Privy Council gives guidance on departing from prescribed costs – Robert Strang represented successful appellant

Privy Council gives guidance on departing from prescribed costs – Robert Strang, led by Ramesh L Maharaj SC together with Vijaya Maharaj, Michael Rooplal and Isa Dookie of the Trinidad bar, represented the successful appellant.

In a judgment delivered on 26 September 2023 in the case of Rollin Clifton Bertrand v Anthony Elias [2023] UKPC 34, an appeal from Trinidad and Tobago, the Privy Council gave guidance on the circumstances in which the court may, at the conclusion of proceedings, opt against applying the prescribed costs regime and order that costs be assessed.

In deciding to order that costs be assessed, the Privy Council identified a number of factors, some of which are of general application and which will apply equally to the question whether to opt against prescribed costs at an earlier stage in proceedings.

The factors of general application at any stage of the proceedings are discussed in more detail below, and in summary are:

1. Whether the importance of the claim is disproportionate to its monetary value;
2. Whether the complexity of the claim is significant and likely to contribute substantially to a disparity between actual and prescribed costs;
3. Where there is a disparity between prescribed costs and actual costs, whether prescribed costs might result in an inequality of arms.

This judgment is therefore of importance not only for Trinidad and Tobago and the application of Part 67 of its Civil Proceedings Rules (the T&T CPR). It will also guide the Eastern Caribbean Supreme Court in the application of Part 65 of the ECSC Civil Procedure Rules, which follows the same scheme as Part 67 of the T&T CPR. It will be useful to the Supreme Court of The Bahamas in the application of Part 72 of the new Bahamian Civil Procedure Rules, which also provide for prescribed costs in a somewhat different scheme. And it may be treated as useful guidance in Barbados which, while no longer having the Privy Council as its apex court, has similar provisions at Part 65 of the Supreme Court (Civil Procedure) Rules.

The general rule in each of these jurisdictions is that costs will be prescribed costs: that is to say, costs are quantified on a prescribed scale against the value of the claim.

In T&T and the ECSC (and Barbados), if a party wishes to avoid prescribed costs, they can apply to the court to set a costs budget (T&T CPR Rule 67.8; ECSC CPR Rule 65.8; Barbados SCCPR Rule 65.8). That application must be made before the first case management conference.

In addition, in those jurisdictions and in The Bahamas, if a party takes the view that the prescribed costs scale will lead to an award that would be too low or too high to be a fair and proportionate recovery of costs, they can apply to the court for an order directing that prescribed costs be calculated on the basis of some higher or lower sum than the actual value of the claim (T&T Rule 67.6; ECSC Rule 65.6; Bahamas Rule 72.6; Barbados Rule 65.6).

In the ECSC and The Bahamas, such an application can be made at any time before trial; in T&T (and Barbados) it must be made at a case management conference.

In all cases, the sooner the application is made, the better. A prescribed costs regime provides litigants with a measure of certainty; that purpose is not served if the parties can too easily diverge from prescribed costs at a late stage in proceedings.

In addition, even at the conclusion of a case, the court retains a discretion to abandon the prescribed costs regime and to order that costs be assessed. The existence of the discretion was confirmed by the Board in this appeal (paragraph 42, confirming dicta of the Board in Rampersad v Ramlal [2022] UKPC 50).

It will, however, be exercised only in exceptional circumstances. At paragraph 63 the Board said:

The starting point in relation to discretion to order costs to be assessed is that it should not be exercised to undermine the purposes of prescribed costs which includes providing a measure of certainty to the public through having a costs regime where the amount of prescribed costs directly correlates with, and is proportionate to, the value of the claim. Accordingly, the discretion will only be exercised for good reasons and in exceptional cases.

In this case, the Board found itself in the position of exercising the discretion afresh and found that there were good reasons to reject the prescribed costs regime and order that costs be assessed.

The case concerned a defamation claim brought by the chief executive of a group of companies, and by two companies under his control, against a shareholder who had criticised the chief executive at a shareholders’ meeting, complaining that he had not given truthful or accurate information at previous meetings. The claimants instructed senior counsel, as did the defendant in response.

