having warned Stewarts Law of the ones he intended to choose, or the specific reason for choosing them, and then to ask the Chief Master to adopt a broad-brush reduction of the costs claimed.
44. In those circumstances, and given the fact that Mr Ainsworth had had five months warning that the point would be taken and was entitled to amend the Points of Dispute, it seems to me that although no express reference was made at the hearing to CPR r3.4 or 47PD.8 (of which the Chief Master would have been well aware) the Chief Master was entitled to form the value judgment he did and to dismiss the assessment in relation to Points of Dispute 10. It seems to me that that decision falls within the wide ambit of the court’s discretion under CPR r3.4(2)(b) and or (c). The Chief Master was entitled to decide that it was not possible to conduct a fair hearing on the basis of Points of Dispute 10 as pleaded, the matter could not be conducted fairly “on the hoof” and was likely to take too long. Despite his very considerable experience in these matters the Chief Master himself noted that having read the papers in the light of the points of dispute as they were pleaded he was unable to identify which particular items were challenged or why and Mr Poole accepted that that was the case.
45. It follows that I consider that the judge was entitled to take the course he did which was well within the ambit of the proper exercise of his discretion and for all the reasons to which I have referred, this appeal should be dismissed.
Lord Justice Peter Jackson:
Lord Justice Lewison:
I also agree.