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Disagreement over whether new proportionality rule trumps indemnity costs


Regan: no attempt to dilute indemnity costs

Masters in the Senior Courts Costs Office are mulling over whether the amended overriding objective undermines the concept of indemnity costs, it was claimed last week.

Professor Dominic Regan reported that “one senior costs judge” is arguing that the added reference in rule 1 of the Civil Procedure Rules for cases to be dealt with justly and at proportionate cost has a universal impact, including on indemnity costs.

He was speaking at a seminar run by NeoLaw [2], the new brand for the business services practice and London office of midlands firm Keelys, which has a well-known costs practice run by Simon Murray.

Professor Regan, however, said he disagreed with the judge’s assessment. “Yes indeed part 1 does represent the guiding principles that shape judicial discretion but it cannot contradict express measures enacted, such as the very reference to indemnity costs,” he explained.

There has been no attempt to dilute indemnity costs, he continued, and they form a fundamental part of part 36. Nonetheless he thought it would prove an interesting point to run.

Professor Regan’s case was arguably strengthened by the first speech on the reforms given by Lord Justice Jackson since his return to the bench following illness.

His address to the Australian Bar Association Conference in Bologna, Italy last week was mainly just a recitation of his reforms, but on the new proportionality test he said: “It is intended that the new proportionality rule will dominate the way in which costs are assessed on the standard basis.”

Jackson LJ also took a swipe at the “many vested interests” that came together to oppose his recommendation for fixed costs across the fast-track, in the same way as they did to thwart Lord Woolf bid to achieve it 13 years ago.

“I understand, however, that there have recently been second thoughts within the Ministry of Justice and that rules for fast-track fixed costs may be introduced later this year,” he said.