Proportionality and budgeted cases

Catherine Moran – Costs Lawyer

Catherine Moran, Costs Lawyer at PIC reports on the case of Sarah Jane Reynolds v One Stop Stores Limited, 21 September 2018, HHJ Auerbach

The judgement can be viewed on Gordon Exall’s highly informative website – Civil Litigation Brief by clicking here

This case was an appeal against a Detailed Assessment Hearing, relating to costs of an employer liability claim.

The claim related to wrist injury suffered by the Claimant. The Defendant made an early admission of negligence and put forward an early Part 36 Offer in the sum of £35,000.00, which was rejected. Causation and quantum remained in dispute. However, the parties ultimately agreed damages in the sum of £50,000.00 just before the matter proceeded to a three day trial.

The matter had been subject to costs budgeting, and the Court had previously recorded that the Claimant’s budget appeared disproportionate.

On assessment the District Judge decided to deal with proportionality on a global basis at the end of the assessment, rather than considering proportionality on an item by item basis.

The District Judge did not find “good reason” to depart from the Claimant’s budget, and prior to considering proportionality, assessed the Claimant’s base costs at £115,906.09. After hearing submissions on proportionality the base costs were reduced to £75,000.00.

The Claimant appealed solely in respect of the decision on proportionality, on four grounds; (1) the learned District Judge had erred in considering proportionality by reference to the settled amount of £50,000.00. He should have considered proportionality relative to the claim for special damages of £174,975.60, together with general damages; (2) The learned District Judge had erred in finding the litigation not to be complex: there were multiple experts who were to give oral evidence; (3) The Judge had wrongly failed to recognise that the litigation had been prolonged by the conduct of the Defendant only substantially increasing their offer at the doors of the Court; (4) the District Judge had erred in failing to attribute appropriate weight to each of the give factors in CPR 44.3(5), and to have reduced the award on an arbitrary basis, with no explanation of how the weighting of the various factors resulted in the final figure.

The Appeal failed on all four grounds. CPR 44 does not prescribe at what stage or stages in the conduct of a detailed assessment the Court should address proportionality. It is open to the assessing Judge to decide, given the nature of the issues of the case, whether to focus on the proportionality of one or more elements of the overall costs, or consider the proportionality of the overall provisional total, taken as a whole.

Proportionality at the detailed assessment stage applies to all of the costs, both those which were, at the costs budgeting hearing, incurred costs, and those which were budgeted costs. The budged costs are susceptible to proportionality review, notwithstanding that, upon initial consideration, the Court will not depart from the budget without good reason. At the assessment stage the Court is entitled to reapply the proportionality test with the benefit of different information and with the benefit of hindsight.

The Court must engage with the CPR 44.3(5) factors, but is not required to assign each factor a precise numerical weighting. The reduction can be broad-brush and does not need to be mathematical.

In this matter the District Judge had considered each of the topics in CPR 44.3(5). The Judge had not automatically taken the settlement amount to be the measure of the sums in issue, which would have been wrong, but had borne in mind that the Claimant’s credibility was in issue. The Judge had taken a reasoned view as to the complexity and conduct issues.

Our Comments

This is a County Court decision and therefore not binding. However, the case provides interesting guidance on the approach Courts will take in dealing with proportionality in budgeted cases. It is important to be aware that on assessments Courts may well reduce costs to take into account proportionality issues, even where the Bill of Costs falls within the approved Budgeted amount. This reinforces the Harrison view that proportionality trumps a Costs Budget. It is therefore important to make sure that costs are thoroughly justified by way of file notes, and in the Bill of Costs itself.

It is encouraging that this case highlights that it is not the agreed damages that are relevant figure for considering the ‘amount or value of any money or property involved’ in the claim. The Court highlighted that this approach would be wrong. The Court should consider the value of the claim as stated on the Claim Form. The agreed damages reflect litigation risks and are not an accurate reflection of the full potential value of the claim.

We are always happy to advise on any costs issue, both at the budgeting stage and during the assessment process.

Click here to contact Catherine with any queries relating to this article or if you would like to arrange an in-house training session at your firm.


Catherine Moran ~ Costs Lawyer ~ Partners in Costs