Costs News

12 February 2018
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Proportionality - The Vision

BLOG BY CLAIRE GREEN, COUNCIL MEMBER OF THE ASSOCIATION OF COSTS LAWYERS FOR THOMSON REUTERS DISPUTE RESOLUTION BLOG

Though the article contains nods to Queen (the case involves guitarist Brian May), ultimately it relates to Lord Justice Jackson’s vision of proportionality and the differing interpretations that have followed.

What was his One Vision?

His view was that a successful litigant should be compensated for his costs, but the burden on the paying party should be commensurate with the nature of the litigation. He felt that the Lownds test was no longer satisfactory and that costs which were disproportionate should not be payable even if they were reasonable and necessary.

He proposed that the proportionality test should be applied on a global basis and that the court should consider individual items before standing back and looking at the total figure. If the total figure remained disproportionate, then the court should make a further reduction.

Simples! Or maybe not.

Dr May and his wife won a neighbour dispute for noise nuisance when they accepted the defendant’s offer of £25,000 damages. The costs bill served totalled £208,236. On assessment, Master Rowley applied an item-by-item assessment for reasonableness, resulting in a reduction to £99,655.

He then took ‘the step back’ and found the costs to be disproportionate. On the grounds that the claim was never going to be more than the £25,000 accepted, that there was nothing complex about this type of litigation, and that the matter had settled early in proceedings, he applied the global approach, resulting in an award of £35,000.

It is important to note that he reviewed the post April 2013 decisions when setting out his conclusions.

Another bill bites the dust!

Unsurprisingly, Dr May and his wife appealed on the basis of the sums in issue, the complexity of the litigation, the relevance of the stage reached at settlement and the global approach.

The appeal was heard by His Honour Judge Dight with Master Whalan sitting as an assessor in the Central London County Court.

The court held that damages for nuisance were for diminution in value of the land affected by the nuisance, which was in line with the value band pleaded in the claim form.

In respect of complexity, it was held that a claim in nuisance required sophisticated pleading and expert evidence. Comparing this type of claim to the range of claims made in the county court, it would readily be seen that it was towards the more complex end.

The court found that the stage the claim had reached was relevant to the assessment of proportionality, but Master Rowley’s judgment seemed to say that early settlement required a greater reduction in the overall costs. This was a view not shared by the court.

The court did not challenge the use of a global approach but found that the final figure had no specific explanation as how the various factors had been weighed, nor did it appear to be based on any specific mathematic calculations.

In the circumstances it was concluded that Master Rowley had mis-interpreted and mis-applied the new proportionality test.

There were various decisions that led to this conclusion.

BNM v MGN [2017] EWCA Civ 1767 was a phone-hacking case in which the claim settled for £20,000 damages with the defendant giving undertakings. The case spanned the new test’s introduction on 1 April 2013.

The bill was £247,817, which Master Gordon-Saker reduced on an item-by-item basis to £167,389. When he took his step back and applied the global approach, the bill was further reduced to £84,855.

Whilst the sum in issue was modest and the value of the non-monetary relief not substantial, he said the claim would have had to been issued. He concluded that the costs should bear a reasonable relationship to the value of the claim.

He did not take the view that this type of litigation was particularly complex, somewhat surprisingly given that he commented on the specialist nature of the work and importance to the claimant.

Compare and contrast this decision with that in Hobbs v Guy’s & St Thomas’ NHS Foundation Trust [2015] EWHC B20 (Costs), in which Master O’Hare found clinical negligence claims to have more complexity and involve more work than others of similar value. That claim settled for £3,500.

In undertaking his assessment in BNM, Master Gordon-Saker had applied the new proportionality test throughout. This aspect of the ‘global’ approach was appealed and it was upheld that the old and new tests remained.

So many different views? Actually, there does appear to be some consistency in so far as the valuation of a claim has relevance to the new test. The grey area seems to be how much.

Less so complexity, which seems to be a matter of interpretation by the individual judge.

Stage of settlement, or ‘the time spent on the case’ (CPR 44.4 (3)(f)) is clearly relevant and was cited in all three of the cases mentioned. The watchword seems to be not to fall into the trap of aligning reductions with early settlement.

As far as the global approach is concerned; both the old and new tests rely upon it. However, the old test placed the global approach before the item-by-item analysis, whereas the new test reverses the order.

Again, all three cases adopted the global approach, but noting Master Gordon-Saker’s comment that “that the new test of proportionality was intended to bring about a real change in the assessment of costs”, it is wrong to apply it to pre-LASPO work.

Claire Green is a council member of the Association of Costs Lawyers.

This article was first published in the Thomson Reuters Dispute Resolution Blog on 12 February 2018.

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