Cost Capping Legal Update

Willis v Nicholson [2007] EWCA Civ 199 (CA) Buxton LJ

This case was seen as an opportunity to give general guidance on costs capping. The appellant appealed against a decision of a Costs Judge refusing to make a costs capping order but ordering that costs incurred from a certain date up until the final determination of the claim should not exceed the estimate provided by the respondent. It was held that there were no grounds on which the Judge's decision could be disturbed. The Judge had stated that one of the reasons for his refusal to make a costs capping order was his concern about the time and costs that would be involved in having a Costs Judge determine what the cap should be. At the time three of the eight months for preparing the case had already expired which would make any intervention by the Judge or a Costs Judge difficult to apply in practice. The difficulty was much greater when at an even later date the court was asked to adjust the respondent's costs and adjust the respondent's preparation of the case

very close to trial. The court took the opportunity to make general observations

that orders should only be made in limited circumstances, for example Smart. In contrast there had been various indications by other Judges encouraging the use of cost capping, for example Griffiths, Leigh, King Ledwood. The CA considered the

difference in opinion was in need of resolution. One element in the high cost of litigation was undoubtedly the expectation as to the annual incomes of the professionals who conducted it. The costs system could not do anything about that because it assessed the proper charge for work on the basis of the market rates

charged by professionals. It had been hoped when CPR came into force that practice might change. No change had occurred. The reasonable amount per hour of a professional's time continued to be determined by the market. Therefore, the focus of costs limitation had to be the way on which the professionals intended to conduct the case because the amount recoverable on assessment was fixed as to rates by the standard amounts allowed. To limit the way in which professionals intended to conduct a case was a delicate matter. The court would have to be careful to select the right moment in the litigation process for the consideration of a costs cap. There remained serious doubts as to whether further guidance on costs capping, if it were to be given at all, should emanate from the Court of Appeal rather

than being formulated by the CPR after extensive consultation. Therefore no general guidance given, although a working party has now been set up chaired by Jackson J to consider the matter further.