CPR 44 : Proportionality in Detailed Assessment

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What is CPR 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 costs orders as per CPR 44.2. Whilst this legislation 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 not proportionate 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.

West v Stockport NHS Foundation

 The case of West v Stockport NHS Foundation Trust & Demouilpied v Stockport NHS Foundation Trust [2019] EWCA Civ 1220 was heard in the Court of Appeal. The Court of Appeal here 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, the above case 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. 

 There was also guidance 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)

 

 CPR 44.4(3) is often referred to during detailed assessment. This part of CPR 44.4 (3) 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.’

 These factors to be considered when assessing if the costs are reasonable are also known as the pillars of wisdom and quite clearly can assist in assessing 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.” 

How Can ARC Costs Assist?

At ARC Costs, we are a team of specialised Costs Draftsmen and Costs Lawyers. We can help with the recoverability of your costs from the preparation of Budgets and Bill of Costs. We can ensure that the costs we seek to recover on your behalf are proportionate against the case in question. We can also assist in preparing Replies to the paying party’s Points of Dispute and represent you at Detailed Assessment in order to ensure your costs are proportionate.

Should you require any assistance, please call us on 01204 397 302.

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