Proportionality is a hot topic in the legal costs world at the moment and in the last 4 months there has been a flurry of cases from the Senior Courts Costs Office and the High Court. The cases are as follows:
The outcomes in each of these cases are of course case specific. Every case is different, and therefore in practice, this is what makes the application of the new test of proportionality difficult to predict.
It is now fundamentally important for all litigators and costs lawyers to have a sound knowledge of CPR 44.3 (5):
Costs incurred are proportionate if they bear a reasonable relationship to –
(a) the sums in issue in the proceedings;
(b) the value of any non-monetary relief in issue in the proceedings;
(c) the complexity of the litigation;
(d) any additional work generated by the conduct of the paying party; and
(e) any wider factors involved in the proceedings, such as reputation or public importance.
Lawyers should be able to link case facts/details to the above factors and articulate those facts to a Judge at a CCMC, summary assessment or to a Costs Judge on detailed assessment (or provisional assessment).
A really important point is that value shouldn’t be given superior status, as shown in the cases of Various Claimants -v- MGN Ltd  and Marcura & DA-Desk FZ-LLC -v- Nisomar Ventures Limited & Claus Hyldager (costs can be higher than damages). However, in practice, Judge’s are often tactically led by Defendants to place a greater weight on value. It is therefore important for Claimants to be alive to this and ensure the Judge gives equal consideration to each factor in CPR 44.5 (3) and to encourage the Judge to adopt a ‘holistic’ approach (May & May -v- Wavell Group & Dr Bizzari ) when applying the new test of proportionality.
The ’May’ case is the only case to date to give some real judicial guidance in relation to the test and how it should be applied. The decision in that case was appealed, but last week permission to appeal was refused by the Court of Appeal. Many legal experts expected the ‘May’ Appeal to provide the Court of Appeal with the chance to issue some clarity and guidance on the test – they will now have to wait a bit longer.
The area of proportionality is starting to develop and we will see many more decisions in 2018, with some appearing harsh and some lenient. The application of the test involves a large degree of judicial discretion and therefore practitioners should not expect a great deal of consistency. If certainty is what practitioners want then fixed costs is the remedy, which is of course not an attractive alternative!
This blog was prepared by Andrew McAulay who is a Partner at Clarion and the Head of the Costs and Litigation Funding team. He can be contacted on 0113 336 3334 or at firstname.lastname@example.org