Blog for Thomson Reuters Dispute Resolution blog by Francis Kendall, vice-chair of the Association of Costs Lawyers and a practising Costs Lawyer at Kain Knight
Proportionality may not be the only issue to debate in the costs world right now, but it’s probably the biggest one.
My colleague David Bailey-Vella wrote last month about the latest county court ruling which – while on its own terms quite reasonable – only served to muddy the waters further. Wind forward a month, and those waters are muddier still.
Speaking at November’s APIL Costs Conference, Master Brown – who sits in both the Senior Courts Costs Office and as a deputy Queen’s Bench master – said his preferred approach to dealing with proportionality was to address it at the beginning of an assessment, and not the end.
He said the problem with applying proportionality after the line-by-line assessment was that it could look like the judge “having second thoughts” about what they had allowed once the defendant had persuaded them that the value of the claim, for example, was lower than it appeared.
The master observed that Sir Rupert Jackson had indicated that the court should first make an assessment of reasonable costs and then stand back and consider whether the total figure was proportionate.
But in questioning whether this was right, he cited His Honour Judge Dight’s ruling in May v Wavell, which currently stands as the best judicial guidance there is on this issue. In this, the judge said the tests of reasonableness and proportionality were intended to work together.
Master Brown said: “On one reading, this might suggest that proportionality should be part of an assessment of reasonableness: what is reasonable in the circumstances of the case must be a function of what is proportionate. Put another way, it may not be reasonable to spend £10,000 on experts in a claim worth at most £20,000, but may be reasonable to do so where the sum in issue is over £1m.
“On this analysis, proportionality is a matter which needs to be addressed at the outset of an assessment, not the end, because the judge needs to make his or her decision as to reasonableness properly informed as to the relevant 44.5(3) factors in the course of the item-by-item assessment. No determination may then be necessary as to what is a proportionate sum, but it may be that the court will be expected to make determinations as to, for instance, the sums in issue if proportionality and reasonableness are considered side by side.”
It remains a disappointment to many that the Court of Appeal refused permission to appeal May v Wavell, not least because Sir Rupert had opposed the issue of guidance on the proportionality test because he said case law would explain how it should be applied.
Speaking at the recent Association of Costs Lawyers annual conference, top costs counsel Nick Bacon QC said the current state of affairs was “unacceptable”. He criticised the court’s failure to deliver any guidance on the rule, getting on for six years since it was introduced.
Mr Bacon pointed out that “nowhere do the rules say it should be a two-stage test”, but many judges were nonetheless following Sir Rupert’s recommendation. Yet, as Master Brown’s comments showed, not all judges agreed. HHJ Dight in May observed that the rules were difficult to apply; this is an unsatisfactory state of affairs.
Mr Bacon argued that it was “much better” to look at reasonableness and proportionality together, but urged the Court of Appeal “to get hold of this and sort it out”.
But later on in the day, the Senior Costs Judge, Andrew Gordon-Saker, told us that he was “not so hung up” on Court of Appeal guidance. “What would they say?” he asked. “They would probably only be able to deal with the proportionality of the costs of the case in front of them.” He added that there was no more guidance about the old proportionality test than there was now.
He said: “You are experienced costs lawyers. You will know just from your experience just what a proportionate figure is likely to be… We’ll all have been in a detailed assessment for three, four or five days and you end up with the figure you knew you’d end up with.”
He added that he found proportionality brought up in only a minority of cases, because the paying party generally thought the bill it faced was proportionate.
For once, however, I’m not sure the Senior Costs Judge is right. Perhaps we cannot expect the Court of Appeal to tell us what a proportionate figure looks like – crude methods like multiples of damages are obviously unworkable – but they can tell judges the process they need to go through to reach a figure. Too often we see judges do the line-by-line assessment and then reduce the figure, on an apparently arbitrary basis, to a ‘proportionate’ one. How can we be expected to advise our clients on what costs they should budget for when nobody really knows how the proportionality test works.
This article was first published in the Thomson Reuters Dispute Resolution Blog in December 2018.