The new proportionality test

Lord Neuberger, in a lecture on the new proportionality test, recently stated:

“It would be positively dangerous for me to seek to give any sort of specific or detailed guidance in a lecture before the new rule has come into force and been applied. Any question relating to proportionality and any question relating to costs is each very case-sensitive, and when the two questions come together, that is all the more true. The law on proportionate costs will have to be developed on a case by case basis. This may mean a degree of satellite litigation while the courts work out the law, but we should be ready for that, and I hope it will involve relatively few cases.”

This approach is difficult to understand. Self-evidently, no two cases are alike. However, the vast majority of litigation is routine in nature (even if relatively complex on occasions) and does not involve unusual factors that take the claims outside the usual (ie where it is not test litigation and there are no reputational or public importance issues arising). Therefore the answer to the question of what level of costs is it proportionate to incur to recover £25,000 should not normally require consideration of any special fact specific issue. (Consideration of what work was “reasonably” incurred is, of course, case specific but applying the Jackson test: “proportionality should prevail over reasonableness”. Therefore, discovering what work was reasonably incurred on an individual case does not tell us what is proportionate.) Indeed, it is difficult to see why the answer to the issue of what is a proportionate level of costs to recover £25,000 should normally vary from case-to-case.

On the other hand, if the amount of costs it is proportionate to incur to recover £25,000 is indeed to vary in every single case, it is difficult to see what useful guidance the courts are ever going to be able to give and the idea the “satellite litigation” on the issue will be limited is, at best, wishful thinking.

One thought on “The new proportionality test

  1. since when has the value of the case been the yardstick?

    this is part of the problem!

    Defendants will generally fight smaller claims harder, in the belief they will go away.

    Consequently small value claims (up to £25k) will, on a case by case basis, end up having significantly varying costs necessary, dependant on the actions or inactions of the Defendant fighting it

    There is no easy answer, but this blog post is indicitave of the reason why the proposed answer is so wrong, and will simply serve to give a great advantage to insurers/Defendants

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