On 23 August 2016, Chief Justice Kawaley of the Supreme Court of Bermuda handed down a 15 page judgment, encouraging lawyers and litigants to behave reasonably and proportionately in Court cases of low financial value.
In doing so, Chief Justice Kawaley has reminded Bermuda litigators and their clients that unreasonable and disproportionate legal costs will not be recoverable by the winning party against the losing party, in the event of taxation (assessment) by the Registrar or by the Court.
The judgment is mainly of interest because of the Chief Justice’s application of the “overriding objective” under RSC Order 1A, including the requirement of “proportionality”, to the rules applicable to taxation, even though RSC Order 62 only makes express reference to “reasonableness” and a list of particularly “relevant circumstances” for the Court to take into account, rather than “proportionality”.
As the Chief Justice held, “the practical result must be that a Bermudian taxation is governed by a construct of reasonableness incorporating requirements of proportionality“.
The judgment is also of interest for some other reasons:
- It reveals that the lawyers involved in the case (one of 3 PQE and one of 7 years PQE in Bermuda) were charging their clients the hourly rates of $450 and $500 respectively. Although it was suggested in evidence, and accepted by the Court, that these rates were reasonable and comparable to rates charged by lawyers of similar vintage in Bermuda, these hourly rates actually seem pretty high for a local family dispute, especially taking into account the manner in which the “hopeless” and “patently unmeritorious” case appears to have been argued on behalf of the losing party, when compared with the “scrupulous care” and “complete command of the law and her file” by counsel for the winning party.
- The Chief Justice also reminded the winning party that it could have taken steps in correspondence to lay the foundation for an indemnity costs order, by expressly warning the losing party at an early stage of the case that it was “hopeless”, and inviting discontinuance.
- In the end, the winning party’s Bill of Costs was reduced by 57% by the Chief Justice (it had been reduced by 75% by the Registrar on taxation).
The judgment is reported as Lightbourne v Thomas  SC Bda 80 App, and it is available here; https://www.gov.bm/sites/default/files/Appeal%20Judgment-Review%20of%20Registrar%27s%20Taxation%20of%20Costs-Lightbourne-v-Thomas.pdf
By coincidence of timing, the English High Court, Family Division, has recently handed down a judgment (on 29 July 2016) in which Mr. Justice Macdonald very significantly reduced the amount of costs being claimed on summary assessment (awarding only £3,737.50 against the initial claimed figure of £38,813), as reported by Gordon Exall on his Civil Litigation Brief blog here: https://wordpress.com/read/feeds/12030196/posts/1144749428
“In K -v- K  EWHC 2002 (Fam) Mr Justice Macdonald reduced the costs of a successful party to an appeal in a family case.
“The stringent test of proportionality in relation to costs incurred applies with equal force in family proceedings. It is remarkable that such a significant sum of money has been spent by these two parents arguing over a single question the answer to which was indisputable from the outset. The costs incurred in this case were disproportionate to the single issue at hand”
“That does not mean, however, that it is right for the mother to bear the frankly excessive costs enumerated in the Statement of Costs filed by the solicitors instructed by the father. In circumstances where the rules make provision for the payment of costs proportionately and reasonably incurred, where a costs order is merited the court will meet robustly any claim for costs that it considers to be, as in this case, excessive.””