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The electronic bill of costs was one of the key features arising out of the recommendations of Lord Justice Jackson in his review of civil litigation costs.  The detailed bill of costs was based on a Victorian account book and had changed little in over 100 years.  LJ Jackson considered that preparation of a detailed bill of costs was time consuming and required greater transparency. 

He recommended a bill in the form of a spreadsheet with items allocated to the various phases of a costs budget with reference to tasks and activities using a uniform task-based management system developed in the USA.  This required the use of coding and time recording systems in the hope that a bill of costs could be produced at the push of a button.  A working party was set up tasked with the development of the new bill of costs.

Once the working party had developed a bill of costs, a voluntary pilot scheme began in the Senior Court Costs Office on 1 October 2015.  The pilot was originally to last for 6 months, however given the significant departure from the detailed bill of costs the profession was used to, there was little appetite for the pilot and it was extended twice until 30 September 2017.  Consequently, the pilot did not provide any useful guidance to the SCCO or the Civil Procedure Rule Committee.

The electronic bill was revised to make it simpler and due to the lack of participation in the pilot scheme it was made mandatory on 6 April 2018 that any costs incurred since that date in multi-track claims must be claimed in an electronic bill of costs in the form of a spreadsheet.

Although case management software and time recording systems have developed over recent years with a view to making the preparation of a detailed bill easier, we believe Jackson’s aim of an electronic bill being produced at the push of a button is unlikely to be achieved, certainly not any time soon. 

Although time can be recorded with reference to the phases of the budget by fee earners during the course of litigation, it is important to ensure that the time has been allocated correctly so that, when a bill of costs is prepared, time is not claimed in the wrong phase to reduce the likelihood of challenges by paying parties and reductions to the costs claimed on assessment.

This is particularly important as CPR 3.18(b) provides that where costs are being assessed on the standard basis and a costs management order has been made, the court will:

"not depart from such approved or agreed budgeted costs unless satisfied that there is good reason to do so."

Case law suggests that where a party is claiming costs that do not exceed an agreed or approved budget the Court is unlikely to undertake a detailed assessment of those costs and will simply allow the costs as claimed.  The "good reason" test appears to be set high.  Guidance from the SCCO in the cases of MOD v Nash [2018] EWHC B4 (Costs) and MOD v Jallow [2018] EWHC B7 (Costs) confirms that a reduction in the hourly rate for non-budgeted costs is not normally good reason to depart from an approved budget.

With our specialist knowledge of the CPR and relevant case law, and our experience of costs budgeting and the preparation of electronic bills of costs, we can ensure that costs are correctly claimed with reference to the phases of a costs budget to minimise challenges by paying parties and reductions to costs on assessment in order to maximise your recovery.

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