Who needs Fixed Costs!

The case of BNM and MGN Limited  is one of the first cases to really demonstrate the power of CPR 44.3 (2) (‘Jackson test of proportionality’), which states:

Where the amount of costs is to be assessed on the standard basis, the court will –

(a) only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and

(b) resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party.

Background

The Claimant was a primary school teacher who had been involved in a relationship with a Premier League footballer.  The Claimant lost her mobile phone and information from the phone fell into the hands of the Defendant, who subsequently sent a freelance journalist to attend upon the Claimant to enquire about the relationship.  This lead to a complaint by the Claimant to the Defendant and the subsequent instruction by the Claimant of Atkins Thomson Solicitors.

Atkins Thomson acted under a CFA dated 18 April 2013.  On 25 July 2013 ATE insurance was obtained.  CFAs were also entered into with Counsel.

The claim settled for £20,000.00 and the Defendant agreed to pay the Claimant’s reasonable costs to be subject to detailed assessment if not agreed.

Detailed Assessment

The parties were unable to agree costs and the matter was listed for a detailed assessment hearing before the Senior Costs Judge, Master Gordon-Saker.

The Bill of Costs totalled £241,817.00 and following detailed assessment it was reduced to £167,389.45.  The Master then sat back and using his power under CPR 44.3 (2) reduced the Bill further to £83,964.80.  This was a sum that the Master felt was a proportionate amount for the claim taking into account the value and facts of the claim.

The case demonstrates the new era of proportionality and the power of CPR 44.3 (2) on detailed assessment. In fact at paragraph 20 of his judgment, Master Gordon-Saker said the following:

“it is clear that the new test of proportionality was intended to bring about a real change in the assessment of costs”

Are Fixed Costs Required?

Fixed costs is a topic on the Government’s agenda at the moment.  LJ Jackson is pushing for the implementation of fixed costs in order to ensure proportionality in each and every case.  However, are fixed costs required when the Courts have the power (through costs management, costs capping and detailed assessment) to reduce a disproportionate claim for costs to a proportionate level?

Other key Points

1. CPR 44.3 (2) (‘Jackson test of proportionality’) applies to additional liabilities incurred after 1 April 2013 (where those additional liabilities still remain recoverable);
2. When applying the ‘Jackson’ test of proportionality, the Court does not have to consider the amount of any additional liability separately from the base costs.

Summary

It will now be interesting to see whether the wider judiciary takes note of the judgment in this case and starts to tackle any other claims for disproportionate costs by applying CPR 44.3 (2). We shall see with interest how this area of costs law now starts to develop.
This blog was prepared by Andrew McAulay who is a Partner and the head of the Costs and Litigation Funding team at Clarion.  Andrew can be contacted at andrew.mcaulay@clarionsolicitors.com or on 0113 336 3334.