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Howard Dean

Howard Dean


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Proportionality - Does the new approach bring back the old test of proportionality?

Costs Aware Autumn 2019

West v Stockport NHS Foundation Trust (and related appeal) (2019)EWCA Civ 1220

On 17 July 19 the Court of Appeal handed down judgment on a number of issues arising out of the respondent’s successful challenge to the amount of the After The Event (ATE) insurance premium recoverable by the appellants in two clinical negligence claims.

More importantly, they raised the wider point as to what is the proper approach to reasonableness and proportionality upon the assessment of costs.

In setting out its views on the right approach to costs assessment, the court was anxious not to force the judiciary, when assessing a bill of costs, to follow inflexible or overly-complex rules that would restrict them.

It was clear from the numerous authorities cited during the course of this hearing and from the submissions of counsel that there was an absence of consistency in the way in which bills of costs are assessed. The Court of Appeal gave the following guidance on what could be an appropriate and consistent approach.

  1. Line by line assessment

The judge should go through the bill line-by-line, assessing how reasonable each item is. If the judge considers it possible, appropriate and convenient when undertaking that exercise, he or she may also address the proportionality of any particular item at the same time.

That is because, although reasonableness and proportionality are conceptual distinct, there can be an overlap between them, not least because reasonableness may be a necessary condition of proportionality.

This will be a matter for the judge. It will apply, for example, when the judge considers an item to be clearly disproportionate, irrespective of the final figures.

  1. Assessment as to proportionality

Upon conclusion of the line-by-line assessment, there will be a total figure which the judge considers to be reasonable. That total figure will have involved an assessment of every item of cost, including court fees, the ATE premium (where applicable) and the like.

The proportionality of that total figure must be assessed by reference to both CPR 44.3(5) and CPR 44.4(1).

If that total figure is found to be

(a) Proportionate, then no further assessment is required.

(b) Disproportionate, then a further assessment is required.

  1. Further assessment as to what is proportionate

That should not be line-by-line, but should instead consider various categories of cost, such as disclosure or expert’s reports, or specific periods where particular costs were incurred, or particular parts of the profit costs.

At that stage, however, any reductions for proportionality should exclude those elements of costs which are regarded as unavoidable, such as court fees, the reasonable element of the ATE premium in clinical negligence cases, and the like.

Specifically, therefore, if the ATE premium is assessed as reasonable, it will not fall to be reduced by any further assessment of proportionality.

The judge will undertake the proportionality assessment by looking at the different categories of costs (excluding the unavoidable items noted above) and considering, in respect of each such category, whether the costs incurred were disproportionate. If yes, then the judge will make such reduction as is appropriate. In that way, reductions for proportionality will be clear and transparent for both sides.

Once any further reductions have been made, the resulting figure will be the final amount of the costs’ assessment. There would be no further stage of standing back and, if necessary, undertaking a further review by reference to proportionality. That would introduce the risk of double-counting.

Keoghs Comment

We welcome the Court of Appeal’s guidance as to the appropriate approach to the application of the tests of reasonableness and proportionality upon assessment of costs. However, when you consider the detail of this approach, it appears to be inconsistent with the assessment of reasonableness and proportionality in costs management.

Court fees are routinely taken into account when assessing what is a reasonable and proportionate amount for a budget. Whereas, the new guidance suggests that, as court fees are “unavoidable”, they should be excluded when considering what further reductions are to be made for proportionality.

We can see why additional liabilities are excluded but there does not appear to be any reasoning as to why court fees should be singled out in this way or, more importantly what is meant by “unavoidable”.

The use of the word “unavoidable” appears to bring back the old proportionality test of “necessity” under Lownds v Home Office [2002] EWCA Civ 365.

It appears to be the case that disproportionate costs should be allowed if they are “unavoidable”.