Expert’s costs and their recoverability
After settling their disputes in this case, the parties found themselves unable to agree the quantum of the receiving party’s costs to be included in the settlement figure. They therefore applied for the recoverable costs to be determined.
The principal issue between the parties on the costs bill concerned experts’ costs. In particular, the defenders argued that the decision to use some five separate expert witnesses was unreasonable and irrecoverable; it was said that their evidence was repetitive, and the number of witnesses called was excessive given that only one witness’ evidence was actually relied upon throughout the negotiations.
The Court of Session (Lady Scott) awarded the expenses sought without qualification, and certified the five witnesses. Her view was the pursuer’s reliance on one witness in particular when compiling the statement of claim did not mean it was unreasonable to obtain a second expert opinion for the wider purpose of preparing the proof. Reasonableness had to take into account what was needed for preparation for the proof, as well as for the proof itself.
Recoverability of costs is often uppermost in the parties’ minds; the moral victory is rarely worth it alone. This case demonstrates a surprisingly liberal approach to awarding costs which might not be followed south of the border. Of course, now that most cases are covered by costs budgeting, the issue in England & Wales might not be so contentious, since the default position is the recoverable costs will be governed by the approved budget (although of course that means if you get the budget wrong, a haircut on costs is likely to follow). There are of course two ways of looking at cost budgeting; a good thing, in that it controls the bill in advance and provides transparency which can aid settlement. Alternatively, and in particular where the case turns out to be more complex than first thought, the risk is that the real cost of the case departs more and more from the approved budget, but without the case generating sufficient circumstances to give an application to increase the budget any real prospect of success. Anecdotally at least, there is some evidence that parties are alive to that second situation in particular, with domestic arbitration clauses enjoying a (mild) upswing as a result of costs budgeting.
Whether that is true or not, in litigation at least cost budgeting is here to stay; recent reforms have significantly lifted the costs cap, for example, so that budgeting applies to all but the very largest cases. Experts need to be accurate in their cost forecasting and keep the solicitors briefed as to where they are as against their budget as the case progresses. This is likely to require new skills and new procedures for many to produce internal costs budgets and forecasts of the likely time taken to carry out particular tasks, many of them to be completed months hence, and when the forecast is to be provided without much of the key information.