The common costs quandary; but what specifically are they?

In the recent case of Austin v East Sussex Fire & Rescue (08/08/17), Master Gordon-Saker heard the preliminary issue of whether a bill of costs should be re-drawn.

It was the Defendant’s position that the bill had been drawn incorrectly due to a failure to properly divide specific and non-specific common costs.

The claimant had brought a claim against Alpha Fireworks (first defendant) and East Sussex Fire & Rescue (second defendant) following an explosion that occurred at the first defendant’s premises. The claim was consolidated with a number of claims which had also been brought against the first defendant.

Judgment in default was obtained against both defendants, although the first defendant subsequently went into liquidation and took no further part in proceedings. Notably, the judgment against the first defendant was not set aside.

Judgment against the second defendant, however, was set aside and the matter proceeded to trial on liability. In a judgment handed down on 30/07/13, the second defendant was found liable to the claimant and ordered to pay costs of the issue of liability and a make a payment on account of costs in the sum of £175,000.

Following this, the claimant proceeded to serve a bill of costs which totalled the sum of circa £720,000 notwithstanding the fact that the claim had not concluded and the order had not been made forthwith. Service was premature.

Thereafter, the claim ultimately concluded following the claimant’s late acceptance of the defendant’s Part 36 offer dated 22/12/14. The claimant proceeded to serve a bill of costs which totalled the sum of circa £755,000 notwithstanding the fact that late acceptance of a Part 36 offer does not lead to a deemed costs order. For the second time, service of the bill was premature.

The claimant was required to make an application for an order for costs, and which subsequently provided that:

“1. The Second Defendant do pay the Claimant’s costs of the proceedings up to 12 January 2015 as against the Second Defendant only; such costs to be assessed on the standard basis by detailed assessment if not agreed.

  1. For the avoidance of doubt paragraph 1 provides that the Second Defendant pay the Claimant’s costs:
  2. a) incurred exclusively against the Second Defendant;
  3. b) non-specific common costs; and
  4. c) the appropriate share of the specific common costs as determined by the Costs Judge if not agreed.”

A third notice of commencement and bill of costs was then served by the claimant in the sum of £798,554.

Points of dispute raised only one issue; that the bill included costs to which the claimant had no entitlement. The second defendant argued that the claimant should only be seeking an appropriate share of specific common costs and that the bill of costs claimed specific common costs as non-specific common costs and vice versa. It was the second defendant’s position that the bill of costs should be re-drawn.

The issue was heard on 25/07/17 in which Master Gordon-Saker decided that the bill did not need to be re-drawn and, thereafter, gave directions for further points of dispute and for the listing of the detailed assessment.

In reaching his decision, Master Gordon-Saker considered the descriptions of specific and non-specific common costs derived from the judgment of Jay J in Haynes v DBIS [2014] EWHC 643 (QB):

“26. I have been advised by Senior Costs Judge Hurst that common or generic costs effectively fall into two categories. First, there are the non-specific costs such as court fees, medical reports and travel expenses which would have been incurred in any event, regardless of the number of other defendants. Secondly, there are the specific costs which are, in principle, capable of identification and division. For example, if there is a conference with Counsel concerning the liability of all ten defendants, the total fee may be envisaged as ripe for division.”

The question of whether the court actually had the power to order that an amended bill be served was also considered.

Points of dispute sought to rely upon Mullan v Chief Constable of the Thames Valley Police [2009] EWHC 90140 (Costs) in which the Chief Master himself had ordered that an amended bill of costs be served. The facts of that case, however, are distinguishable.

Nevertheless, following consideration of the rules as can be seen at paragraph 15 of the judgment, Master Gordon-Saker commented:

“it seems to me that the court must also have power, in an appropriate case, to require a party to serve an amended bill which either omits costs to which that party cannot be entitled or which identifies the basis on which the costs are claimed if otherwise there could not be a fair detailed assessment hearing.”

Having established the definitions of both specific and non-specific common costs and whether an amended bill could be ordered, the claimant’s 19 part bill of costs was considered.

Whilst acknowledging that some items of costs appeared to be claimed in the wrong category, the Chief Master decided that it would be disproportionate to require the claimant to revise his bill of costs again:

“(para 23) On the face of it none of the items claimed are objectionable in principle (eg because they are solely referable to the claim against Alpha). Rather the issues are whether specific items have been correctly identified and how those which are properly specific common costs should be divided. The appropriate time for resolving those issues is at the detailed assessment hearing.”

The Chief Master concluded with the parting warning that if the subsequent detailed assessment hearing was lengthened due to items mis-described or due to excessive time being spent dividing costs which have not been divided, then it may be appropriate to reflect this in any order for costs.

One wonders how such a decision can possibly facilitate a negotiated settlement.