27 October, 2011
Filed UnderLegal Costs
Even a stopped clock tells the correct time twice a day.
And so it has come to pass that even I have turned out to be correct on a couple of occasions.
Back in June, reporting in the Solicitors Journal on Master Hurst’s preliminary ruling on proportionality in Motto v Trafigura Ltd  EWHC 90201 (Costs), I started by paraphrasing Humpty Dumpty:
“proportionality means just what I choose it to mean – neither more nor less”
It will be recalled that Master Hurst had relied on Morland J’s judgment in Giambrone v JMC Holidays  EWHC 2932 (QB):
“For my part I do not accept that if a costs judge has ruled at the outset of a detailed assessment that the bill as a whole is not dispropor-tionate he is precluded from deciding that an item or a number of items are or appear disproportionate having regard to the ‘matters in issue’.”
Based on this passage Master Hurst had concluded:
“Therefore, in my view, there is no reason why a costs judge, having found at the outset on a global view, that the costs have the appearance of being disproportionate, should be precluded from deciding that an item or number of items are in fact proportionate, and thus that the test of necessity should not apply to them.”
I concluded the article:
“So we now, apparently, have the situation whereby:
1. If the costs overall are deemed to be proportionate, individual items will be allowed if they were reasonable even if not necessary, unless the court decides that individual items are disproportionate, in which case they may be disallowed if they are reasonable but not necessary.
2. If the costs overall are deemed to be disproportionate, individual items will be allowed if they were both reasonable and necessary, unless the court decides that the individual items are proportionate, in which case they may be allowed if they are reasonable but not necessary.
At this stage you may want to have a quiet lie down in a dark room. If a costs judge can allow or disallow individual items depending on whether they are individually deemed to be proportionate or disproportionate, what is the point of the global approach, as required by the Lownds judgment, at the outset of the detailed assessment? The courts have progressively managed to render the concept of proportionality entirely meaningless.”
The Court of Appeal reached a similar conclusion in Motto v Trafigura  EWCA Civ 1150 when allowing the Defendants’ appeal from Master Hurst’s decison. They concluded that once a court has determined that the costs overall are disproportionate then the test of necessity must be applied to each item within the bill.