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New Superior Courts Rules and adjudication

04 Nov 2022 / Courts Print

The fashion of the world is to avoid costs

Under the former system of taxation of party-and-party costs, neither party was entitled to costs of the party-and-party taxation against the other. That prohibition on the award of such costs now stands abolished. Denis O’Sullivan breaks out the abacus.

Order 99, rule 13(2)of the Rules of the Superior Courts, as amended, now provides for the award of the costs of the adjudication process in party-and-party adjudications.

In addition, a further entirely novel provision providing for the making of lodgements or tenders in satisfaction of costs has also been introduced. Here, consideration is afforded to the scope and effect of these fundamental changes in party-and-party adjudication of costs.

The assessment of the amount of the costs to which a successful party to litigation is entitled on foot of an order of the court for payment of such costs is an essential component of the entitlement to relief of the successful party in litigation.

It is not an incidental or ancillary aspect of litigation but, on the contrary, is an essential component of the remedy granted to the vindicated plaintiff or, indeed, the defendant who has been wrongly sued.

Hence, it requires strict justification if rules are to be introduced that clog the right of the party who has obtained such an order to obtain payment of the full measure of the costs incurred by him or her in successfully prosecuting or defending litigation.

It must be remembered that, in the adjudication-of-costs process, one is not dealing with a claimant who has yet to establish liability and damage, but rather with one who has been found (or admitted) to have been injured by the wrong of another, and entitled to recover the costs of self-vindication before a court.

Range of values

It is well-recognised that, in the assessment of party-and-party costs, there exists a range of values within which a professional fee – whether that of lawyer or expert witness – can remain objectively reasonable. An award of costs within that range of values is fair, notwithstanding that it may be less than that marked by the lawyer or expert.

On the other hand, if the fee claimed can properly be regarded as reasonable, then the party awarded costs is entitled to recover that amount, since the function of the costs order is to make restitution to that party in respect of the costs of his having been compelled to engage in litigation.

Of course, the lawyer or expert whose fee is in question must demonstrate the features of the litigation that justify his/her marking the fee charged, in terms of:

  • The work done, and required to be done, to bring the case to a successful conclusion,
  • The complexity of the issues,
  • The responsibility involved, and
  • The other factors identified in the first schedule of the Legal Services Regulation Act 2015.

But where relevant matters have been thus identified to justify the fee marked, it is obviously for the party resisting the fee charged to show that the reliance on those matters is mistaken in one or more significant respects.

In this context, attempts to ‘average costs’ or to allow a bare minimum – or the lowest amount that might be described as ‘reasonable’ – defeats the purpose and rationale of the award of costs.

It sacrifices the interest of the party injured to some other perceived (but generally unstated) reason for mitigating the costs incurred by him or her in favour of the unsuccessful party to the litigation.

Nevertheless, even within the parameters of the foregoing approach, there is obviously room for disagreement. This is because there is no fee written in stone that constitutes ‘reasonable remuneration’ for work done.

Moreover, the Legal Costs Adjudicator, in many cases, may find difficulty in judging the complexity inherent in the litigation because, unlike the lawyers involved, he will not have had the opportunity of acquiring the detail that they acquired over years of living with the case.

This is not a criticism of the Legal Costs Adjudicator or of the system, but merely a recognition of the reality involved in performing a very difficult exercise within a very short period of time. Hence, there is the concept of a range of values within which a professional fee can remain objectively reasonable.

The right to costs

Order 99, rule 13(2), as amended, provides: “The costs and expenses of an adjudication shall, unless the Legal Costs Adjudicator, for special reason to be stated in his determination otherwise directs, follow the event.”

The first issue concerns what constitutes ‘the event’ in such an adjudication, which determines to whom the costs of the adjudication should be awarded. If the party in whose favour the order for costs has been made gets an assessment of any sum in respect of costs, then surely he has won ‘the event’ on the adjudication?

On this basis, recovery of any amount in the adjudication entitles the party so recovering to his or her costs of the adjudication. Moreover, there are no circumstances (other than failing to beat a lodgement or tender) in which the costs of the adjudication can – except for special reason stated – go otherwise than to the party who has thus won ‘the event’.

Criterion question

A further question relates to what comes within the criterion of ‘the costs and expenses’ of the adjudication?

First, there is the work done in drawing the bill of costs. One of the advantages of the new format of the bill, which facilitates the assessment process, is the detail that must be stated in the bill (see ‘Top of the bill’, Jan/Feb 2022 Gazette, p36).

The solicitor for the costs is responsible for the contents of the bill that he presents on behalf of his client, and this means that he must exercise close supervision over its preparation, even if he delegates its preparation to a member of his own staff or a legal costs accountant.

In complex actions, this means that it may take several days to formulate the bill in accordance with the requirements of the rules of court. It should be mentioned that, as an alternative, the expense of drawing the bill of costs is sometimes claimed under section D of the bill of costs and, for reasons which will appear later in this article, it may be wiser to claim this item in that context.

Second, in point of time, there are the discussions (mandated by statute to occur before the bill of costs may be issued) to attempt to agree the bill, which, again, may take considerable time.

This is because there are the four headings of costs to be considered – namely, ‘solicitor’, ‘senior counsel’, ‘junior counsel’, and ‘other disbursements’ – and, even if the party resisting the bill has little interest in compromise, that party will, most likely, be interested in acquiring such information as he can glean from those discussions for the purpose of making a lodgement or tender in satisfaction of costs.

Third, there is the court fee required to be paid on issuing the bill of costs prior to its service.

Fourth, there is the preparation of the argument for the hearing before the Legal Costs Adjudicator.

Fifth, there is the attendance to argue for the bill at the hearing before the Legal Costs Adjudicator.

Sixth, there is stamp duty (which, under the former system of taxation, was always the responsibility of the party resisting the bill of costs in party-and-party taxations).

This itemisation is not intended to be comprehensive, but it captures the main items of work and outlay involved for the solicitor for the costs in the legal-costs adjudication process contemplated by the present order 99.

Prohibitions on recovery

As regards the costs incurred by the party opposing the bill of costs in party-and-party taxation, there are two important prohibitions on recovery, comprising the time spent in preparing to oppose the bill, and the time spent in attendance before the Legal Costs Adjudicator to oppose the bill.

This is because order 99, rule 29(1) precludes the awarding of preparation and attendance charges for opposing costs on the adjudication of party-and-party costs: “The Legal Costs Adjudicator may allow a legal practitioner or legal costs accountant attending to oppose the adjudication of costs, otherwise than as between party and party, proper charges for his preparation and attendance” [emphasis added].

It should also be added that section 27(6) of the Courts and Court Officers Act 1995, which imposed a statutory prohibition of any allowance being made in respect of the costs of taxation of any party on party-and-party taxation, has now been repealed by section 2 of the Courts Act 2019.

Consequently, where party-and-party costs are in issue, the Legal Costs Adjudicator does not have jurisdiction to award a solicitor’s, or legal costs accountant’s, charges for preparation and attendance at the hearing to oppose the adjudication of costs.

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LEGISLATION

Denis O’Sullivan
Denis O’Sullivan is principal of Denis O’Sullivan & Company Solicitors, Grand Parade, Cork.