Top costs QC: Unacceptable that proportionality test is still not clear

Bacon: We are in a very unhappy place

It is “unacceptable” that there is still no guidance on the proportionality test more than five years after it came into force, a leading costs silk has argued.

Nick Bacon QC of 4 New Square was speaking following the latest application of the test, which saw a circuit judge reduce assessed costs of £116,000 to £75,000.

Speaking at the recent Costs Law Reports conference in London, Mr Bacon complained that it was impossible to divine how judges reached decisions such as this. “Judgments are very good about what the rules say but not how they ended up at the final figure.”

Citing the comments of His Honour Judge Dight in May v Wavell, he said: “Why are we in a position where judges are saying ‘the rules are difficult to apply’? There needs to be something done to make the rules easy to apply.”

Mr Bacon expressed frustration that the Court of Appeal had refused permission to hear May, given that Sir Rupert Jackson had opposed the issue of guidance on the test because he said case law would explain how it should be applied.

“We are in a very unhappy place… Nearly six years have passed and I am still standing here saying I don’t know what your costs are going to be allowed at in your case…

“For me that it is a completely unacceptable state of affairs. Justice can only be administered with some certainty and judges have got proper parameters in which to exercise their judicial judgment.”

Reynolds v One Stop Stores Limited, handed down last month by His Honour Judge Auerbach in Cambridge, was an appeal over a budgeted employer’s liability case with a pleaded claim for special damages of £175,000. At the door of the court, it settled for £50,000.

The budget was £120,000, with £116,000 allowed following a line-by-line assessment. But District Judge Reeves awarded only £75,000 on the basis of proportionality, finding that the claimant had overstated her case.

Mr Bacon said that former costs judge Colin Campbell, who was chairing the conference, had calculated that this sum was “just £285 more than the claimant would have got had the defendant won every single point of dispute… I’ve never won every single point of dispute… These guys did in effect because of the proportionality rule”.

HHJ Auerbach found no error in law in the district judge’s decision. “DJ Reeves did not err in taking proportionality at the end, and in the round, nor in applying it to the whole of the provisional total, that is, to both incurred and budgeted costs.

“He did not fail to consider each of the 44.3(5) factors in turn, and he properly then turned to draw the threads together, coming to a decision on proportionality in the round.

“I also consider that he sufficiently conveyed how those factors interacted and fed into his view on proportionality, when giving his oral decision, building on the earlier discussions during the hearing.

“In short, it is quite clear that he considered that the costs were disproportionate to the sums in issue (about which he took a properly reasoned view), and that this was not a case where the complexity of the litigation, additional work generated by the paying party’s conduct, nor any other factors in the rule 44.3(5) list, had a countervailing impact, such as to lead to a different overall conclusion.”


Read more about the Jackson Reforms in our guide.

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