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Post – 2013 Proportionality Test: Breakthru or Hammer to Fall? (Queen, 1989 and 1984, respectively)

At face value this is a fantastic outcome for Queen guitarist Brian May and actress wife, Anita Dobson, but can Claimant’s finally relax in relation to the post-2013 proportionality test?  Our Susie Power, Costs Consultant, reports.

The recent appeal of Brian May has produced an outcome which many of us in the costs world expected to see. In brief, Brian May originally agreed an early settlement of his private nuisance case for £25,000.00. A Bill of Costs was prepared in the sum of £208,236.58 (incl VAT) which was subject to detailed assessment by Master Rowley. An item-by-item assessment was conducted, and following this, the bill was reduced by more than 50% to £99,000.00. However, once the item-by-item assessment was completed, a further deduction was applied on the basis of proportionality reducing the costs to £35,000.00 + VAT (around 75% of the Bill of Costs as drawn).

The appeal rested on the argument that the deduction applied using the post-2013 proportionality test following the item-by-item assessment (which was not being challenged) by Master Rowley was misapplied. His Honour Judge Dight agreed with the appellant and awarded £75,000.00 + VAT in costs.

So, what did we learn from this appeal…

1. The five factors (CPR 44.3(5) https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs#rule44.3) which are actively involved in consideration of proportionality must always be addressed, HHJ Dight specifically referring to the sums of dispute and the complexity in the litigation.
2. The costs should reflect the overall picture of the litigation. Whilst this does include damages in comparison to costs and complexity of the litigation under factors which need to be considered, such factors as conduct of the parties, volume of work involved, complexity of medical evidence, etc. also need to be considered. It should be noted that HHJ Dight stated that wider factors need to be considered and not just those specifically referred to in the rules.
3. An objective stance needs to be taken as to reasonableness and proportionality. This objectivity should allow each case to be awarded their just costs, as such two similar cases in their substantive matter conducted by the same ‘grade’ of fee earner from any firm in the same area should recover similar costs.

It should be noted that there is no mention above in relation to hourly rates. A reduction in this area before considering a Bill of Costs can substantially reduce a bill before proportionality is even considered. Therefore, a large reduction at the outset due to hourly rates with a further significant reduction during item-by-item assessment can seem unfair and disproportionate.

It can be agreed that this ruling will be welcomed by Claimants as it reiterates that extreme, unjustified reductions go against the rules.

However, be warned! This appeal has not negated these rules. Judges can still complete an item-by-item assessment and then apply an overall reduction at the end due to proportionality. This final reduction does need to be justifiable and based on reason, not just a subjective opinion.

Many proportionality arguments can be addressed prior to, as well as during, detailed assessment. This, of course, goes hand-in-hand with choosing the right costs draftsmen and advocates to present your Bill of Costs. Contact PIC today and let us help you achieve great costs recovery.

PIC offer a wide range of training to include:-

1. Cost Budgets (this training has been provided to both APIL and AvMA)
2. Proportionality
3. New electronic bill training, compulsory from April 2018 (this training has been provided to APIL)
4. An essential costs update
5. Any training session required bespoke to your needs.

If you would like to arrange a training session at your firm click here.   If you have any queries in relation to this article and would like to contact Susie click here.