A Comparative Analysis of the Adequacy of Costs Awarded to Successful Litigants by Nigerian Courts and Those in the United Kingdom

Introduction

The principle of awarding costs to successful litigants is a fundamental part of civil litigation worldwide, aimed at compensating the victorious party for expenses reasonably incurred during legal proceedings. In Nigeria, the award of costs is regulated by statutory provisions, rules of court, and judicial discretion. However, concerns persist about the adequacy of these costs, particularly when compared to those awarded in jurisdictions like the United Kingdom, from which Nigeria derived much of its legal framework. This paper critically examines the adequacy of costs awarded in Nigerian courts vis-à-vis the UK, with reference to legal principles, statutory provisions, and case law examples.

The Legal Framework for Awarding Costs

Nigeria
1. Statutory Basis:
Costs in Nigerian courts are governed by various procedural rules such as the High Court Rules, Court of Appeal Rules, and Supreme Court Rules. Section 16 of the High Court of Lagos State (Civil Procedure) Rules, for instance, provides that costs should follow the event unless the court orders otherwise.
2. Discretionary Nature:
Courts have wide discretion in awarding costs. This discretion is guided by considerations such as the conduct of the parties, complexity of the case, and time expended in litigation. However, the amounts awarded are often nominal and rarely reflect the actual expenses incurred by litigants.
3. Precedents:
In Tukur v. Government of Gongola State (1989) 4 NWLR (Pt. 117) 517, the Supreme Court emphasized that costs should serve as a partial indemnity to the successful litigant, though this indemnity is far from comprehensive.

United Kingdom
1. Statutory Basis:
The UK courts operate under the Civil Procedure Rules (CPR) 1998, which outline a comprehensive framework for the award of costs. Rule 44.2 states that the general rule is for costs to follow the event, with detailed guidance on assessing the quantum of costs.
2. Cost Recovery Principles:
The UK employs two primary principles:
• Standard Basis: Costs are awarded to the extent that they are reasonable and proportionate to the issues.
• Indemnity Basis: This allows for a higher level of cost recovery where conduct warrants it, with ambiguities resolved in favor of the receiving party.
3. Precedents:
In Three Rivers District Council v. Bank of England (No. 6) [2006] EWHC 816 (Comm), the court demonstrated the thorough assessment of costs, ensuring substantial indemnity for the successful party.

Comparative Analysis of Cost Adequacy

1. Quantum of Costs

In Nigeria, costs awarded are often nominal, reflecting symbolic compensation rather than actual expenses. For example, in Chevron Nigeria Ltd. v. Omoregha (2015) LPELR-25938(CA), the court awarded ₦50,000 as costs, which was disproportionate to the litigant’s actual legal expenses.

Conversely, in the UK, costs are meticulously assessed based on detailed schedules and bills submitted by the parties. The concept of “cost budgeting” ensures that litigants have a clear understanding of potential cost implications, as seen in Harrison v. University Hospitals Coventry & Warwickshire NHS Trust [2017] EWCA Civ 792, where the cost management process ensured equitable recovery.

2. Procedural Mechanisms for Cost Assessment

The UK’s CPR provides robust mechanisms such as detailed assessment hearings to determine reasonable costs. In Nigeria, such assessments are rare, with courts often awarding costs arbitrarily. This lack of transparency contributes to the perception of inadequacy.

3. Costs as a Deterrent

In the UK, the potential for substantial cost liability acts as a deterrent against frivolous litigation. In Fox v. Foundation Piling Ltd. [2011] EWCA Civ 790, the losing party was held liable for substantial costs due to their unreasonable conduct. In Nigeria, the relatively low quantum of costs reduces their deterrent effect.

4. Accessibility to Justice

While the UK’s approach to cost recovery is comprehensive, critics argue that it may impede access to justice for litigants with limited resources. Nigeria, on the other hand, balances this concern with its more modest cost awards, albeit at the expense of fairness to successful litigants.

Challenges in the Nigerian Context

Judicial Discretion:

1. The broad discretion granted to judges often results in inconsistent and arbitrary cost awards.
2. Economic Realities: The depreciating value of the Naira and rising legal costs mean that even substantial awards in nominal terms often fail to reflect real expenses.
3. Absence of Clear Guidelines: Unlike the UK, Nigerian courts lack detailed guidelines for cost assessment, leading to subjective and often inadequate awards.

Recommendations for Reform

1. Adoption of Cost Budgeting: Nigerian courts could introduce cost budgeting frameworks similar to the UK, requiring parties to submit estimated costs early in the litigation process.
2. Legislative Intervention: Amendments to procedural rules should establish clear guidelines for the calculation of costs, ensuring greater predictability and fairness.
3. Training for Judges: Specialized training on cost assessment would help judges award costs that more accurately reflect the realities of litigation.
4. Periodic Review of Cost Scales: Regular updates to cost scales in light of economic conditions would ensure that awards remain adequate.

Conclusion

The comparison between Nigeria and the UK reveals significant inadequacies in the costs awarded by Nigerian courts. While the UK system provides for detailed and equitable cost recovery, the Nigerian approach is marked by inconsistencies and arbitrariness. Reforming Nigeria’s cost regime to incorporate best practices from jurisdictions like the UK would enhance fairness, deter frivolous litigation, and ensure that successful litigants are adequately compensated for their expenses.

Chidi Ezenwafor, MCArb
Past Secretary, NBA Abuja Branch

Source: Theloyalnigerialawyer