Legal Cost Specialists

New proportionality test

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.

15 thoughts on “New proportionality test”

  1. So, unsurprisingly, Rupert Jackson’s original longstop proposal with no PD guidance triumphed over all the other suggestions made by the Working Committee.

    One thing that has been somewhat overlooked is how this will tie in with costs budgeting. Budgets, if imposed, aim to control costs in line with the overriding objective (PD 51G para 4.2). The overriding objective includes proportionality (CPR 1.1 (2)(c)). So, in addition to reducing the budget to ensure the costs are reasonably, will a budgeting judge also then be able to apply his own ‘longstop’ and further reduce the budget on grounds of proportionality.

    If so, this is going to be a huge shock to many – especially if Master Hurst’s decision in Henry v BBC is upheld and budgets are as hard to go behind on detailed assessment as he suggests.

    Detailed assessments – ah yes, I remember those…

  2. it would seem that we are no longer wanted within the judicial sector. Personally i do not see costs budgetting as the way ahead for us to survive – client’s will soon enough be doing themselves (they will have time to fill when all the lower value claims become small claims)

    I would be interested to see a survey of those in the profession that actually feel secure in their job for the forseeable future and not just the next two years whilst all these jackson points are pushed to test cases

    Can a survey be run on forum?

  3. Is there an increase in people joining the profession or is it people already in the profession joining the ACL though?

    I agree with annon @ 11.06 – arn’t we just basically now waiting until such time as the solicitor’s figure out how easy it is to do a budget themselves? Once the time recording systems catch up with adequate data capture options, budgets will be a breeze and IMO unlikely to require a costs draftsman’s input.

    Am i missing something?

  4. increased ACL membership does not mean more people in the profession

    I would interpret this as more people outside the ACL having even more fears than those within and seeking to protect their position as best as they can

    Or is there a stat that there are now even more people joining costs full stop?

  5. Doom indeed! Sorry but i cant see a costs draftsman/Lawyer with very little or no experiance of preparing budgets being instructed. If they are i can see an avalanche of potential claims on PI policies if they get it wrong – which they will!!! Of course then PI premiums will go sky high due to the sudden increase in claims, which could be substantial. Those large sausage factory firms out there are in for a shock! Prepare now!!! get out while you can or go back to a one man band like me and enjoy the 9-5pm 5 day weeks with weekends to myself. No more 90 hours weeks for me or sleepless nights!!

  6. if all you doom and gloomists would kindly leave now and have done with, it will leave room for (1) the ones left and (2) the sensible ones whom embrace the changes and know there will be an increase in work for drafters with sense and knowledge (and I exclude the many, many “negotiators” from that bracket)

  7. sorry for holding an opinion. My opinion is based upon my own fears for future

    I am in-house and only deal with multi track of significant value so I am more protected than most. Notwithstanding this I hold fears

    Dont delude yourself that change is always for the good. The fact that the changes are being flung in with no thought whatsoever cannot be good. But you embrace those changes, it’s yoru perogative as it is mine to hold fears

  8. It’s very typical of the older and more experienced costs professionals to have the ‘I’m alright Jack’ attitude. It must be very disheartening for the young folk entering the profession.

  9. That’s my point – I am not of the I am alright Jack opinion – I am very much concerned.

    I said I am “more protected than most” that’s a far cry from “I am all right Jack”

    If you note my comments earlier I am clearly stating that I have grave concerns

  10. And sorry, I have another 35 odd years to retirement – I have every right to hold my concerns this being my only trade of 14 years

  11. I would be more than happy to leave thank you!I have been sensible for the last 28 years and will continue to be so! I just wish you would all wake up and stop giving false hope.You have to be realistic in your expectations for the future. Tough times ahead and those just coming into the profession will find it very hard given the fact that work will be more complex and difficult to find once the reforms bed in!

  12. Annon – I wasn’t referring to you. I too work in-house and have roughly 35 years left to retirement. Whilst I am concerned, I have a feeling it will be a blessing in disguise. If you have something about you and know your stuff, then I am sure there will be many an open door.

  13. sorry, for that was aimed at me …

    i just dont see that costs budgetting is that door. They said that for HCCP for family legal aid – that didnt come to anything

    The only increase in work that i foresee is that of solicitor and own client disputes

Leave a Comment

Your email address will not be published. Required fields are marked *

Post a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Scroll to Top