What is CPR Part 44?

The general rules on costs are governed by Part 44 of the Civil Procedure Rules. This part of the CPR gives discretion to the Costs Judge to make a costs order as per CPR 44.2. Whilst this area of the CPR contains a number of general rules on costs; this article will focus on proportionality and how this is assessed, usually at detailed assessment, in line with CPR 44. 

CPR 44.3(5) states the following:

“Costs incurred are proportionate if they bear a reasonable relationship to

(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.”

Proportionality is a very important factor which should be taken into consideration when the Bill of Costs is being drafted. Often, the paying party will raise proportionality as an issue in their Points of Dispute, arguing that the receiving party’s costs are disproportionate to the facts and conduct of the case. It is therefore crucial that the Bill of Costs is drafted with this point in mind so that the costs claimed can be justified in relation to proportionality.

It is important to highlight that proportionality factors do not just focus on the quantum aspect of the case. This is because relief sought in proceedings is not always quantifiable, and even low value matters can have considerable complexity. By way of example, taking into account the aforementioned factors, an immigration Judicial Review may be of exceptional importance to the client and in relation to setting future public policy, thereby involving complex legal issues however, the quantum value may be extremely low. Proportionality is therefore not a simple equation of the claim is worth X, therefore costs should equal Y.

West v Stockport NHS Foundation

The case of West v Stockport NHS Foundation Trust & Demouilpied v Stockport NHS Foundation Trust [2019] EWCA Civ 1220 in the Court of Appeal provided some useful guidance concerning proportionality. It was clarified by the Court of Appeal that CPR 44.4(1) should also be a factor to consider in assessing proportionality. This section of the CPR states the following:

“(1) The court will have regard to all the circumstances in deciding whether costs were

(a) if it is assessing costs on the standard basis –

(i) proportionately and reasonably incurred; or

(ii) proportionate and reasonable in amount, or

(b) if it is assessing costs on the indemnity basis –

(i) unreasonably incurred; or

(ii) unreasonable in amount.”

Furthermore, West stated that certain parts of the Bill of Costs should not be included when assessing proportionality such as the costs of preparing the bill, Court Fees and VAT. These costs we considered to be fixed and unavoidable. Counsel fees, however, were subject to proportionality assessment. Details on the precise findings made can be found here. 

Guidance was also given in the case as to how proportionality should be approached at detailed assessment. It was stated that firstly, the judge should go through the Bill of Costs item by item and assess the reasonableness of each item in the bill. It was said that the judge in question should also address proportionality at any time during this line by line assessment should he or she deem it appropriate.

The reason for this was ‘because, although reasonableness and proportionality are conceptually distinct, there can be an overlap between them, not least because reasonableness may be a necessary condition of proportionality:’

CPR 44.4 (3)

This is often referred to during detailed assessment and is used to assess the total costs which should be allowed, and which are reasonable. It is often referred to when assessing the hourly rates utilised.  

CPR 44.4(3) reads as follows:

(3) The court will also have regard to – 

(a) the conduct of all the parties, including in particular –

(i) conduct before, as well as during, the proceedings; and

(ii) the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;

(b) the amount or value of any money or property involved;

(c) the importance of the matter to all the parties;

(d) the particular complexity of the matter or the difficulty or novelty of the questions raised;

(e) the skill, effort, specialised knowledge and responsibility involved;

(f) the time spent on the case;

(g) the place where and the circumstances in which work or any part of it was done; and

(h) the receiving party’s last approved or agreed budget.

Often referred to the ‘pillars of wisdom’, when utilised alongside CPR 44.3, these factors are important to determine the proportionality and reasonableness of the costs claimed.

Merrix v Heart of England NHS Foundation Trust 

In the case of  Merrix v Heart of England NHS Foundation Trust [2016] EWHC B28 (QB) (13 October 2016), it was held that CPR 44 should be applied when assessing costs to be allowed for both budgeting and assessment stages. Judge Lumb went on to state that “as the tests are applied at different times when considering different documents (a budget and a bill) there is no certainty that they would produce identical results.” 

What else does CPR Part 44 cover?

CPR 44 covers a wide range of topics related to the costs of litigation, including the general rule that the unsuccessful party in a case is required to pay the costs of the successful party, unless the court orders otherwise. It also sets out the factors that the court will consider when deciding whether to make a costs order, such as the conduct of the parties, the value of the claim, and any offers to settle that were made.

Other areas covered by CPR 44 include the assessment of costs, the types of costs that can be claimed, and the process for challenging a costs order. It also includes provisions for the costs of appeals and the costs of litigating in multiple jurisdictions. Examples of other sections of CPR part 44 are outlined below:

• Section 44.5: This section sets out the procedure for applying for a costs order, including the time limits for making an application.
• Section 44.6: This section deals with the assessment of costs, including the fact that costs must be reasonable and that the court has the power to disallow costs that are deemed to be excessive.
• Section 44.7: This section sets out the procedure for challenging a costs order, including the time limits for making an appeal.
• Section 44.8: This section deals with the costs of detailed assessment, including the fact that the costs of the assessment process itself can be claimed as part of the overall costs of the case.
• Section 44.9: This section deals with the costs of appeals, including the fact that the general rule is that the unsuccessful party pays the costs of the successful party in relation to the appeal.

Overall, CPR 44 is an important part of the legal framework for civil litigation in England and Wales, as it helps to ensure that costs are awarded fairly and proportionately, and that parties are held accountable for their conduct throughout the litigation process.

How Can ARC Costs Assist?

ARC Costs are an experienced and independent team of specialised Costs Draftsmen and Costs Lawyers. We assist both paying and receiving parties in resolving costs disputes, and are adept at preparing Costs Budgets and Bill of Costs for receiving parties, as well as providing legal costs negotiations services and preparing Points of Reply. For paying parties, we are adept at preparing Points of Dispute, and ensuring that a proportionate level of costs is recovered. Proportionality is a subjective issue, and it is therefore important you have the right legal costs representative on your side during detailed assessment to ensure you make the most persuasive submissions on the issue.  Should you require any assistance or free initial advice, please call us on 01204 397302, or email one of our costs experts direct on info@arccosts.co.uk.

Follow Us