CPR 44.3 Update April 2021: Vulnerability and Proportionality
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What is Covered Under CPR 44.3?
The Civil Procedure Rules are used to govern Civil disputes in the UK. CPR 44 refers to general rules on costs of civil litigation or civil cases. CPR 44.2 sets out the Court’s discretion on costs:
(1) The Court has discretion as to –
(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid.
(2) If the Court decides to make an order about costs –
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the Court may make a different order.
CPR 44.3 specifically refers to the basis of an assessment of costs which means costs can be assessed on either the standard basis or the indemnity basis.
(1) Where the Court is to assess the amount of costs (whether by summary or detailed assessment) it will assess those costs –
(a) on the standard basis; or
(b) on the indemnity basis,
In either case, the Court will not allow costs that have been unreasonably incurred or are unreasonable in amount.
(Rule 44.5 sets out how the Court decides the amount of costs payable under a contract.)
Furthermore, CPR 44.3(2) states that when costs are being assessed on the standard basis, the Court should only allow costs that are reasonable and proportionate. And where there is any doubt on whether costs are reasonable and proportionate, then this doubt should be resolved in favour of the paying party (CPR 44.3 (2)(b)). On an indemnity basis, the issue of proportionality falls away and doubt as to reasonableness falls in favour of the receiving party.
CPR 44.3 (5) refers to factors that should be considered when assessing if costs are proportionate. This part of the CPR is often referred to in the paying parties’ Points of Dispute and the receiving parties Replies to the Points of Dispute as a test of proportionality for the costs incurred. These are also factors taken into account at the point of Costs Budgeting.
Currently, the following factors are to be taken into account in line with CPR 44.3 (5) when assessing proportionality:
(a) the sums in issue in the proceedings;
(b) the value of any non-monetary relief in issue in the proceedings;
(c) the complexity of the litigation;
(d) any additional work generated by the conduct of the paying party; and
(e) any wider factors involved in the proceedings, such as reputation or public importance.
CPR 44.3 (5) Update
As of April 2021, a new factor will be added to CPR 44.3(5), which should be considered when assessing proportionality. This new factor will be in relation to ‘any additional work generated or expense incurred due to the vulnerability of any party or any witness’.
The term vulnerability is not itself defined in the amendment; however, the following list is included in determining what can be counted as vulnerability.
- Age, immaturity or lack of understanding;
- Communication or language difficulties (including literacy);
- Physical disability or impairment, or health condition;
- A mental health condition or significant impairment to their social functioning or intelligence (including learning difficulties);
- The impact which any matter of the case has had on the party or witness.(for example, witnessing a traumatic event relating to the case);
- Their relationship with a witness or party to the case(for example, sexual assault, domestic abuse or intimidation (actual or perceived));
- Social, cultural or domestic circumstances.
This amendment will be specifically useful to the receiving party where they have had a vulnerable Claimant as a client, which has resulted in more work and costs being incurred than usual for a claim of those facts and course of conduct.
An example of where this new factor will be considered is the common Noise-Induced Hearing Loss Claim whereby the Claimant suffers a physical disability in their hearing loss. This often results in lengthier communications with the Claimant and can increase costs.
Having this factor now play a part in the test of proportionality will be useful when costs have been increased due to the Claimant’s vulnerability. It is a factor that has often been argued on by the parties during detailed assessment proceedings.
How Can ARC Costs Assist?
We can assist with the recovery of costs, including the preparation and negotiation of a Bill of Costs on your behalf if you are the receiving party. Where a Bill of Costs has been served on you as the paying party, and you deem these costs to be unreasonable and disproportionate, we can assist with the preparation of Points of Dispute in compliance with the Civil Procedure Rules, in order to ensure you will not be required to pay costs that do not fall within the CPR 44.3(5) test of proportionality.
Furthermore, we can assist in preparing Replies to these Points of Dispute if, as the receiving party, you believe your costs incurred are reasonable and proportionate.
Whichever side of the coin you fall on, we can assist you on your costs query with our extensive experience dealing with costs under the Civil Procedure Rules. As Costs Lawyers, we can also represent you at Detailed Assessment Proceedings, should an agreement not be reached between the parties through legal negotiations.
Should you wish to discuss your query with us, please contact us on 01204 397302 or firstname.lastname@example.org. You can also complete our online query form, and we will contact you to discuss your costs issue.
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