State your case — The Master of the Rolls has made it clear that he wants to control court costs in civil cases. Here, Steven Bate says there are already signs that cost caps are starting to come into play
The costs of litigation and other forms of dispute resolution are often at the forefront of the minds of participants. Now it looks like the way that courts deal with litigation costs is changing. Specifically it is expected that capping will play an increasingly important role in the way that courts deal with litigation.
Cost capping orders give judges the power to limit the parties recoverable costs at different stages of the litigation. About five years ago courts began to grant orders capping the overall cost or the cost of a distinct part of a court claim.
At first these orders were only sought and granted in group litigation, such as the case involving the organ donor scandal at Alder Hey Hospital in Liverpool. However, in a recent defamation case, in which a Mr King sued The Daily Telegraph the Court of Appeal agreed that the courts have a general power to grant these types of orders. As a result they are no longer limited to group litigation.
In May this year the Chancery Court considered an application for a costs cap in the intellectual property case of Knight vs Beyond Properties. The defendant argued that there had been extravagant expenditure by the claimant. Although the application was dismissed it shows that the issue is one that is increasingly coming before the courts.
It seems the courts are being influenced by concerns over litigants generating excessive and unreasonable costs, for tactical reasons, or simply generating extravagant costs that offend the principle of proportionality found in the civil procedure rules.
It is predicted that these orders will become more mainstream now that the courts have confirmed they are available generally. One reason is that these orders have the support of the Civil Justice Council and the new Master of the Rolls, Sir Anthony Clarke.
In April Sir Anthony said that control over cost was the next big issue for the civil justice system. He said he was interested in proposals for cost budgeting and enforceable estimates.
This could potentially prevent the claimant from attempting to find the smoking gun email buried deep in the files
At the very least the use of such orders might reassure parties that litigation can be made cost effective for cases that might not be suitable for adjudication, such as complicated and high-value delay claims.
These types of orders are available in all courts, including the Technology and Construction Court. Although it does not appear that such an order has yet been sought or granted in a construction case they are eminently suitable. There are two aspects of any litigation where the court is likely to consider granting a discrete cost capping order: disclosure of documents and expert witnesses. The court order that the overall costs of preparing a list of documents and inspecting the other side's documents should be capped at an assessed sum. The court might also consider an order capping the overall costs expenditure on expert witnesses, whether generally or perhaps just limited to a specific category of defect.
Construction lawyers and those who have been involved in disputes referred to arbitration will not be surprised by these developments. A similar power has long existed in arbitration, in section 65 of the Arbitration Act 1996. In fact, the courts looked at this section and applied it by analogy when they began to develop the principle that costs caps could be granted.
The question of whether to apply for such orders does depend entirely on the type of case and its individual facts or issues, but if cost capping does take off, as expected, and then litigation in the TCC for construction disputes might be seen as more attractive. One of the usual bugbears about court based litigation in construction is cost and this will now be under greater control.
On the other hand claimant might fear that a defendant could use applications for such orders tactically. A good example would be that at the stage of disclosure of documents a defendant might attempt to limit the cost a claimant was able to incur on inspection of the defendant’s documents. This could potentially prevent the claimant from attempting to find the smoking gun email buried deep in the files containing a mass of seemingly irrelevant documents. If parties are concerned that cost capping may be used for tactical advantage they may opt to keep the dispute in adjudication or mediation.
Either way, it should now be possible to control the cost of litigation more carefully and a well-judged and well-timed application for a cost cap might give the recipient a tactical advantage over the opposition.
Steven Bate is a solicitor in the construction team at Hammonds in Leeds