£3,500.00 in damages and nearly half a million pounds in Legal Costs – How do you deal with Disproportionate Costs?

I’ve often found myself wanting to get into the mind of a Costs Judge and the case of Gilks -v- Hodgson [2015] EWCA Civ 5  is one such case.

 

The case centred around a boundary dispute between the parties in relation to the boundaries of land and a right of way. The matter ran all the way to Trial which lasted 10 days, thereafter an appeal was allowed and heard in the Court of Appeal which lasted 3 days and was solely in relation to the boundary dispute. The Claimant was awarded £3,500.00 in damages.

 

Sir Stanley Burnton’s judgment makes for some particularly interesting reading. He stated that “this [was] a depressingly unfortunate dispute between neighbours. The costs so far approach half a million pounds, far more than the value of the rights involved. It is a dispute that could and should have been compromised on terms that both parties could live with. The trial took 10 days, and even then some issues, referred to by the judge at paragraph 2 of his judgment, were left undecided.”

 

So to be clear, although the matter in dispute was undoubtedly important to the client, damages were awarded in the sum of £3,500.00 and legal costs totalled nearly half a million pounds. There’s clearly some large proportionality issues and the Judgment handed down certainly goes some way to addressing this.

 

This is particularly interesting when read in the context of the recent case of Savoye -v- Spicers Ltd [2015] EWHC 33 (TCC) (a useful post on this case can be found here) It is almost certain that this case will be raised when dealing with the issue of costs. In the case of Savoye, the Bill of Costs was reduced from £201,790.66 on summary assessment, to £96,465.00.

 

This is a case which is worth keeping an eye on in terms of costs. The Costs Judge will no doubt have some difficult issues to determine and depending upon which proportionality test applies there could be some drastic reductions.

 

Is Costs Budgeting the Key?

 

For those doubting Costs Budgeting, is there a better case than this to highlight the need for some form of monitoring costs? The amount incurred is astonishing and some form of Costs Management would certainly have been beneficial in curbing the level of costs incurred.

 

Lord Justice Bean who also heard the Appeal added in the Judgment the following;

 

I only add how dismayed I have been by this Dickensian litigation. The disputed strip of land and right of way do not constitute the sole means of access to anyone’s home. The award of damages to Mr & Mrs Gilks was £3,500. Yet, at a time when the courts are under great pressure, the battle between these two couples took up ten days of court time – more than some murder trials – before Judge Armitage and a further three days in this court; and about half a million pounds has been spent in costs. It is almost as though Lord Woolf and other civil procedure reformers over the years have laboured in vain.

 

I have faith that the reforms in place will start to work, particularly once the Bill of Costs follows the same format as the Budget which will enable the correct comparisons to be made (there’s a clear disconnect between the two at present).

 

Costs Management can assist if applied correctly.  Get the Costs Budget right and everything else will naturally fall into place. As with most things in life, prevention is better than cure.

 

Are people seeing a more aggressive approach from the Court in terms of proportionality? Should the Court be doing more to prevent such disproportionate claims for legal costs?

 

The full Judgment is available online http://www.bailii.org/ew/cases/EWCA/Civ/2015/5.html

 

If you have any questions or queries in relation to this blog please contact Sean Linley (sean.linley@clarionsolicitors.com and 0113 336 3327) or the Clarion Costs Team on 0113 2460622.

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