New proportionality test applied..

Where the costs of a clinical negligence case, which settled pre-issue for £3,500, were 10 times the level of damages (£32,329.12) they were reduced on a provisional assessment to £9,879.34 to reflect what the Costs Judge considered to be a reasonable and proportionate amount in all the circumstances. In Hobbs v Guy’s And St Thomas’ NHS Foundation Trust [2015] EWHC B20 (Costs), Costs Judge O’Hare initially assessed the costs (on an item by item assessment) at £11,000 but considered that further reduction was necessary, after applying the new ‘Jackson proportionality test’ which involves standing back from the level of assessed costs and considering whether the sum to be allowed is proportionate having regard to the factors as set out in CPR 44.3(2) i.e. by reference to: the sums in issue, value of non-monetary relief, complexity, conduct of the paying party and any wider factors).

Costs Judge O’Hare was assisted by the recent decision of Leggatt J in the Kazakhstan Kagazy Plc v Zhunus case (see link below) where Leggatt J said:

The touchstone is not the amount of costs which it was in a party’s best interests to incur but the lowest amount which it could reasonably have been expected to spend in order to have its case conducted and presented proficiently, having regard to all the relevant circumstances. Expenditure over and above this level should be for a party’s own account and not recoverable from the other party. This approach is first of all fair.  It is fair to distinguish between, on the one hand, costs which are reasonably attributable to the other party’s conduct in bringing or contesting the proceedings or otherwise causing costs to be incurred and, on the other hand, costs which are attributable to a party’s own choice about how best to advance its interests”.

For those who consider there is little point in assessing costs (item by item) in the first instance where the court has, at the conclusion of that assessment, the freedom then to make an arbitrary reduction to the overall figure on grounds of proportionality, this helps to explain the sense of this process. The Costs Judge in Hobbs however, adopted a different approach to “chopping off a slice” by identifying specific items of costs which he thought, with the benefit of hindsight, would not be proportionate for the paying party to pay.

Hobbs:

http://www.bailii.org/ew/cases/EWHC/Costs/2015/B20.html

Kazakhstan:

http://www.bailii.org/ew/cases/EWHC/Comm/2015/404.html

 

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