25 June 2014Print This Post

Gloster: budgeting extension unlikely to tame Commercial Court case costs

Gloster: we are all going to have to learn new tricks

Mandatory costs budgeting for smaller cases is unlikely to achieve make costs more proportionate in the Commercial Court, according to the judge who initially persuaded Lord Justice Jackson to exclude the court from the process.

Lady Justice Gloster also told judges and lawyers that they need “to learn new tricks” to operate in an electronic court environment.

In a speech organised by Harbour Litigation Funding last month, the transcript of which has just been published, Lady Justice Gloster revealed that as the judge then in charge of the Commercial Court, she was “instrumental” in persuading Sir Rupert Jackson to exclude the court from compulsory costs management.

Noting the “massive support” for this position from the Commercial Court users committee, she explained: “The rationale was that sophisticated parties and litigants in Commercial Court cases were well able to [control], and were already controlling costs by means of budgets for their clients and themselves.

“They were well able to monitor excessive spend by opposing parties both during the case and at the end, and the judge was unlikely to be sufficiently informed about the complexities of the litigation to be able to bring added value to the budgeting exercise.”

That changed as of 22 April this year, when the Commercial Court was brought within the ambit of the costs management regime for cases worth up to £10m.

Gloster LJ asked: “Will it lead in the long run to greater transparency and therefore to more proportionate spends? There has been some criticism of the amount of costs in the Commercial Court and it is clearly critical for the court’s reputation that costs can be justified as proportionate in both large cases and small cases.

“Whether mandatory costs budgeting in the smaller cases will achieve that result, I personally consider doubtful.”

In a speech that looked at how the courts in England and Wales needed to adapt to maintain England and Wales’s “pre-eminent position as a leading global centre of excellence for the resolution of disputes”, Gloster LJ identified the need for judges and lawyers not only to adapt their working practices to new technologies but also “anticipate how commercial disputes are going to be resolved in five to 10 years’ time. And we have to do so quickly to remain competitive”.

She recounted how, as the judge in the Berezovksy v Abramovich case in 2012, she conducted a virtually paperless trial “at least so far as I was concerned”.

“But counsel… at least the more senior ones, appeared unable to relinquish the comfort blanket of hard copy files and the ubiquitous yellow sticker. Vast quantities of ring binders were stacked up like the giants’ gold outside Valhalla in Wagner’s Das Rheingold in serried ranks in the courtroom, and trundled back and forth from chambers every day.”

And in the Court of Appeal, “we would hardly know that the digital revolution had begun”, the judge continued, saying she has never been offered before a case starts access to a digital version of the files – and that when she does ask for the case documents in electronic format, “I am almost always provided with the facility within a day or two, by which time of course the appeal is over and I have marked up my hard copy documents”.

She asked: “So where lies the problem? It lies, I fear, with the judges and the advocates. It is not that judges and advocates are luddites – they are just more comfortable with what they know. But we are all going to have to learn new tricks.

“Parties should in my view be much more aggressive in seeking case management directions that require parties to operate in an electronic court environment, and judges should be much more pro-active in making such orders. Practice directions or new rules may have to be introduced to achieve this end.”

Gloster LJ also complained about the length of pleadings, witness statements, arguments, trials and even (with a “mea culpa”) judgments. “Excessive length – it has to go,” she said, noting that little seems to have changed since the reforms that were instigated in the wake of the BCCI case eight years ago.

One solution was for judges to be “much more proactive” in disposing at an early stage of issues that should not be taken to trial, she said.

The judge also strongly backed the judiciary’s concerns about government plans to charge commercial litigants ‘enhanced’ court fees above cost price. This was an issue “which ultimately is bound to affect the shape of commercial litigation in the years to come”.

While pushing ahead with other changes to court fees after consultation, the Ministry of Justice has yet to announce whether it will take enhanced fees forwards.

By Neil Rose

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