Costs News

12 July 2018
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Proportionality 1: Notional value of claim not key when money is not the point

It is inappropriate to assess the proportionality of costs only by reference to a notional financial value when money is not the point of the claim, a costs judge has emphasised.

Master Leonard also said that it was hard for one party to argue that the other’s costs were disproportionate when its own budget was three times the amount in dispute.

In Arjomandkhah v Nasrouallahi [2018] EWHC B11 (Costs), the claimant failed to obtain an injunction against the defendant over threats he claimed the latter had made to him after their two-year “close relationship” had come to an end. The claimant was wealthy and the defendant a student of limited means.

The case before Master Leonard was an appeal from a detailed assessment by Costs Officer Piggott of the defendant's costs at £23,253 (including VAT) – the bill was drawn at £34,985 – with a further £3,335 for the costs of the detailed assessment.

The claimant appealed against Mr Piggott's refusal to reduce the assessed costs further on proportionality grounds, with his focus on the low financial value of the claim.

Master Leonard said: “[The claimant’s solicitor’s] submissions invite me, contrary to the clear provisions of the Civil Procedure Rules, to judge proportionality only by reference to a notional financial value derived from the pleaded claim, ignoring the wider criteria expressly set out in the rules.

“CPR 44.3(5)(e) and CPR 44.4(3)(c), given the potential effect of the claim upon the defendant's reputation, are of much more significance in this case than the fact that the claimant was not seeking an award of damages. Mr Piggott, in concluding that her reasonable costs were not disproportionate, put some emphasis on the importance of the matter to the defendant, and he was right to do so.

“I agree with [the defendant’s counsel] that it is inappropriate to judge proportionality only by reference to a notional financial value when money is not the point of the claim. If I were to do so, however, it would have to be measured by reference to all of the criteria set out at CPR 44.4(1) and CPR 44.3(5). It would therefore have to take into account the probable permanent effect of a successful claim upon the defendant which, as I have observed, could have been devastating.”

The master added that the defendant was also correct to say that, in assessing "the sums in issue in the proceedings" as required by CPR 44.3(5)(a), “one must have regard to the costs claimed by the parties”. He continued: “[The claimant] is, of course, quite right in saying that one must not, in circular fashion, conclude that a party's costs are proportionate because disproportionate costs were a feature of the case. Nonetheless, the parties' claimed costs are not, and given the wording of the rules cannot be, irrelevant.”

In this context, the claimant had prepared a costs budget of almost £60,000 and indicated to the defendant that he had every intention of seeking to recover against her costs at that level. “That does not assist the claimant now in arguing that base costs assessed at one third of that figure, incurred in defeating that claim, are disproportionate,” the master said.

He went on to reject multiple criticisms of the defendant’s conduct and upheld the costs officer’s decision.

Virginia Rylatt (Rylatt Chubb) for the claimant; Dr Russell Wilcox (instructed by Sabeers Stone Green) for the defendant.

 

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