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Wigg & Co - costs capping

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"Petursson and another -v- Hutchinson 3G UK Limited (2004) EWHC, then 2609 (TCC)."

" A Costs cap should normally be prospective and not retrospective, but see "Smart -v- East Cheshire NHS Trust (2003) EWHC 2806 and Ledward (Tunbridge Wells County Court)."

"The authorities suggest that the court expects an Order for capping costs be made at an early stage."

"Both sides, have the right to a fair hearing. To impose a retrospective limit on costs would amount to a breach of the Defendant's right to a fair hearing. It would be a wholly exceptional case where it would be appropriate to order a cap retrospectively. Future costs could normally be managed by conventional case management and Detailed Assessment of costs after trial. The appropriate time to consider a costs cap is at the early stages of an action where the parties and the Court can together plan the steps needed to bring the matter to trial and can consider the costs implications of those steps and whether a cap is appropriate."

Civil Procedure (Amendment No.3) Rules 2008 applicable from 6th April 2009 introduces new CPR 44.18-20. Costs Capping Orders will only apply to "future costs". These are defined as costs incurred in respect of work done after the date of the Costs Capping Order but excluding the amount of any additional liability. There can be no attempt to reduce costs already incurred. The Order cannot be retrospective. There is no power to cap any additional liability. There is a three stage approach requiring the Court to make an Order if it is in the interest of justice so to do, and there is a substantial risk that without such an Order costs will be incurred disproportionately and the Court is not satisfied that the risk can be adequately controlled by case management.

The cap will only restrict costs which a Party may recover pursuant to an Order for costs subsequently made. It only applies to Inter-Parties Costs. The Court can take a failure to accurately estimate costs as an indicator that a cap might be required. The Court may use previous costs estimates in deciding whether a cap is required and the level of the cap. See also Costs Practice Direction 6.4 on failure to serve a Costs Estimate. There is power to vary the cap.

See Various Ledward Claimants v Kent & Medway Health Authority & East Kent Hospitals NHS Trust (2003) EWHC (2001) QD. Group litigation order had been made, the parties agreed that there was a need for costs cap on the generic case and the 8 lead cases which would be in respect of the base costs only and not taking into account any CFA success fee. The Claimants' costs at the end of the trial were capped. Grade A hours at 150.00, Grade B hours at 135.00 and Grade D hours at 85.00 with Leading Counsel at 250.00 per hour, 75 hours of pre-trial work and a Brief fee of 50,000.00 and refreshers of 1750.00 per day. Junior Counsel's fees were allowed at half these amounts. 

See Smart v East Cheshire NHS Trust (2003) EWHC 2806 in which it was recognised that the cost cap is not of universal application. The judgment was that the Court should only consider making a costs cap order in such cases where the Applicant showed by evidence that there was a real and substantial risk that without such an order costs would be disproportionately or unreasonably incurred and that this risk may not be managed by conventional case management and a detailed assessment of costs after a trial and that it is just to make an order. District Judge Lethan is a pioneer of costs capping and in the Tonbridge County Court said that it was not in his experience that the approach contemplated in Smart would be required. For example, in his own case of Laybourne v Mills, a fast track case, he was faced at the allocation stage with a costs estimate of 22,000.00 to recover 13,000.00. Could it really be right that in these circumstances a Court should sit idly by? Equally, this use of proportionality might be highly irrelevant in lower level multi track trials. He considered that a case can be made out for such control on all major and significant litigation. Generally the costs estimate found in or attached to the allocation questionnaire will suggest whether or not the case is one where the Court ought to consider a costs capping order.

Costs Capping in CFA Cases

King v Telegraph Group Limited CA TLR 21 May 2004. 

Costs Capping generally

A Costs Capping Order needs to demonstrate that such an Order satisfies the criteria at CPR 44.18(5) and 44.18(6). A case in which those criteria were satisfied was likely to be exceptional. It is suggested that the new rules comprise a more restricted approach to costs capping than that favoured by many. See Peacock -v- MGN Limited (2009) All ER (d) 88(ATR), EDJ EADYJ. There are also Barr and Others -v- Biffa Waste Services Limited (2009) EWHC 2444 (TC).(2009) All ER (d)176(Oct), NLJ 30th October P1513. See also Eweida -v- British Airways Plc.(2009) EWCA Civ.1025 ; 15 October; SJ 27th October P37. The Court could not make Protective Costs Orders because it was not public law litigation but a claim by a single employee against her employer. A Protective Costs Order cannot be made in private litigation.

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