Satellite litigation may be necessary to work out the new rule on proportionality in costs, the Master of the Rolls has said, but it will be a “very small price to pay”.
Lawyers were also warned that if they fail to submit a budget under the new rules for costs management coming in next April, then it will by default comprise only the applicable court fees.
Speaking at an event on costs management at the Law Society last night, Lord Neuberger also revealed that two specific members of the Court of Appeal will sit on all appeals arising out of the Jackson reforms “to ensure consistency and efficiency”.
Giving the latest lecture in the Jackson implementation programme, Lord Neuberger emphasised that proportionality will apply throughout the life of a case, rather than just at the end. The rule will enable courts to judge the reasonableness of individual items in a bill and then stand back and consider whether the total figure is proportionate.
He said: “The effective, and consistent, implementation of case and costs management informed by the new costs rule should have a salutary effect on litigation conduct and costs.
“It should focus the minds of all involved on the need to consider the costs and benefits of each step proposed to be taken in proceedings, not least because parties will need to be made fully aware of the fact that certain steps taken may, or will, be at their own cost, or may be futile.”
The judge deliberately steered away from saying what precisely would constitute proportionality and how it would be assessed. “It would be positively dangerous for me to seek to give any sort of specific or detailed guidance in a lecture before the new rule has come into force and been applied…
“The law on proportionate costs will have to be developed on a case-by-case basis. This may mean a degree of satellite litigation while the courts work out the law, but we should be ready for that, and I hope it will involve relatively few cases. It will be a very small price to pay.”
Despite the new arrangements in the Court of Appeal, Lord Neuberger called for “a strong respect for, an inclination to uphold, first instance decisions on costs issues. When making costs decisions, first instance judges should not be looking over their shoulders, and parties should not be encouraged to appeal costs decisions”.
In an accompanying lecture on costs management – which for the first time released the new rules – Mr Justice Ramsey told the event that all parties will usually have to exchange budgets within 28 days of service of the defence, which will then be checked by the court. In default the budget will only comprise applicable court fees, which he said would come as “something of a shock” to those who have hitherto been ignoring budgeting.
Ramsey J emphasised that there will, in most cases, be a presumption in favour of making a costs management order.
Addressing concerns that the costs of costs management will themselves prove a problem, he revealed that the costs of initially completing precedent H (the budget form) should not normally exceed £1,000 or 1% of the approved budget, and the costs of the process should not exceed 2%.
The Association of Costs Lawyers is canvassing views from claimant personal injury lawyers on the impact of the Jackson reforms. To take part in a short survey, click here.