Payment on account of costs pending taxation
In recent times, the taxation of costs whereby the amount of legal costs payable was independently determined, has been hampered by significant delays. As a result solicitors and barristers often did not get paid until long after a matter had concluded.
As a result the Dublin Solicitors Bar Association (“DSBA”) set-up a taskforce to examine the issue with a view to finding a solution. An apparent solution was indeed found in Order 99 of the Rules of the Superior Courts (Costs) which allows the Court to deal with costs at any stage of the proceedings and indeed the payment of such costs. The matter was raised with the President of the High Court, President Kelly, and he subsequently issued High Court Practice Direction 71 in late April of this year which states:-
“In view of long delays in the taxation of costs, the attention of practitioners is drawn to the provisions of Order 99, rule 1B (5).
I direct that in all cases where there is no dispute as to the liability for the payment of costs and in any other case which a judge thinks appropriate, an order may be made directing payment of a reasonable sum on account of costs within such period as may be specified by the judge pending the taxation of such costs. Such orders may be made on an undertaking being given by the solicitor for the successful party that, in the event of taxation realising a smaller sum than that directed to be paid on account, such overpayment will be repaid.”
It is notable that the solution was found in a rule that was already in place rather than needing to seek new legislation to solve the issue.
The effect of the Practice Direction is to essentially alert all parties of the existence of a mechanism under which an interim payment of costs on account can be sought pending a final adjudication at taxation. As noted, the rule permits a payment being made “notwithstanding that the proceedings have not been concluded”.
How such applications will work in practice remains to be seen but it is envisaged that it will remain informal and without the need for a motion and affidavit. It would seem the ideal scenario would be to have counsel apply for an order under Order 99 when a matter has been concluded before the Judge hearing the matter and there is no doubt that there is a liability to pay costs. It would therefore be advisable to have some idea as to what the costs of the proceedings are when appearing so as to be in a strong position to seek an appropriate level of payment.
It would also be advisable when seeking such an order to be in a position to coherently vouch the costs being sought. This would not be for the purpose of proving full costs but rather to make a bona fide case for the level of costs.
Finally, given that an undertaking to repay any overpayments is required, it will be important to seek a level of payment that one is reasonably confident is less than the final figure that will be determined by the Taxing Master. The High Court practice seems to have developed to require a report from a Legal Cost Accountant before it will make an order pursuant to the new practice direction.
In respect of the party making a payment under such an order, it would also be advisable that the payment is not sufficiently large to discourage a conclusion to taxation.
This is a welcome development for practitioners who faced having to carry unpaid costs. It also diminishes the ability to use the stalling taxation system as a tactical mechanism to pressure a settlement on the costs point.
On a further positive note, there is now a second Taxing Master and the backlogs in the system are now beginning to clear. The backlogs should also be reduced further once the new regime is implemented pursuant to the Legal Services Regulation Act 2015 where there will be three Taxing Masters (to be re-named Legal Cost Adjudicators).
The applications will not be granted as a matter of course and a number of in the High Court judges (Chancery and Common Law Lists in particular) have been rejecting the applications citing the clearing of the backlogs in the taxation system. However, applications have been more successful in Personal Injuries actions in particular.
This should not discourage the use of applications pursuant to Order 99, although it is now possible to get a date for taxation approximately 6-8 weeks away, that date is likely to be the first in a number of dates with there still being no guarantee of a speedy conclusion before the Taxing Master or the handing down of a decision. There is also the possibility of appeals of such decisions to contend with.