Grasping the costs nettle
Date: 18 June 2009
Authors: Dominic Regan
Issue: Vol 159, Issue 7374
Categories: Opinion, Costs
No party has ever paid out costs to an opponent unless either those costs have been agreed or the court has determined what should be paid.
The recent Jackson report comes up with myriad possibilities to control the level of costs (see Civil Litigation Costs Review, Preliminary Report by Lord Justice Jackson).
However, for a decade there has been a simple weapon which has hardly been deployed—proportionality. Costs are almost invariably awarded on the standard basis and CPR 44 (2) dictates that such costs be proportionate.
Ambitious claims
Where does the blame fall for the failure to apply proportionality? Some judges have done sterling work. When sitting as the designated civil judge in Birmingham His Honour Alistair MacDuff regularly waded in and slapped down ambitious claims for costs. Little wonder that he was elevated to the High Court bench. The current designated civil judge in Liverpool, His Honour Judge Stewart QC, is admired for a robust approach (and should soon be on the High Court bench).
Interestingly, Judge Stewart puts some blame at the door of paying parties, those who complain about high costs. At a talk in London last November he drew attention to the failure to attack high fees charged by experts and counsel. Since no challenge was raised the items were allowed. Had the items been contested they would have been reduced. The specific example given was of a medical report in an injury claim where a fee of £400 was sought. Judge Stewart’s view was that £250 would have been right.
Unworldly approaches
Another explanation for ridiculous levels of costs is the unworldly approach to claims. I am indebted to Roz Steeple, a senior litigation solicitor, who gave me details of a nightmare case that defendants took to trial recently: the claimant offered to take £1,100 in a simple road accident claim; the defendants took the case to trial where the claimant was awarded £1,250; and costs after a bitter hearing added up to a five figure sum. Was it worth it?
Sadly,many judges do not seem to have grasped the concept or nettle of proportionality. They must take the blame for their failings. “Summary assessment is arbitrary, rushed and inconsistent,” says Jackson LJ in his review at p 530. Quite right. It is a clumsy process at the end of a trial and I fear there is little real appetite to get to grips with finishing the job off efficiently.
My concern is that these problems may lead to a greater injustice. Insurers would be ecstatic if the current small claims limit of £1,000 was increased to, say, £2,500. This would mean that a substantial number of claimants would be denied advice and representation for, without costs, how would they secure representation? It is a nonsense to say that the typical victim of an accident could deal with issues of quantum and liability unaided. I fear there are some lawyers who struggle with these matters!
Virgin litigants
An additional problem which should not be underestimated is what would happen if claimants were compelled to represent themselves. A dramatic rise in the number of litigants in person would put considerable pressure upon the court service.
Speak to any district judge and they will regale you with stories of how much longer and more complicated disputes become when someone with understandably no legal knowledge is cast into the litigation arena. Insurers will always want to minimise their outlay.
If they can buy off a claim at an under-value will they not do so? It is all very well for Jackson LJ to talk of having a computerised valuation system for injury cases but that will be years away.
Predictable costs
The best way to bring balance and proportionality to these lower value claims is to extend the existing road traffic predictable costs regime to embrace all injury cases worth over £1,000. This scheme, carefully worked out by Robert Musgrove at the Civil Justice Council, imposed proportionality with a fixed price for the job.
Those who are efficient will earn a respectable sum. A practitioner who makes a meal of it by accident or design will be no better off; indeed, they will suffer for they will have done considerably more work for the same set fee. The judiciary have the issue of costs taken out of their hands for the determination is a simple arithmetical exercise. There must be an exception carved out to cover the case described above where a defendant blindly fights everything at great expense.
There is no guarantee that any reforms recommended by Jackson LJ at the end of this year will be implemented. Law reform takes time. A simple application of proportionality—a concept alive since April 1999—could have immediate and beneficial impact. As is so often the case, the best solution may be the simplest.
Dominic Regan is a solicitor, author & presenter. He chairs Butterworths Dispute Resolution Webinars (www.lexisnexis.co.uk/onlinewebinars). E-mail: lord.denning@hotmail.co.uk
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