The defendant costs specialists

Proportionality and court fees

By on Jun 21, 2016 | 3 comments

Much of the commentary on Master Gordon-Saker’s recent proportionality decision in BNM v MGN Limited [2016] EWHC B13 (Costs) has understandably focused on the reductions made to the “reasonable” costs (approximately a 50% reduction).  However, almost as interesting is what was not reduced.

To remind you of the figures, the Master initially assessed the costs, applying reasonableness alone as follows:

Base profit costs £46,321
Base Counsel’s fees £14,687.50
Court fees £1,310
Base costs of drawing the bill £4,530
Atkins Thomson’s success fee £16,780.83
Counsel’s success fee £4,846.88
ATE premium £61,480
VAT £17,433.24
Total costs £167,389.45

Having concluded this was disproportionate he then, in his own words: “concluded that the sums which had been allowed as reasonable on the line by line assessment were disproportionate and were about twice the sum which would be proportionate. As I had been given the breakdown set out above I gave separate figures for the sums allowed”:

Base profit costs £24,000
Base Counsel’s fees £7,300
Court fees £1,310
Base costs of drawing the bill £2,250
Atkins Thomson’s success fee £7,920
Counsel’s success fee £2,409
ATE premium £30,000
VAT £8,775.80
Total costs £83,964.80

It is not obvious to me that there was any need to provide a breakdown of the further “Jackson adjustment”. It seems artificial to rule that it was reasonable to spend, say, £10,000 on experts’ fees but that this will then be adjusted down to £5,000.  The “Jackson adjustment”, as the second part of the proportionality test, is to ensure that the total the paying party is asked to pay is proportionate to the claim.  This is concerned with the total, not the constituent parts of that total.  The constituent parts are dealt with in the line by line element of the assessment.

Nevertheless, having decided to adopt that approach, the one striking part of the bill that was not reduced was the court fee element. This was left untouched.

On the one hand, I can see why a judge, particularly the Senior Costs Judge, might be reluctant to rule that court fees are disproportionate, with the implicit criticism of the Ministry of Justice (although many judges have done just that).  However, does it not rather miss the point of the new proportionality test to leave them untouched?

The “Jackson adjustment” is not concerned with what it was reasonable or necessary for a receiving to incur in legal costs.  It is solely concerned with what the paying party should pay as a proportionate amount.

The Master reduced the ATE premium by approximately 50% despite concluding it was a reasonable amount and necessary for the Claimant to incur.  The Claimant presumably had no more control over the level of ATE premium than they did the courts fees.  It was simply a cost they had to incur to pursue the claim.

Why should court fees be ring-fenced from the proportionality test?

    3 Comments

  1. Sort of misses the point, in my opinion, which is that the Court fee in this instance is NOT disproportionate. I’m pretty Defendant-minded at the best of times, but however much I try I cannot get to thinking that a Court fee of £1,310.00 is disproportionate against damages of £20k, however you slice it.

    Court fees being calculated as a percentage of the claim now means that they will only be reduced on a proportionality basis as and when the claim itself turns out to be worth a hell of a lot less than it was first envisaged to be worth.

    If and when that happens, I have no (or little) doubt that the likes of Master Gordon-Saker will cheerfully slash the Court fee as much as he has done everything else here, on the basis that had the claim been properly valued, a proportionate Court fee would have been incurred.

    Cash the Pigeon

    21st June 2016

    • So you consider that a fee of £1310 is proportionate for stamping a Claim Form!

      john hall

      28th June 2016

  2. I have to disagree with above post.

    Proportionality is not reduced to just the sums in issue.

    Arguably £1310 is disproportionate to the complexity of the work done i.e. stamp a few forms – there was no CMC hearing.

    There may be a point to be made about whether the new test of proportionality requires a global approach at the end or whether its applied on an item by item or phase basis.

    If not on a phase basis, what is the point of budgeting? Budgets are approved as proproportionate on a phase by phase basis rather than by the total of the budget.

    Robert Pettitt

    21st June 2016

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