| 63. |
The first six Tables in
Appendix B concern HCAs, referred to in the Tables as "General Civil Actions".
They correlate the amounts claimed and recovered (Note 60) in the proceedings on the one hand, with the costs
claimed and costs allowed on the other. For present purposes, one may assume that the
figures for "costs claimed" represent the fees and disbursements charged to a
party by his own lawyers which he is seeking to recover from the other side. The
"costs allowed" amount represents what he recovers by way of costs after items
disallowed have been taxed off. |
|
|
| 64. |
Where the claim was
quantified, the amounts claimed varied from $4,200 to $99,601,700. (Note 61) The amounts eventually recovered ranged from $1 to
$52,728,000. (Note 62) It was therefore appropriate to divide the cases into five bands,
by amounts claimed and recovered and to show the range (Note 63) and median (Note 64) sums in each category of amounts claimed, amounts
recovered, costs claimed and costs recovered. |
|
|
| 65. |
It
will be appreciated that a case in which the median amount was claimed may very well not
be the same case as the one where the median amount of costs was claimed. Nor are the
cases where the median amount and the median sum of costs respectively were recovered,
either the same case or the same as either of the two cases mentioned in the preceding
sentence. Nevertheless, it is convenient to discuss median values against median values
even though such comparisons strictly do not establish proportionality or the lack of it
in any particular case. The client paying median costs may have had comparatively good
value in recovering the highest - and not merely the median - amount among the range of
sums recovered. Nevertheless, the median values are indicative of the spreads within each
band and category. |
|
|
| 66. |
Approaching
the figures in this way, it may generally be said that costs were markedly
disproportionate in the smaller claims. To take the first band (<$120,000) in Appendix
B, Table 1, the median recovery was $62,700, against which the median lawyers' bill to the
client was for $46,400 (equivalent to 74% of the median recovery), while the median costs
allowed on taxation came to $29,000 (equivalent to 63% of the median costs claimed). If
the three figures came hypothetically together in a single case, it would mean that to
pursue a claim leading to recovery of $62,700, the plaintiff would have had to pay his
lawyer $46,400, but, recovering only $29,000 on the party and party taxation, would have
incurred $17,400 in irrecoverable costs so that his effective recovery would come down to
$45,300 which is less than he had to pay his own lawyers. Of course, this is a
hypothetical calculation assuming median values all round. In many cases, the result would
be less disproportionate. However, there will also be many cases where the
disproportionate outcome is worse, with the client recovering less and paying
more in costs. |
|
|
| 67. |
The disproportion
applies equally to the second band ($120,000 to <$600,000) where all-round median
values for amount claimed, amount recovered, costs claimed and costs recovered are the
respective sums of $245,100, $230,000, $119,400 and $81,800. (Note 65) If applied to a single hypothetical case, it would mean
that to recover $230,000, a claimant would have to pay his lawyers $119,400 (equivalent to
52% of the recovery) and, having had $37,600 taxed off that bill, obtain a recovery
reduced to $192,400, his lawyers' bill being the equivalent to 62% of that sum. Again,
while some clients will have done better, many will have done worse. |
|
|
| 68. |
It is to be hoped that
for claims in these two bands, ie, of up to $600,000, such unacceptably disproportionate
figures will have been ameliorated by the increase of the District Court's jurisdiction in
respect of monetary claims from $120,000 to $600,000 which took effect on 1 September
2000. (Note 66) After a period of operation, the costs consequences
of this jurisdictional change on the cases which have migrated from High Court to District
Court should be studied. By O 62 r 23(1A) of the District Court Rules, costs generally
allowable on a taxation are not permitted to exceed two thirds of the amount which would
have been allowed in respect of the same items on a High Court taxation. This may well
influence not only the level of costs allowable but also the level of costs incurred. |
|
|
| 69. |
In the next band
($600,000 to <$1 million), concerned with a relatively small sample of 19 cases, the
disproportion is considerably less marked. The four median figures for amounts claimed and
recovered and costs claimed and recovered are $776,900, $720,000, $88,400 and $66,100
respectively. (Note 67) In the hypothetical all-median value case, an effective recovery
of $697,700 (after deducting irrecoverable costs) would have cost $88,400 in legal fees,
