The history of the courts’ attempts to ensure legal costs are proportionate is a strange one. The appeal decision in May v Wavell Group Plc is no exception to that trend.
To recap, Master Rowley, on a line-by-line assessment, reduced the costs claimed from £208,236.54 to £99,655.74. He then concluded that this was still disproportionate for a claim which settled pre-trial for £25,000 and made a further global reduction, to reflect proportionality, down to £35,000 plus VAT.
On appeal, His Honour Judge Dight, CBE concluded that Master Rowley had misinterpreted and misapplied the new proportionality test and concluded a figure of £75,000 plus VAT was proportionate (presumably resulting in a global figure close to £90,000). (There was no challenge to the finding that the reasonable costs were £99,655.74.)
Of the various interesting comments made by the judge, one that stands out is:
“I doubt … that the proper interpretation of the rules requires or indeed entitles a costs judge at the end of an item by item assessment to impose a very substantial reduction on the overall figure without regard to the component parts.”
The issue of whether it is appropriate to reduce a successful litigant’s costs below the level that it was reasonable and necessary for him to incur is one of policy. There were many strong arguments advanced as part of the Jackson consultation process as to why this was wrong, but those arguments did not prevail. (It is equally a matter of policy that means that in the field of personal injury claims, successful defendants are now usually deprived of all the legal costs they have reasonably and necessarily incurred.)
The rules relating to proportionality expressly state:
“Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred”
The express intention of the new rule is that proportionality trumps reasonableness/necessity (ie the assessment of the component parts).
On what basis can it be suggested from the wording of the rules that the test is not designed to “impose a very substantial reduction on the overall figure”? There is none. A County Court judge has decided he does not like the new proportionality test and has therefore sought to re-write the rules. Presumably, he would have the rules read:
“Costs which are disproportionate in amount may be disallowed or reduced to a small extent even if they were reasonably or necessarily incurred”
We have, of course, been here before. The old proportionality test was completely undermined by the Court of Appeal in Lownds v Home Office by the Court ruling that the word “proportionate” (which clearly has one meaning) should be read as “necessary” (which clearly has a completely different meaning).
It was only a matter of time before the judiciary started to try to dismantle the Jackson reforms. Expect more of the same to come.