The defendant costs specialists

Guidance on the new proportionality test

By on Oct 27, 2014 | 10 comments

The new Senior Costs Judge Master Gordon-Saker recently suggested there was no need for further guidance on the new proportionality test. He said:

“It is said that we will need guidance on how to apply the new test. I disagree. The guidance is already there. It is likely that somebody will in some case or another seek to appeal the approach that has been taken. But I would suggest that there is no reason to suppose that the court hearing the appeal will do other than restate the guidance that has already been given by Jackson LJ in his final report:

… 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.”

This is to be contrasted with the views of Professor Dominic Regan, writing in the New Law Journal, that:

“it is going to cost a lot of money by way of test cases to determine the new, sensible approach to proportionate costs”

So, which view is correct?

In one sense, I would suggest they are both wrong.

A more detailed analysis of this issue can be seen here, but the problem boils down to the fact the new test is probably unworkable. On the one hand, guidance is clearly needed as to how the court should approach the issue of proportionality where, for example, a routine claim settles for £50,000 and the “reasonable” costs are assessed at £200,000. What should the court reduce this to applying the new proportionality test? If the answer to this is obvious from the guidance already given, I have yet to hear a costs judge or costs practitioner explain it to me. Without further guidance there will be the most extreme and absurd inconsistency from court to court and judge to judge. This goes far beyond any issue of judicial discretion. Justice requires a level of predictability and certainty that cannot happen without further guidance.

However, what meaningful guidance can the Court of Appeal provide that does not amount to some type of fixed tariff or a percentage of the damages recovered? To introduce this across the board would go far further than anything Lord Justice Jackson recommended.

We are thus faced with the situation where further guidance is urgently needed but there is nothing meaningful which can be said which does not lead down an entirely unintended route.

    10 Comments

  1. The new test is just morally wrong in my opinion.

    They say it will have regard to all of the facts, but bet your bottom dollar it will only have have regard to the value, so the paying party that pushed every issue to the limit will then get the benefit of proportionality at the back end.

    wrong

    abcde

    27th October 2014

  2. “The new test is just morally wrong in my opinion”

    A bold statement, that. Why is it “morally wrong” for an approved and appointed Court judge to exercise his experience and discretion when determining what is an appropriate fee to allow between contesting parties? Isn’t it in fact “morally wrong” for Receiving Parties to present bills which have little basis in the reality of the reasonable and necessary work needed on a case, and has no regard whatsoever for what is really between the parties??

    Here’s an idea. Before a solicitor can claim their costs from the otherside, they have to demonstrate they have sent their whole bill to their client, withholding their damages for the exercise, and their client has agreed and approved the solicitors fees. That should flush them out and have less comments of this type

    Anonymous

    27th October 2014

  3. You refer to reasonable and necessary work. The judge decides what is reasonable and necessary. I’m fine to this point, including if the judge cuts out mass swathes of work on the basis it wasn’t necessary or is excessive in amount

    I just draw the line as to the removing of work that is deemed necessary and has already been adjusted to reflect a reasonable amount

    abcde

    27th October 2014

  4. @ abcde

    You miss the point. “reasonable & necessary”, INCLUDES consideration as to what is right for the case to be paid between the parties.

    It may well be right, that a case requires a Grade B solicitor, and that he requires to do X amount of work; That does NOT mean however, that the final sum, is the one to be paid between the parties, and thus on the new rule, requires to be reduced.

    For too long, Receiving Parties have glibly run litigation without recourse to their clients, whom have been blind to their solicitors fees, as the solicitors, irrespective of saying “its a private retainer, of course the client is paying”, will never dream of letting their clients know how inefficient they are and how much they charge. Let these self same solicitors now write to their clients and say “well, the judge said the work was reasonable at X, but ordered the other side to only pay Y, so here’s my bill….”

    Anonymous

    28th October 2014

  5. No, i do not miss the point

    1. My statement was an opinion and my opinion

    2. ““reasonable & necessary”, INCLUDES consideration as to what is right for the case to be paid between the parties.” – actually no, that is proportionality. That fact the costs are reasonable and necessary is to an extent now irrelevant as the “new” proportionality test trumps necessity.

    And just to re-iterate, I am not missing anything, I just dont agree with it, hence “The new test is just morally wrong in my opinion”

    emphasis on “in my opinion”

    abcde

    28th October 2014

  6. Simon, did you write this article at 5:33 am or was it in fact 4:33 am due to the clock not being updated. You would think after all these years of dealing with costs that sleep would not be a problem..

    The cost crusader

    28th October 2014

  7. Neither. Possibly a few days before. The posts are then set to automatically publish when I’m still tucked up safely in bed.

    Simon Gibbs

    28th October 2014

  8. Any views on the costs budgeting comments in the speech? Should unreasonable costs be allowed if they are within the costs budget or should the costs budget operate only to prevent costs exceeding the budget rather than permitting unreasonable costs if costs are in budget.

    Also the views re: a stay on Coventry would not usually be permitted are the opposite of every barristers view I have seen on the point (only 3 to be fair so not an exhaustive survey of the bar).

    'king costs

    29th October 2014

  9. it appears my previous reply to abcde was considered unsuitable, as it has not been published

    let me just say, therefore, reasonable and necessary are STILL a feature of the new proportionality test, read CPR 44.3(2) please. Also, your “opinion” is expressed as something being “morally wrong”. Such “opinions” require justifying, and you do not, indeed you now backpedal from it by seeking to deflect from the issue…are you a trainee politician?

    Anonymous

    31st October 2014

  10. It’s double jeopardy – thats why its wrong

    I am not back pedalling at all. It just seems you are intent upon stirring a war of words. Believe it or not, there is always a range of opinion.

    Whilst Reasonable and necessary are part of proportionality, they involve only an assessment of what is necessary and what is a reasonable amount. They do not involve the consideration of what is reasonable to pay. What is reasonable to pay is a 2nd stage and that is the stage I disagree with

    abcde

    31st October 2014

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