Proportionality does not apply to proportionate order

Proportionality does not apply when the court is considering a proportionate costs order, the High Court has ruled – a phrase the judge described as “confusing” for non-costs lawyers by referring to an order that a party pay a proportion of another party’s costs.

“In most, if not all, cases, a clear dividing line can be drawn between the circumstances to be considered under part 44.2 and proportionality,” he said.

The issue arose in Amey LG Limited v Cumbria County Council [2016] EWHC 2946 (TCC), which related to claims made over a highways maintenance contract. The claimant was successful with some of its claims, while the defendant was partially successful with its counterclaim.

In consider what costs order to make, His Honour Judge Stephen Davies, sitting as a High Court judge in Manchester, said the question arose of whether or not the court should also have regard to proportionality when deciding what order to make about costs under part 44.2 and in particular when deciding whether or not to make a proportionate costs order and if so in what amount under part 44.2(6)(a).

He said that, if proportionality had been intended to be a relevant factor under part 44.2, “there can be no doubt that it would have been specifically mentioned”.

However, the “more difficult question”, was whether or not – if the court at the part 44.2 stage was making a proportionate costs order on the basis of conduct, success or admissible offers – should take into account proportionality in doing so.

This created, the judge said, a risk of double jeopardy if on detailed assessment the costs judge was also invited to reduce the receiving party’s costs by reference to the proportionality test in part 44.3.

He concluded: “In most, if not all, cases, a clear dividing line can be drawn between the circumstances to be considered under part 44.2 and proportionality.

“The trial judge should limit his task to addressing whether relevant circumstances such as conduct, success and admissible offers arise and, if so, their impact on the total time and cost of the trial, or the case as a whole, and how – if at all – they ought to be reflected in the costs order made.

“The trial judge should make a proportionate costs order based solely on such considerations, as opposed to the further consideration as to what proportion of the overall costs would have been incurred had the action been pursued in a manner which was proportionate.

“At this stage, the trial judge will have details of the approved costs budgets of the parties, if the case is subject to costs management, and may well have been provided with some details of costs actually incurred for the purpose of making an interim payment on account of costs, but will not be in a position to know whether and if so to what extent costs have been unreasonably incurred, which is of course a matter for detailed assessment.”

HHJ Davies added that if, however, a trial judge was minded to take into account proportionality when deciding what proportionate costs order to make, and to make a discount which expressly or implicitly took into account his assessment of overall proportionality when arriving at a percentage or fractional reduction, “that should be clearly stated and identified in the order and/or the judgment, so that the costs judge will know what the trial judge has taken into account and why when undertaking the detailed assessment at the later stage”.

 

This post was posted in ACL e-Bulletin

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Costs News
Published date
24 Nov 2016

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