New proportionality test for costs

By on Mar 18, 2013 | 2 comments

When the new costs rules were first published the relevant transitional provision concerning the new proportionality test read:

“Paragraphs (2)(a) and (5) do not apply in relation to cases commenced before 1 April 2013 and in relation to such cases, rule 44.4(2)(a) as it was in force immediately before 1 April 2013 will apply instead.”

This caused two problems. Firstly, the phrase “cases commenced” was ambiguous. Secondly, it appeared to be retrospective in effect meaning the new test would apply in some case to work already undertaken.

This problem was, partly, recognised and it was announced that Richard LJ said the rule committee “acknowledged the force” of the Law Society’s argument and was to insert a further transitional provision within rule 44.3:

“to the effect that costs incurred in respect of work done before 1 April 2013 will not be disallowed if they would have been allowed under the rules in force immediately before that date”.

That would have meant all work done pre-April 2013 would be subject to the old test and any work done post-April 2013 subject to the new test.

We now have the Civil Procedure (Amendment No.2) Rules 2013 to deal with this. However, it does something totally different again:

“Paragraphs (2)(a) and (5) do not apply in relation to—

(a) cases commenced before 1st April 2013; or
(b) costs incurred in respect of work done before 1st April 2013,

and in relation to such cases or costs, rule 44.4.(2)(a) as it was in force immediately before 1st April 2013 will apply instead.”

It’s staggering that they have left in the ambiguous wording “cases commenced” (unless the Association of Costs Lawyers and the Costs Bar have been giving bungs to the committee to ensure the rules are as ambiguous and badly drafted as possible to generate as much satellite litigation as possible).

Nevertheless, from the context I am treating “cases commenced” as meaning “cases where proceedings have been issued” (how hard would it have been to use that wording?).

What this means therefore is that the old proportionality test will apply to all work done for cases where proceedings have been issued before 1 April 2013. Perhaps this is a cunning wheeze by the Ministry of Justice to generate a huge injection of cash as solicitors arrange to issue on everything before 1 April 2013.

I was going to start using the abbreviation JD (for Jackson Day) to describe 1 April 2013 but I’m decided AFD (April Fools’ Day) is more appropriate.

The following variations therefore apply:

  • All work done pre-AFD – Old proportionality test applied to all work.
  • All work done post-AFD – New proportionality test applied to all work.
  • Work done pre and post-AFD. Proceedings not issued – Old proportionality test applied to work done pre-AFD. New proportionality test applied to work done post-AFD.
  • Work done pre and post-AFD. Proceedings issued pre-AFD – Old proportionality test applied to all work.
  • Work done pre and post-AFD. Proceedings issued post-AFD – Old proportionality test applied to work done pre-AFD. New proportionality test applied to work done post-AFD.

Simple.

    2 Comments

  1. so, do you forsee (as I do) that bills will have to be split pre-post 01.04, to ensure the appropriate test of proportionality is applied in each part?

    and how do you see the courts dealing with cases where they do not consider at the start of assessment the costs are disproportionate – will we have defendants jumping on the final figure and asking for it to be cut anyway? how will DJ’s deal with that?

    Anonymous

    18th March 2013

  2. When proportionality came in after the advent of CPR, I recall that the vogue was to split the bills pre and post CPR to stop the (supposedly) tougher test biting on pre-CPR costs. That was certainly the way that I was going to approach it.

    Tired Costs Draftsman

    18th March 2013

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  2. Splitting bills of costs | Legal Costs Blog - [...] Secondly, so far as the courts “applying a differently proportionality test for work done during these two periods”, not…

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