cost capping hammer blow
Cost capping hammer blow
11 July 2007
Synopsis
On 12 March 2007, his Honour Judge McDuff made
a cost capping order limiting Irwin Mitchell's costs to just 30% of
their £726,000 estimate. In a judgement that pulled no punches,
sympathy was expressed for the defendant's view that the case "was
less about gaining compensation for the claimants and more about
making profits for Irwin Mitchell".
Background
The claimants are represented by Irwin
Mitchell, acting under a Group Litigation Order and the defendant
is First Choice Holidays and Flight Limited. The allegations relate
to the provision of holidays in 2001 and 2002 at the Soviva Hotel
in Tunisia. It is claimed that as a result of inadequate hygiene at
the hotel the claimants became ill. Liability is denied.
At the Allocation Questionnaire stage, Irwin
Mitchell produced an estimate showing costs to date of £650,000,
with an estimated total expenditure of £940,000. Both figures were
exclusive of the success fee uplift and were described by the
defendant as "breathtaking". His Honour Judge McDuff agreed with
that sentiment.
In order to support a cost capping application
the defendant sought a full breakdown of these estimates. That was
not forthcoming, but further estimates (in fact also wrong!)
revised the costs spent as £1.2 million, with a further £900,000
anticipated. Unsurprisingly the defendant proceeded with their
application.
Judgement
His Honour Judge McDuff refused to
retrospectively limit the claimant's costs. He did however say that
the defendant's suggested cap of £166,000 for past costs
represented a figure with which he would have agreed had he been so
empowered.
As to the application for a prospective cap,
the judgement was scathing as to the claimant's inability to
provide an accurate breakdown and the discrepancies in their
evidence as to why this had not been possible. Short shrift was
given to the suggestion that the claims are worth £1.15 million
and, so limited are the anticipated damages in the individual
cases, it was suggested to be unlikely that they would have been
pursued in the absence of a Conditional Fee Agreement.
His Honour Judge McDuff commented that
increasing legal costs are a real impediment to the affordability
of civil justice, meaning many can no longer afford to litigate.
Little wonder that Irwin Mitchell received little judicial sympathy
for their suggestion that a costs cap would result itself in
limited access to justice.
The claimant has permission to appeal.
Conclusion
- As his Honour Judge McDuff said "I do not
see why, in the appropriate case, costs capping should not be a
regular and normal order". In our view this is now something
to be considered in every case
- The orders are prospective, so applications
should be made a soon as possible, and that will usually be after
Allocation Questionnaires are filed. If the case is moving slowly,
why not ask for a pre-action estimate of costs. After all, what
reasonable litigant would deny a defendant this information?
- Caps will undoubtedly focus attention on the
key issues and limit any tendency to plead and pursue claims too
widely based. In this case the judge observed that the cap would at
least "…act as a check against the constant thirst for opening the
file and recording a unit or two"
- Defendant's solicitors must be prepared to
file detailed proposals as to how caps should be calculated, with
robust evidence to support those proposals
- Finally, we have just heard that the Civil
Procedure Rule Committee has costs capping is on the agenda for the
next meeting on Friday 20 July 2007
A more detailed article by the author on this
subject is due to be published by the Law Society Gazette
shortly.
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