The inception of costs management was botched, but there are grounds for optimism.
Last month, Lord Justice Jackson spoke on the subject of ‘Confronting costs management’ in an eagerly awaited speech.
His reforms were meant to be implemented as an interlocking package and, had this been done, we would not be in the position we are in today. Costs management may have been seen as the key component, but implementation can best be described as ‘botched’.
This started with piloting. Leaving aside the pilot in defamation cases (a non-mainstream area of practice), Sir Rupert recommended that in addition to the pilots in the Mercantile and Technology and Construction Courts, costs management should be tried out in clinical negligence cases. This did not happen. Costs management works in those courts, partly because the judges are ‘docketed’, overseeing a case from beginning to end, and partly because litigants are ‘sophisticated’.
So the pilot was successful; the problems have arisen following its application to other matters, most particularly in the Queen’s Bench Division and the lower courts. Had the scheme been piloted there too, the issues could have been dealt with prior to implementation.
But what are the problems? A working party set up by the Association of Costs Lawyers has suggested that the main areas of concern include:
- Lack of uniformity of approach by the courts;
- Precedent H is an inadequate document for showing incurred and forecast costs and the Notes for Guidance are not clear;
- Asking parties to budget in advance of knowing the directions inevitably leads to revisions having to be made (the costs of which are unlikely to be recoverable);
- The parallel existence of ‘assumptions’ and ‘contingencies’ is causing confusion;
- Confusion over whether hourly rates should be considered – and the differing approach of various courts;
- Budgeting is made more difficult by the lack of information concerning already incurred costs;
- The costs of the budgeting exercise are disproportionate; and
- The regime is leading to delays in litigation by clogging up court lists.
These concerns mostly mirror those identified by Sir Rupert in his speech, but did he – and master of the rolls Lord Dyson – address them sufficiently?
The answer is ‘mostly’. While some have expressed incredulity at the assertion that ‘costs management works well’, many others – including costs practitioners – will have found much to encourage them, not least the pair’s wholehearted support of the regime.
They are also likely to be relieved that Lord Dyson opposed Sir Rupert’s suggestion that a court ‘should not manage costs in any case if it lacks the resources to do so without causing significant delay and disruption to that or other cases’. This would undoubtedly encourage judges who dislike the regime to ‘opt out’ of it and lead to satellite litigation.
Sir Rupert acknowledged the core concern that the judiciary require more training to help ensure consistency; this will deal with several of the issues identified above and will assist practitioners too if the components of the new one-day course are made public, as Sir Rupert suggested.
He also highlighted that parties are, by and large, failing to seek to agree budgets in advance of a case and costs management conference, although it is debatable whether his suggestion that this be addressed by filing and serving budgets 14 rather than seven days prior to a hearing goes far enough. Surely it would be better to compel parties at least to discuss budgets in advance of the hearing and to file a list of issues requiring the court’s determination.
Last but not least, the issue of fixed recoverable costs is firmly back on the agenda. All practitioners should be concerned by the suggestion that they be introduced in the multitrack – this would be the thin end of what could be a very large wedge.
Sue Nash is chairman of the Association of Costs Lawyers