Proportionality should be addressed at the beginning of an assessment, and not the end, because it should inform the reasonableness of the costs, a costs judge has suggested.
Master Brown, who is also a deputy Queen’s Bench master, said that 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.
In a speech to last week’s APIL Costs Conference, Master Brown said 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.
In questioning whether this was right, he cited His Honour Judge Dight’s much-discussed ruling in May v Wavell. 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.”
Speaking at the Association of Costs Lawyers’ annual conference on Friday, leading costs barrister Nick Bacon QC of 4 New Square reiterated his criticism of the Court of Appeal’s failure to provide guidance on the proportionality test more than five years since it came into force.
He pointed out that “nowhere do the rules say it should be a two-stage test”, but many judges are nonetheless following Sir Rupert Jackson’s report – indeed, he was recently on a judicial training course where that was the method taught.
It was “completely unacceptable” that even costs judges did not agree with how the test should work, let alone lawyers and clients.
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”.
During a later session, however, the Senior Costs Judge, Andrew Gordon-Saker, said 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.
“You are experienced costs lawyers,” he told the gathering. “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.