Costs News

11 July 2019
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High Court rejects appeal over master’s comments on proportionality test

The Senior Costs Judge did not misdirect himself in observing that costs he found proportionate under the pre-2013 rule would not have been so had the case been run under the new test, the High Court has ruled.

Mrs Justice Lambert said Master Gordon-Saker could have expressed himself “more clearly”, but he made no error of law.

East Sussex Fire and Rescue Service v Austin [2019] EWHC 1455 (QB) arose from a large firework explosion which killed two men. Timothy Austin was one of the firefighters at the scene and suffered a significant psychological reaction to witnessing the explosion and the aftermath.

In the claim that followed in negligence and for breach of statutory duty, he was separately represented from two groups of claimants because of a potential conflict of interest arising with other firefighters due to his seniority and operational role on the day.

Following judgment on liability in favour of the claimants, the defendant fire service made a part 36 offer of £25,000 which he accepted. The base costs he claimed were £275,000. Gross of success fees, insurance premium, the costs of preparation of the bill of costs itself and VAT, the bill of costs was £798,554.

During the course of the assessment, which was based on the pre-April 2013 rules, Master Gordon-Saker made a series of ex tempore rulings, including that the base fees, viewed globally, were not disproportionate. He recorded that, in conducting the proportionality exercise at the outset of the assessment, he had to balance the modest nature of the award against other factors; namely an eight-day trial, complex legal arguments and the importance of the matter to Mr Austin.

In a statement that was at the root of the appeal, he said: “It is difficult that the law requires us to step back in time when applying the old proportionality test, because we are becoming more used to applying the new proportionality test and I have to say that, if we did apply the new proportionality test to this case, the inevitable conclusion would be that the costs claimed are indeed obviously disproportionate. The old proportionality test was rather gentler and more generous.”

He concluded that the base costs were not disproportionate although they were high, and it would be open to the paying party to contend on an item-by-item assessment that particular items were disproportionate.

The defendant, represented by Roger Mallalieu, argued that the master misdirected himself by saying the costs would be disproportionate under the current regime, but not under the old regime, and that the old test was gentler and more generous.

Lambert J – sitting with Master Rowley as assessor – said: “I am against Mr Mallalieu, notwithstanding his cogent submissions, for two reasons: first, Mr Mallalieu's submission requires me to consider a short section of the ex tempore ruling in isolation from the observations of the Master which came before and after.

“Second, although it must be accepted that the meaning of the impugned section of the ruling is not immediately clear on a superficial reading, a closer scrutiny in context leads to the conclusion that the master was drawing attention only to the fact that the global assessment of proportionality is now undertaken (typically) after, rather than before, the item-by-item assessment and that generally the current regime is tougher than the regime it replaced. Neither of these observations is wrong.”

The judge said the “linguistic context” of the comments were the master considering each of the relevant factors set out in CPR 44.5(3) as in force before 1 April 2013 and which weighed most heavily. “The master's approach was correct,” she said.

Lambert J found: “Although the master referred to the ‘new test’ and the ‘old test’, I do not find that the master was, in using those terms, suggesting that different factors informed the global proportionality assessment under the former and current rules. Viewed in context, the master was simply making the point that the global proportionality assessment under the former rules was undertaken at the first stage of the detailed assessment and that it preceded the item-by-item assessment, whereas under the current rules the proportionality assessment is typically undertaken after the item-by-item assessment.”

There was nothing wrong in his observation about the impact of the different tests, she said. “The comment is no more than a common-sense reflection upon the different point in the detailed assessment at which the global proportionality test is currently undertaken.”

Similarly, suggesting that the old test was "rather gentler and more generous" was uncontroversial, Lambert J said.

“The section of the ruling may not have been particularly clearly expressed and it would have been preferable if the master had mentioned specifically that disproportionate costs will now be reduced so that they bear a reasonable relationship to the factors now set out in CPR 44.3(5), irrespective of necessity and reasonableness, but allowance must be made for the fact that this was an ex tempore ruling and that the Master was using the phrases ‘old proportionality test’ and ‘new proportionality test’ as short hand for the general approach to assessment under the old and new rules.

“I therefore refuse this ground of appeal. There are two sentences in the ruling which might have been expressed more clearly but, when viewed in context, they reveal no error of law.”

Roger Mallalieu (instructed by Clyde and Co) for the appellant, and Mark James (instructed by Thompsons) for the respondent.

 

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