Legal Cost Specialists

Detailed assessment and proportionality

I have previously questioned the reasoning of Master Rowley, when dealing with the new proportionality test in May v Wavell Group, that:

“The proportionate amount of costs must inevitably be smaller for a case which concludes early than one which reaches a final hearing.”

My criticism was that it ran the danger of confusing what work was reasonable and necessary (the old proportionality test) with what total costs were proportionate.  Inevitably, a matter that proceeds to trial will involve additional costs compared to one that does not, but that is simply part of the first stage of the assessment process.

At the recent Solicitors Costs 2017 conference Master Rowley explained the reasoning behind his decision is that, under the new regime, costs budgets are based on phases.  On assessment, the more phases that have been completed, the greater will be the recoverable costs.  Costs budgets are, of course, meant to produce a proportionate total.  Although the claim in May does not appear to have been costs managed, Master Rowley’s reasoning is that given the approach to costs management, it must follow that proportionate costs on detailed assessment will be lower if a matter settles early (with less phases completed).

Given the existence of costs management by phases, the logic of this is difficult to argue with.

Nevertheless, if is still noteworthy that CPR 44.3(5) does not list the amount of work undertaken or the stage at which the matter settled as being relevant factors when considering whether costs are proportionate.

Further, in May the initially assessed costs of £99,655.74 were reduced to £35,000 plus VAT to reflect proportionality.  This was as against agreed damages of £25,000.  This, of course, begs the question as to what would have been considered proportionate if the matter had proceeded to a full trial.  Sadly, Master Rowley did not share his thoughts on this.

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