equivalent to about 13% of the recovered amount. |
|
|
| 70. |
The figures in the next
band up ($1M to <$3M) do a little worse. The four comparable median figures are
$1,613,700, $1,503,000, $234,100 and $190,000. The hypothetical all-median case in this
band would mean an effective recovery of $1,458,900 after costs taxation against a legal
bill of $234,100 which is equivalent to 16% of the recovered amount. |
|
|
| 71. |
The final band, with a
quantified value exceeding $3 million, involves a very small sample of 8 cases. The median
amount claimed ($6,076,900) was lower than the median amount recovered ($10,075,300). The
median costs claimed and allowed were small sums in comparison, namely $289,200 and
$286,600. If the same approach as that adopted above is applied, one arrives at a
hypothetical all-median effective recovery $10,072,700 and costs equivalent to 3% of that
sum. It is practical, given the smallness of the numbers to consider the actual figures as
follows. They tend to indicate that costs are on the whole less disproportionate in
relation to larger claims. |
|
|
|
* |
In the two lower bands,
the highest taxation bills came in each case to over $50,000, a sum exceeding half of the
maximum claim amount in the first band. (Note 71) |
|
|
|
|
* |
Even the median sums
claimed by way of taxation costs were highly disproportionate, being $9,200 and $18,900 in
the first two bands. (Note 72) Comparing these to the median awards recovered of $62,700 and
$230,000 in these bands, such taxation costs are the equivalent of 15% and 8% respectively
of the sums recovered. |
|
|
|
|
* |
Compared to the median
sums in these two bands for total costs claimed ($46,400 and $119,400). (Note 73) the median sums claimed for the expense of taxation
represent 20% and 16% of the total costs bill respectively. |
|
|
|
|
* |
A similar comparison of
such taxation costs claimed with profit costs claimed ($42,700 and $100,700) shows that
taxation costs in these two bands were the equivalent of 22% and 19% of such profit costs
respectively. (Note 74) |
|
|
|
|
* |
In relation to median
counsel's fees claimed in these two bands ($61,000 and $60,000), taxation costs claimed
are the equivalent of 15% and 32% respectively. (Note 75) |
|
|
|
| 74. |
As Appendix B Table 5
shows, claimed taxation costs represent a significant percentage of total costs claimed.
Taking the median of total costs claimed for all bands of cases ($129,100), the median of
taxation costs claimed ($18,600) was equivalent to 14%. |
|
|
| (b) |
Appendix B Tables
7, 8 and 11 to 14 |
|
|
| 75. |
While the costs of the
HCAs discussed above were for 336 cases that were all concluded, it is important to note
that it was by no means the case that they all went the full distance. In fact, for
quantified claims, only 10% were disposed of at trial and another 8% disposed of by a
substantive hearing in a non-writ case. (Note 76) In contrast, 27% overall ended in a default judgment,
this figure being 58% for cases where the recovery was less than $120,000. (Note 77) |
|
|
| 76 |
This must be borne in
mind in assessing the costs examined above. Such costs, and again particularly the costs
in the lower bands, must be considered particularly high when one remembers that the
median figures worked with include many cases that were disposed of by default or were
otherwise concluded early on in the proceedings, eg, by summary judgment or consensually.
It is also noteworthy that in the >$3M category two of the eight cases went by default,
(Note 78) this no doubt contributing to relatively low overall costs figures
for that category. |
|
|
| 77. |
Non-provisional HCA
bills (that is, bills other than those below $100,000 and taxed provisionally pursuant to
HCR O 62 r 21(4)) were analysed to correlate costs with the stage when the proceedings
terminated, showing disproportionately high fees. (Note 79) |
|
|
| 77.1 |
The findings on cases
that concluded early suggest that there is already a considerable degree of front-end
loading of costs since large bills were issued despite early settlement. The costs may
also be said to be disproportionate to the amounts recovered. Thus, for the 63 cases begun
by writ, 29 were concluded before the summons for directions with $340,000 as the median
sum recovered and median total costs of $129,400 equivalent to 38%. |
|
|
| 77.2 |
For the 13 cases which
continued after the summons for directions but were concluded before being set down, the
median cumulative costs rose to $198,300 against a median recovery of $593,600, a 33%
equivalent. |
|
|
| 77.3 |
Another four cases
ended after being set down but before trial. The median cumulative costs rose to $315,300,
now 54% of the median amount recovered ($578,800). |
|
|
| 77.4 |
17 cases went to trial,
with 16 proceeding to judgment. The cumulative costs were up to $414,600 representing 59%
