I have previously posted blogs on the topic of proportionality (Who needs fixed costs! and Proportionality continues to get tougher) and made the comment that it would be interesting to see how the area and application of proportionality develops.
Recently we have seen proportionality develop in the area of Family Law. In the case of Kay v Kay [2016] EWHC 2002 (Fam) the successful party’s claim for costs was reduced on Summary Assessment from £33,813.00 to £3,737.50. This was a reduction of approximately 89%.
The Summary Assessment was carried out by Mr Justice Macdonald and he felt that the claim for costs was unreasonable and excessive taking into account the circumstances of the case. He said the following; “it is remarkable that such a significant sum of money has been spent by these two parents arguing over a single question the answer to which was indisputable from the outset. The costs incurred in this case were disproportionate to the single issue at hand”.
During the Summary Assessment the Judge reduced items heavily such as hourly rates, attendances upon the client and work done on documents. Interestingly, no schedule (breakdown of time) was attached to the Statement of Costs in relation to the documents work. This no doubt contributed to the significant costs reduction.
The Judge conducted the Summary Assessment by assessing the claims within the statement of costs on a summary basis, which brought the figure of £3,737.50. What he did not appear to do was assess the costs and then stand back and reduce the costs to what he thought was a proportionate amount. Clearly, in this case the Judge must have felt comfortable with the ‘end’ amount or when he conducted the summary assessment he applied the tests of reasonableness and proportionality at the same time. In the cases of Who needs fixed costs! and Proportionality continues to get tougher (both detailed assessments and not summary assessments) both Judges determined what was reasonable and then ‘sat back’ and reduced the claims for costs to what they deemed were proportionate amounts. This is the approach that LJ Jackson set out in his final report at Part 1, chapter 3, paragraph 5.13:
In other words, I propose that in an assessment of costs on the standard basis, proportionality should prevail over reasonableness and the proportionality test should be applied on a global basis. The court should first make an assessment of reasonable costs, having regard to the individual items in the bill, the time reasonably spent on those items and the other factors listed in CPR rule 44.5(3). The court should then stand back and consider whether the total figure is proportionate. If the total figure is not proportionate, the court should make an appropriate reduction. There is already a precedent for this approach in relation to the assessment of legal aid costs in criminal proceedings: see R v Supreme Court Taxing Office ex p John Singh and Co [1997] 1 Costs LR 49.
The case demonstrates that the new test of proportionality is not just limited to the areas of Civil and Commercial Litigation, but equally applies to the area of Family Law. Effectively, regardless of the area of law, where legal costs are to be assessed pursuant to CPR 44.3(2) then the new test of proportionality (the ‘Jackson’ test) applies.
Finally, this is another example of the Courts tackling disproportionate legal costs and demonstrates that the Court has the tools already to deal with disproportionate claims for costs and that fixed costs are not required.
This blog was prepared by Andrew McAulay who is a Partner at Clarion and the Head of the Costs and Litigation Funding department. Andrew can be contacted at andrew.mcaulay@clarionsolicitors.com or on 0113 336 3334.
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