Circuit Judge sets out one vision for proportionality test

The infamous case of May v Wavell Group Limited finds itself in the headlines once again following an appeal against Master Rowley’s first instance approach to proportionality.

In hearing the appeal, HHJ Dight sitting with Master Whalan as assessor, found that the proportionality test had been misapplied by Master Rowley and assessed costs in the sum of £75,000.00 [a considerable increase from the previous figure of £35,000.00].

In contrast to Master Rowley’s previous comments that the new test of proportionality was a “blunt instrument as a reason to make a substantial reduction in the reasonable costs to bring them down to a rough and ready but proportionate amount”, the learned judge stated that the new test of proportionality is not to be used to make a substantial reduction in the reasonable costs in order to bring them down to a rough and ready but proportionate amount.

The relationship between whether the costs and the factors outlined in CPR 44.3(5) is a reasonable one is a matter of judgment rather than discretion.

When assessing costs on the standard basis, a costs judge is required to “assess on an item by item basis whether the costs are reasonable having regard to, among other things, the factors listed in CPR 44.4(3), and to consider whether the total figure is proportionate having regard to the definition of that word in CPR 44.3(5)”.

The reference to ‘among other things’ evidently arises from the learned Judge’s view that proportionality is intended to be consistent across 44.3 and 44.4 and thus should include, but is not limited to, those factors identified at 44.3(5).

Referring to the approach that had been taken in BNM, HHJ Dight commented that the correct approach is to undertake an item by item assessment of the reasonable costs and “then undertake a separate assessment of the proportionality of those sums reducing each of them item by item”.

Insofar as how this works in practice, the CPR is not prescriptive and providing some practical guidance, HHJ Dight commented that:

[the rules do] not specifically state that the assessment has to be undertaken in two stages but they do require the costs judge to apply two tests, namely reasonableness and proportionality, and it is open to the costs judge to have an eye to both as he or she undertakes an item by item assessment having in mind a figure or range of figures which would be proportionate but it is equally open to the judge to apply the tests sequentially”.

This eminently sensible approach suggests the test of proportionality is a much more scientific one to that which had previously been followed and that the concepts of ‘reasonableness’ and ‘proportionately’ are more closely linked than costs officers have, of late, been giving credit for. Of course, there is still scope for different figures to be reached on assessment by different assessing judges, however, as HHJ Dight concluded, “so long as the rules have been applied correctly such decision should not be open to challenge on appeal”. On future detailed assessment hearings, receiving parties will no doubt be urging costs officers to keep their eye on what they considered to be ‘reasonable’ when they come to consider what is ‘proportionate’.