The Senior Costs Judge Master Gordon-Saker prefaced his recent decision on proportionality, in Various Claimants (In Wave 1 of the Mirror Newspapers Hacking Litigation) v MGN Ltd  EWHC B13 (Costs), with the warning:
“this judgment should not be taken as any attempt at providing guidance. I say that because I know that anything said about proportionality, at whatever judicial level, is subjected to anxious scrutiny. First this is not a judgment of the Court of Appeal. Secondly the circumstances which give rise to this judgment are very unusual.”
That said, the decision does highlight one aspect of the proportionality test that merits consideration.
Of the various factors the Court must take into account when considering proportionality is:
“any additional work generated by the conduct of the paying party”
The Master summarised his conclusions as follows:
“62. Contrary to the Claimants’ submission, it seems to me that the conduct relied on must be conduct in the litigation rather than the conduct which gave rise to the cause of action. The conduct which caused the wrong will be compensated in damages or other relief. In my view the purpose of r.44.3(5)(d) is to enable the court to take into account that the costs may have been increased because work which would not ordinarily have been required has been required by the way in which the opponent has fought the claim.
63. It also seems to me that the conduct relied on does not need to be misconduct. Had that been intended misconduct could easily have been substituted in the rule for conduct.
64. In the event in my judgment there was no additional work caused by the conduct of the Defendant. That the Defendant chose to deny liability until 6 months before trial did not cause additional work. It caused the claim and the work involved in the claim. If a failure to concede by the party who eventually loses is considered of itself to cause additional work, this factor would apply in every case which did not settle within the relevant pre-action protocol period.
65. The Defendant fought these claims vigorously and did not concede liability at the earliest opportunity. As a consequence it will have to pay a greater sum in costs than if it had not fought the claims so vigorously or had conceded liability earlier. However I am not persuaded that this stance or the matters listed in the Claimant’s written submissions caused additional work in relation to the individual claims.”
(This decision appears to be broadly consistent with the approach taken by Master Rowley in May & Anor v Wavell Group Plc & Anor  EWHC B16 (Costs) at paragraphs 20-24.)
This is an important issue and one where the wording of the rule is not very helpful. The Master is correct that the rule does not use the word “misconduct” and it would be wrong to place so high a test on the provision. On the other hand, “conduct” is, on the face of it, broad enough to cover anything the paying party does; which would include, for example, disputing liability. (It is not, for example, worded as “unreasonable or improper conduct” as per CPR 44.11(1)(b)). However, the Master here treated that as being too low a test.
The Master appears to have interpreted the rule as being designed to catch matters that fall somewhere between the inevitable costs that need to be incurred in light of the fact an opponent has brought/defended the claim and actual misconduct (although additional work caused by misconduct would also clearly be caught by the rule). Presumably this “additional work” would cover such issues as work generated by delay in a party complying with orders, unnecessarily long or irrelevant witness statements being served by the other side or the wasted costs of experts due to a failure to attend medical appointments.
It will be interesting to see if this approach is followed by the higher courts.