Legal Cost Specialists

proportionality

Proportionality after West v Stockport NHS Foundation Trust

By on Oct 31, 2019 | 0 comments

This is the second look at the guidance given on the new proportionality test by the Court of Appeal in West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220. The previous post explored how the Court dealt a fatal blow to the new rule by introducing a test as to whether work was “unavoidable expenditure” (in which case it was to be allowed) and pretended that this was logically different to the “necessarily incurred” test under Lownds. The problem with this judgment does not end there. Remember how the new test was meant to work? The current version of the White Book states at 44.3.3: “The general practice on detailed assessment is to consider the reasonableness of each item that has been challenged and then to consider whether the total sum that would be allowed on that basis is proportionate or not.  If it is not proportionate, the court will then reduce the total figure to a sum which is proportionate.  That is the approach suggested by Jackson LJ in the Review of Civil Litigation Costs: Final Report (December 2010) Pt 1, Ch.3, para.5.13, and endorsed by Lord Neuberger (then Master of the Rolls) in the 15th implementation lecture on the Jackson reforms, entitled Proportionate Costs and given on 29 May 2012.” At the lecture referred to, 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.” The practical effect of this would be: “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...

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Proportionality revised by West v Stockport NHS Foundation Trust

By on Oct 28, 2019 | 3 comments

There has now been time to reflect on the Court of Appeal’s proportionality guidance given in the case of West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220.  And what a sorry mess that guidance was. The first part of the guidance related to the reasonableness and proportionality of the ATE premium.  The Court was concerned with two ATE premiums, each costing £5,088, as against two separate clinical negligence claims that settled for £10,000 and £4,500 respectively. The Court reheated the pre-Jackson decision of Rogers v Merthyr Tydfil County Borough Council [2006] EWCA Civ 1134 and decided, so far as relevant, that it basically remained good law when assessing ATE premiums.  (The key finding in Rogers being: “if the court concludes that it was necessary to incur the staged premium, then as this court’s judgment in Lownds shows, it should be adjudged a proportionate expense”.)  This is surprising given Lownds was clearly overturned by the Jackson reforms, as expressly recognised by the Court here: “we make clear that Lownds must no longer be regarded as good law” Nevertheless, the Court decided that the dead body of Lownds was to be resurrected in the context of assessing ATE premiums: “Specifically, therefore, if the ATE premium is assessed as reasonable, it will not fall to be reduced by any further assessment of proportionality.” It is the reasoning behind this conclusion that is particularly troubling: “This last point raises the wider issue as to whether, when considering proportionality, the judge needs to have regard to every item of cost, or whether there are some costs which ought to be removed from that part of the assessment. We consider that, when the judge comes to consider proportionality, there are some elements of costs which should be left out of account. The exceptions are those items of cost which are fixed and unavoidable, or which have an irreducible minimum, without which the litigation could not have been progressed. Court fees are perhaps the best example.” The Court elaborated: “We recognise that this means that, when undertaking the proportionality exercise, it is those elements of cost which are not inevitable or which are not subject to an irreducible minimum which will be vulnerable to reduction on proportionality grounds in order that...

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Court of Appeal guidance on proportionality

By on Aug 1, 2018 | 0 comments

In a speech given earlier in the year, Lord Justice Jackson recognised that the profession was becoming “impatient” for guidance on the proportionality test from the Court of Appeal.  He concluded: “The remedy lies in their own hands. The Court of Appeal can only decide the cases which come before it.” In May v Wavell Group Plc, an appeal at County Court level, a judge reached the questionable conclusion that the wording of the rule that reads: “Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred” should be interpreted to mean (I paraphrase here): “Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred but not by a very substantial amount” Unsurprisingly, permission was sought to appeal this to the Court of Appeal. The Court of Appeal refused permission. You couldn’t make it...

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Proportionality test – providing specific reasoning

By on Jan 17, 2018 | 0 comments

At the heart of the successful appeal in May v Wavell Group was the appeal judge’s view that, apparently, the issue of proportionality is something readily discoverable once all the relevant factors have been taken into account.  He held: “the construction of the rules relating to the definition of proportionality and their application do not involve a discretion properly so called but require the court to make a judgment on what the rules mean and how they should be applied. That is a matter of law. The application of the rules, once interpreted, require a balance to be undertaken, in that weight (which includes the possibility of no weight) has to be accorded to each of the factors specified by the rules, but that again is the making of a judgment, albeit of a rather broader nature than construction of the rules, rather than the exercise of a discretion.” and: “There may be a limited range of acceptable difference in the total figure once the rules have been applied, in that different judges could legitimately come to slightly different conclusions as to the proportionate sum, and so long as they have applied the rules correctly they should not be open to challenge on appeal.” Given the rules and Practice Direction are entirely silent as to what amounts to “proportionality”, this is a surprising view.  We now have a member of the judiciary who believes that the new proportionality test can be applied in a quasi-scientific manner. Again: “Whether the relationship is reasonable is, in my view, a matter of judgment, rather than discretion, and, as I have said above, requires a costs judge to attribute weight, and sometimes no weight, to each of the factors (a) to (e).” His criticism of Master Rowley’s decision was that: “the final figure in this case does not appear to be based on any specific mathematical calculation nor is there a specific explanation of how the weighting of the various factors resulted in the final figure.” Surely then, the appeal decision undertook just such a careful mathematical calculation and/or gave a specific explanation as to the weighting given when allowing the figure of £75,000 plus VAT.  Here it is: “In those circumstances we...

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Proportionality – May v Wavell Group appeal

By on Jan 16, 2018 | 1 comment

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...

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