John Wilson, Managing Proprietor, John Wilson Partners: Viewpoint

Viewpoint: John Wilson

In the round-up of significant legal and non-constitutional reforms adopted throughout the course of 2016, as well as in the highlights of the overview of this chapter, I have referred to in some detail the work of the Law Reform Commission Programme. I quoted from that programme of work in regard to the proposed work of the Law Reform Commission on legal reforms to deal with the long-standing problem of the law delays.

It is well known that litigation in the courts of first instance in Sri Lanka, particularly the District Courts, is lengthy and time-consuming and that the procedure is quite rigid and cumbersome.

Draft amendments to the Civil Procedure Code, which governs the conduct of litigation in the courts of first instance, have been prepared and have been under discussion for some time.

I am of the view that many of the problems caused by the large number of pending actions and the large number of actions being instituted could be dealt with very quickly by the simple reform of publishing an order under, and in terms of, section 214 of the Civil Procedure Code. Section 214 provides that all bills of costs, whether between parties or between a registered attorney and his or her client, shall be taxed by the Registrar of the Court according to such rates as may be prescribed.

The general practice of the courts of first instance in Sri Lanka is that if costs have been sought by a litigant in his or her pleadings, the court would, in its judgment, make an order for costs in favour of the successful party. An order for costs must, in terms of the Civil Procedure Code, be subject to a process of taxation by the Registrar of the Court.

Rates were prescribed many years ago in 1997 and the reality of the rates is that a successful litigant who recovers taxed costs would recover an amount which would be a fraction of the actual costs of litigation – probably less than 3% in most cases. The result of this process is that defendants who do not have any realistic basis on which to defend an action will continue to defend actions with an aim of frustrating litigants in the hope that litigants will give up and go away.

There is no incentive to litigants whose cases are weak to settle claims outside the court procedure, since the possibility of having to pay significant costs when losing the litigation simply does not arise.

In my view, if a more realistic regime of costs were instituted, this would result in fewer cases being needlessly litigated and would encourage parties to reach settlements. Furthermore, there would be fewer cases and the workload of the country’s courts would be significantly reduced.

While significant reform to civil procedure may be desirable, such reforms themselves will likely create uncertainty and lead to more delay.

As such, it is my view that the simplest reform that should be experimented with, in the first instance, is introducing and implementing a more realistic regime for taxation and recovery of costs.

In particular, the requirement for a separate action to be instituted to recover costs should be removed and a mechanism introduced into the Civil Procedure Code to enable costs to be recovered along with the initial judgment.

One of the criteria by which a country is evaluated in regard to its investment climate – and even in regard to the rule of law – is the ease of resolving disputes fairly, expeditiously and effectively in the jurisdiction in question.

If Sri Lanka is to build upon the solid foundation that it has created in the last two years and enable an environment for the rule of law to flourish – thereby with the hope of attracting increased volumes of foreign direct investment – it is imperative that simple reforms, such as the reform of the regime of costs, be implemented without delay.