PROPORTIONALITY: WE WILL, WE WILL ROCK YOU

I am grateful to Jon Lord for sending me a copy of the decision of Master Rowley in Dr Brian May -v- Wavell Group Plc  given today (16/06/2016).  It is another case that centres on proportionality. There was a considerable reduction of the costs assessed on the “item by item” basis because the overall figure was disproportional.

Brian May Approved Judgement 160616

“In cases such as this, it seems to me that the new test of proportionality … will require legal representatives to inform their clients that, even if successful, they will receive no more that a contribution to the costs that will be incurred. It may be that such advice proves to be a driver for the costs to be reduced or for alternative dispute resolution mechanisms to be explored. It is to be hoped that cases such as this one, which are in a transitional phase of understanding the new proportionality test, will be relatively rare.”

THE CASE

The claimants brought an action in private nuisance. Proceedings were issued and the claimants accepted the first offer of £25,000. The claimants were automatically entitled to their costs.

The bill of costs came to £208,236.54. All the work was done post 1 April 2013 and subject to the test of proportionality.

After an assessment of the costs on an item by item basis on assessment the reasonable costs came to £99,655.74.

LEGAL REPRESENTATION

The claimants instructed leading counsel directly. The Master accepted that this was a relatively new way of conducting litigation. The reasonableness of costs did not depend on the means of representation. However this was mentioned to provide the reasoning for the significant level of reduction on assessment.

PROPORTIONALITY

The judgment contains a detailed examination of the principles relating to proportionality.  The Master found:

  • The sum accepted (£25,000) reflected  the sums in issue.
  • There was a possibility of an injunction and that issue had to be weighed in the balance.
  • The case was neither legally nor factually complicated.
  • There was nothing in the defendant’s conduct which caused additional works to be generated.
  • There were no wider factors which were relevant to the issue of proportionality. (The fact that the claimants were public figures was not a relevant factor in this case).

THE RESULT THE COSTS REDUCED TO £35,000

The Master reduced the recoverable costs to £35,000 plus VAT.  The case was at an early stage when it settled. The proportionate amount of costs is inevitably smaller for a case that settles early than one that reaches a final hearing.

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3 comments

  1. £208,000 costs for a claim which settled for £25,000 before the Defences had been served? I cannot help thinking that, had there been a solicitor on the record, that solicitor would have got an earful from the Costs Judge.

  2. […] A fuller summary of the decision and a copy of the judgment can be found on the Civil Litigation Brief. […]

  3. robertpettitt · · Reply

    I have 2 main issues with this trend:

    (1) It creates such a level of uncertainty regarding costs recovery that neither party can gain a grasp of what to offer or accept.

    (2)

    ‘It may be that such advice proves to be a driver for the costs to be reduced or for alternative dispute resolution mechanisms to be explored.’

    Unfortunately, for CFA cases, this is just plain wrong.

    The old and new regime are similar in that neither provide an incentitive to a claimant on a CFA to settle for anything less than the most damages possible.

    A savvy solicitor may realize that the costs will soon become disproportionate to the sums in issue, and he may wish to act on that, but the solicitor’s professional obligation to ‘act in his client’s best interests’ compels him to act against his own best interest (i.e. make a good effective early Part 36 offer).

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