of the median amount of $701,800 recovered. |
|
|
| (c) |
Appendix B Tables 9
and 10 |
|
|
| 78. |
Costs are obviously
likely to rise in proportion to the amount of interlocutory activity a case generates. The
non-provisional bills for HCAs were accordingly studied to see how far there was such
interlocutory activity, going beyond routinely necessary hearings like summonses for
directions as indicated in the Notes to Table 9. |
|
|
| 79. |
The results showed a
surprisingly high level of interlocutory activity. (Note 80) Of the 77 HCAs with a quantified value, only 10% did not
have interlocutory applications beyond the routine. Some 45% had between 1 and 3
additional interlocutory applications. The remaining 45% had more than 3, with 29% in the
4 to 6 additional application band, 9% in the 7 to 9 band and 6% making 10 or more such
applications. |
|
|
| 80. |
The results also show
that the most frequent interlocutory applications tend to relate to pleadings (39%),
discovery (17%), unless orders (18%) and time (52%). (Note 81) The percentages refer to the percentage of total cases
involving quantified claims where such an application was made. |
|
|
| (d) |
Appendix B Tables
15 to 32 |
|
|
| 81. |
These Tables perform
the same exercises in relation to personal injury cases. Appendix B, Table 15 indicates an
even greater disproportion than that prevailing in relation to general civil actions. |
|
|
| 81.1 |
Thus, the median cost
of hypothetically recovering the median amount of $100,000 in the lowest band was $127,100
or 127% of the median recovery. Assuming a taxation reducing this to the median costs
allowed in the sum of $90,800, the hypothetical plaintiff's effective recovery is reduced
to $63,700, representing almost exactly half of the cost of the litigation to the
successful party. |
|
|
| 81.2 |
Almost as unacceptable
is the disproportion in Band 2 with median costs claimed ($284,900) representing 90% of
the amount recovered and, after deduction of irrecoverable costs based on median costs
allowed ($236,400), results in a hypothetical effective recovery of $266,500 with costs
claimed representing 107% of that sum. |
|
|
| 82. |
Taxation costs in
personal injury cases also represent a surprisingly large percentage of the total costs
claimed. The median taxation costs figures often exceed 10% of such total costs claimed,
with none falling below 6%. Expert fees could also be significant. Taking median values,
they ranged from 4% to 10% of the total costs, with the higher percentages incurred in
relation to the larger claims. (Note 82) |
|
|
| 83. |
Again, all of these
fees must be viewed in the context of the fact that only a very small percentage of
personal injury cases actually conclude after trial. Of the taxed bill cases studied, some
87% were disposed of by settlement and only 13% proceeded to trial. (Note 83) Although (as discussed later), (Note 84) many cases settled at the courtroom door, the cost
amounts discussed include cases settling at a somewhat earlier stage and before the full
work of preparing for and conducting a trial had taken place. |
|
|
| 84. |
Interlocutory activity
in the personal injury cases among the non-provisional taxed bills surveyed (Note 85) was also frequent. While 28% of such cases stayed with
their routine hearings, 51% had 1 to 3 applications beyond the routine hearings. Another
16% ran to between 4 and 6 applications with the remaining 6% of cases running to over 7
applications. Again the principal categories of interlocutory application concerned
pleadings (35% overall), discovery (24%) and time summonses (28%). (Note 86) |
|
|
| (e) |
Appendix B total
sums |
|
|
| 85. |
The 1,113 taxed bills
examined in Appendices A and B also provide an insight into the order of the sums incurred
by way of legal costs in gross terms. Adding up the costs claimed in these cases gives a
total of $249 million. This represents only what one side in the taxation was charged. If
one assumes that the other side was also represented and involved one set of costs, that
figure may roughly be doubled to arrive at overall costs of about $500 million. |
|
|
| 86. |
By way of comparison,
the entire recurrent expenditure of the Judiciary (comprising 180 judicial officers and
1600 support staff) for 1999-2000 amounted to $928 million. |
|
|
| 87. |
These 1,113 bills,
which comprise only those bills for concluded cases submitted for taxation during the 12
month period between 1 July 1999 and 30 June 2000, obviously constitute only a small
fraction of the total number of cases processed through the courts. As Appendix C Table 1
indicates, the overall annual case load of the High Court in the three years 1998 to 2000
ranged between about 29,000 and 35,000 cases although, given the expense perhaps
understandably, many of the parties were unrepresented. |
