The new proportionality test, due to come into force in April 2013, has now been formally unveiled in a speech by Lord Neuberger:

“44.4(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.”

Lord Neuberger summarised the aim of the new test as:

“effectively reversing the approach taken in Lownds. In this way, as Sir Rupert said, disproportionate costs, whether necessarily or reasonably incurred, should not be recoverable from the paying party. To put the point quite simply: necessity does not render costs proportionate.”

He anticipates that:

“As such it seems likely that, as the courts develop the law, the approach will be as Sir Rupert described it:

‘. . . 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.”

It is acknowledged that the failure to give any detailed guidance as to how the test will operate may mean:

“there may be a period of slight uncertainty as the case law is developed. … The law on proportionate costs will have to be developed on a case by case basis. This may mean a degree of satellite litigation while the courts work out the law, but we should be ready for that, and I hope it will involve relatively few cases.”

A “a period of slight uncertainty” and “a degree of satellite litigation”? I know who gets my nomination for understatements of the year.

I mentioned the other day the case of Faidi v Elliott Corporation [2012] EWCA Civ 287 and the failure of the parties to consider mediation in a dispute over a wooden floor.

Dominic Regan, writing in the New Law Journal, had this to say:

“The Court of Appeal was not impressed and declared that there must be give and take. It was suggested that a mediation would have been a better investment than the £140,134 chucked at the litigation. A mediator could, for example, have suggested that some rugs might have been strategically placed around the flat, something a judge could not order. Thank the Lord for that. The idea that Lord Justice Ward might start doling out interior design tips à la Laurence Llewelyn-Bowen is too much for me.”

Dominic funny.

Lord Justice Jackson, in Faidi & Anor v Elliot Corporation [2012] EWCA Civ 287, commenting on the failure of the parties to engage in mediation over a claim concerning a dispute over wooden floorboards:

"As it is, neither side wrote to the other proposing mediation until shortly before the hearing in the Court of Appeal. By then huge costs had been incurred. The claimants' costs up to the end of trial were £23,195. The claimants incurred a further £34,609 costs on the appeal. The defendant's costs up to the end of trial were £32,798. The defendant incurred a further £49,532 costs on the appeal. Thus the total costs thrown away amount to £140,134. If the parties were driven by concern for the well being of lawyers, they could have given half that sum to the Solicitors Benevolent Association and then resolved their dispute for a modest fraction of the monies left over."

Light hearted satire and a comprehensive history of maintenance and champerty. BBC comedy at its best: Tom Wrigglesworth's Open Letters: Compensation Culture

A new proportionality test is shortly to be announced, which will come into force in April 2013. Will it be retrospective? Or rather, will the rules committee remember to draft transitional provisions to deal with this?

I have a modest proposal.

When serving fee notes and invoices for disbursements in support of a bill of costs, order these in the same order as they appear in the bill. Secondly, given all items in a bill should be numbered, write the number of the item on the top corner of the invoice or by the corresponding entry in the fee note (if counsel’s fee note includes various items).

This is a simple matter of courtesy to your opponent and will avoid the costs judge going ballistic at you when he loses patience trying to locate the correct invoice/fee note in a disordered bundle.

Another absolutely cracking Association of Costs Lawyers Annual Costs Conference last week.

Speakers included (and this is a non-exhaustive list): His Honour Simon Brown QC, Jeremy Morgan QC, Andrew Post QC, Simon Browne QC, Nicholas Bacon QC and Professor Dominic Regan.

Those on the panel session on Saturday: Master Campbell, Master Gordon-Saker, Master Haworth, Regional Costs Judge Besford, Region Costs Judge Lethem and District Judge McIlwaine.

And to top it all, the keynote speaker was Lord Neuberger, Master of the Rolls. His speech was important enough to be reported in both The Telegraph and the Law Society Gazette (and for the Association of Costs Lawyers to get a mention in both). Nice though all this was, the most important development for the ACL was the clear view expressed by Lord Neuberger, in response to a question from the floor, that he could see no reason why a representative from the ACL should not sit as a member of the new Costs Council.

A copy of the speech can be viewed here (well worth reading): Lord Neuberger of Abbotsbury, Master of the Rolls speech: Association of Costs Lawyers’ Annual Conference 2012.

Excellent, and scathing, article from Dominic Regan in the New Law Journal on the botching of the implementation of the Jackson Reforms.

In addition to criticism of the fact that fixed costs for the fast-track will not happen next year (although see yesterday's post), he expresses concerns as to the new proportionality test.

Although it appears that a new proportionality test in line with Lord Justice Jackson's proposals will be introduced, the rules committee will not be providing a Practice Direction giving guidance as to how the new test will be applied. As Regan notes:

"Absent guidelines, there will be a free for all and satellite litigation will roar away. Remember that the test will apply to every case... Well, now we will have utter uncertainty in potentially any and every dispute. This will make the costs wars look like the teddy bears' picnic."

We are finally starting to see a bit of stability and certainty returning to the personal injury and legal costs world.

Obviously, I am joking.

Those responsible for running the RTA portal recently told the Ministry of Justice that it would take 11 months to amend the portal to encompass RTA claims worth up to £25,000 and a further two years and seven months to build and test a new system for EL and PL claims. Some breathing space then? Don’t count on it.

The government is apparently determined to introduce the expanded RTA claims portal in April 2013, as previously planned.

If that looks like a seismic shift, Legal Futures is reporting that the government is planning to revisit the possibility of raising the small claims track limit for personal injury claims from £1,000 to £5,000 and plans to consult over this issue in the summer. That really would have a profound impact on the PI industry.

Article from June 2009 Solicitors Journal discussing Lord Justice Jackson’s Preliminary Report (what care free and happy times), whether a case that proceeds to summary assessment is to be treated as having settled at “trial” for the purposes of the fixed success fee regime and the issue of disclosure of CFAs (an issue that never seems to go away) now available via Costs Law Articles Archive.

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