Master Gordon-Saker provides views on costs issues

Master Gordon-Saker gave his first key note speech since taking up his role as Senior Costs Judge at the Commercial Litigation Association event “The Litigation Journey” on 1 October 2014 in London. The main focus of his speech was (i) costs budgeting, (ii) guideline hourly rates, (iii) additional liabilities (iv) proportionality and (v) provisional assessment. He also made passing comment on the DBA reviews by the MOJ, noting that while he is a fan of the indeminity principle, he does not see DBAs working for low value claims.

You can find the full text of Master Gordon-Saker’s speech here.

Update: Master Gordon-Saker also delivered the keynote speech at the Association of Costs Lawyers Annual Conference on 24 October 2014 where he also addressed the same issues.

Costs Budgeting

Master Gordon-Saker sees costs budgeting as the current greatest area of uncertainty despite the obvious sound reasoning for needing costs budgeting as a matter of fairness and to be a method for adequately controlling costs (easier to say if you do that you won’t recover those costs than it is to say at the end you should not have incurred those costs as you won’t recover them). He points to the strain that the court service is under, the lack of training (or money to pay for the same) for judges, who know the mechanics but still not what a reasonable figure should be, given that many judges have had previously only a limited exposure to costs. It is hard to decide whether a total figure is reasonable without getting into the details of how that figure was arrived at, yet judges are being trained that they must not micro-manage the budgets.

He echoed Jackson LJ’s comments that different judges are taking different approaches and highlighted that the main practical difficulty is that current bills system does not align with the budget system. He stressed more training will be required; that judges need confidence in their decisions which will only come with time and experience.

Guideline Hourly Rates

He had little to add to the debate here, save that he agreed GHR were still a necessity for summary assessment and have limited use on detailed assessment (albeit agreed with the Master of the Rolls that we need greater flexibility on detailed assessment). Essentially we carry on with the 2010 rates as tweaked in a limited fashion at the end of last time and await the MR to meet with the MOJ and Law Society.

Additional Liabilities

Master Gordon-Saker, whilst agreeing that recoverability of additional liabilities had to go, laments that the government in wishing to reduce the civil legal aid bill, replaced a relatively modest burden on the state with a much greater burden on paying parties; civil litigation became a commodity, which turned the focus from justice of the case to the costs of the case. CFAs and ATE insurance spread across litigation even to areas where legal aid had not been available – now in the removal of recovery of additional liabilities, we need a new means of access to justice. Add to this the question raised by the Supreme court in Coventry v Lawrence as to whether the previous regime of recoverable additional liabilities breached the Human Rights Act and there is uncertainty.

Proportionality

A new test is in place for proportionality – which trumps reasonableness, as even if costs are reasonable, unless they are proportionate they will not be recoverable.

Costs incurred are only proportionate if they bear a reasonable relationship to:

  • the sums in issue in the proceedings;
  • the value of any non-monetary relief;
  • the complexity of the litigation;
  • any additional work generated by the conduct of the paying party;
  • and any wider factors involved in the proceedings, such as reputation or public importance.

Master Gordon-Saker stressed that he feels the guidance is already here as to how to apply this test. He referred to Jackson LJ’s guidance, which was quoted by Lord Neuberger (then Master of the Rolls) in his 15th implementation lecture in 2012.

… I propose that in an assessment of costs on the standard basis, proportionality should prevail over reasonableness and the proportionality test should be applied on a global basis. The court should first make an assessment of reasonable costs, having regard to the individual items in the bill, the time reasonably spent on those items and the other factors listed in CPR rule 44.5(3). The court should then stand back and consider whether the total figure is proportionate. If the total figure is not proportionate, the court should make an appropriate reduction. There is already a precedent for this approach in relation to the assessment of legal aid costs in criminal proceedings: see R v Supreme Court Taxing Office ex p John Singh and Co [1997] 1 Costs LR 49.

The approach, to assess in the usual way and then stand back and consider whether the whole figure is disproportionate, and if found to be so, reduce accordingly, can be described as arbitrary, but, argued Master Gordon-Saker, no more arbitrary than the Lownds approach.

Provisional Assessment

Bills of up to £75,000 are now provisionally assessed on paper and Master Gordon-Saker feels that this approach of speedy and cheap costs assessment broadly works and does not feel it will be extended in the foreseeable future.  It will not work for bills where the cases have been costs budgeted.

He does warn that the provisional assessment being carried out by the court within 6 weeks is unrealistic. However, given that the Rolls Building has just gone digital, he is hoping the service provided presently by the courts will start to improve.

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