At an interim stage, but shortly after the first CMC, the defendant applied to the court for an order, in advance, that costs be assessed at the conclusion of proceedings, alternatively for an order stipulating a value for the claim. The stated reason was that recovery of prescribed costs would be too low relative to actual costs (an estimate of which was set out). In other words, this was a somewhat bungled attempt, by the wrong route, to obtain an order for an alternative to prescribed costs, which should have been done at the CMC by one of the methods above. The court dismissed the application finding it be misconceived or premature.

The claim then advanced up to the eve of trial, when it was abandoned by all three claimants in unusual circumstances. Shortly before trial the chief executive was removed as a director of the two claimant companies. Under a new board, the two companies decided not to proceed with the defamation claim and on the morning of the first day of trial they sought the court’s leave to discontinue. They told the court that their view was that the claim was “ill-founded” and personal to their former chief executive. As for him, having learned that the companies intended to discontinue, he had filed a notice of discontinuance the previous day.

Had prescribed costs been awarded in this case, it was not in dispute that the award would not have come near to compensating the defendant for the costs he had incurred. Awards of damages for defamation in Trinidad and Tobago are relatively low; costs quantified on the prescribed scale by reference to the value of the claim would have been a tiny fraction of the actual costs incurred in defending the claim to trial.

The Board’s reasons for finding this to be an exceptional case and for ordering assessed costs rather than prescribed costs (in circumstances where, as the Board found, the reasonable estimate of actual costs was hugely disproportionate to the likely amount of prescribed costs) were as follows:

1. First, a powerful reason for departing from the general rule was that the companies had acknowledged that the proceedings they had brought were ill-founded; the prescribed costs regime is for genuine claims and should not be used to protect them from the consequence of reimbursing the defendant for the costs of defending ill-founded proceedings.
2. Second, the chief executive could have continued with his action but abandoned it after finding out that the companies were discontinuing; the Board inferred that he too effectively acknowledged that his claim was ill-founded.
3. Third, the claimants had been on notice since the defendant’s interim application of the likely amount of actual costs that he would incur up to trial and, knowing these to be disproportionate to prescribed costs, persisted right up to the door of the court in pursuing an ill-founded claim.
4. Fourth, a relevant factor in relation to quantification is whether the importance of the claim to the parties or the wider public is disproportionate to its monetary value; in this claim the allegations were serious and engaged the public interest, given the claimants’ involvement in important commercial and public positions; there was a glaring disparity between the value of the claim and its importance.
5. Fifth, where a case involves relatively complex issues and the estimate of actual costs is disproportionate to the likely amount of prescribed costs, there is a risk that the prescribed costs regime could act to affect a party’s access to justice; however, it is inherent in any system of prescribed costs that there will be ‘swings and roundabouts’, so the complexity must be significant and contribute substantially to the disproportion between actual costs and prescribed costs; this was such a case.
6. Sixth, in circumstances of a huge disproportion between actual costs and prescribed costs, applying the prescribed costs regime in defamation proceedings could adversely affect freedom of speech; many litigants would be intimidated and silenced if they knew that they would have to incur substantial costs but only recover a fraction of them as prescribed costs even if successful in defending proceedings.
7. Seventh, where there is a great disparity with actual costs, prescribed costs can result in an inequality of arms against well-resourced litigants (because a well-resourced litigant will be less troubled by an inability to recover the full costs of litigating); a factor in the exercise of discretion in this case was to protect the defendant, an individual up against well-resourced claimants, and to vindicate his decision to spend his own personal outlay to achieve equality of arms.

Readers will have noticed that while the first three reasons relied upon by the Board relate specifically to the exceptional circumstances at the close of the case which justified a late decision to opt against prescribed costs, the other four reasons would also have been factors if an application had been made at an earlier stage: under Rule 65.6 for an order that costs be calculated against a higher value; or under Rule 65.8 for a costs budget.

These factors identified by the Board will therefore be of guidance to all litigants considering whether to opt against prescribed costs and apply for an order to set a budget or to calculate costs against a higher value:

1. Whether the importance of the claim is disproportionate to its monetary value;
2. Whether the complexity of the claim is significant and likely to contribute substantially to a disparity between actual and prescribed costs;
3. Whether prescribed costs might result in an inequality of arms (in particular for a litigant who can ill afford the likely disparity between actual and prescribed costs); and
4. In defamation claims in particular, whether the disparity between actual and prescribed costs, and the consequent inability of a party to recover the full costs of defending its speech, might adversely affect that party’s freedom of speech.

The Board’s judgment can be found here.