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From 1 April 2013 we have a new proportionality test (although it will not apply to work undertaken before that date). New CPR 44.3(2):
“Where the amount of costs is to be assessed on the standard basis, the court will—
(a) only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred”
New CPR 44.3(5):
“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.”
No Practice Direction to explain how this is to be applied.
It is envisaged that the approach proposed by Lord Justice Jackson will apply:
“I propose that in an assessment of costs on the standard basis, proportionality should prevail over reasonableness and the proportionality test should be applied on a global basis. The court should first make an assessment of reasonable costs, having regard to the individual items in the bill, the time reasonably spent on those items and the other factors listed in CPR rule 44.5(3). The court should then stand back and consider whether the total figure is proportionate. If the total figure is not proportionate, the court should make an appropriate reduction.”
Now, back to my post the other day concerning whether costs judges are expected to undertake the arithmetic on a bill following a provisional assessment or whether they simply send the annotated Points of Dispute/Replies back to the parties and it is for them to work out the final figure allowed. Practice Direction 14.4(2) provides:
“Once the provisional assessment has been carried out the court will return Precedent G (the points of dispute and any reply) with the court’s decisions noted upon it. Within 14 days of receipt of Precedent G the parties must agree the total sum due to the receiving party on the basis of the court’s decisions. If the parties are unable to agree the arithmetic, they must refer the dispute back to the court for a decision on the basis of written submissions.”
How does this tie in with the new proportionality test? If, at the end of the provisional assessment, the judge does not know the figure he has allowed (because he has not done the calculations) how does he know whether to apply a further discount to make the costs “proportionate”? The new rules do not envisage any procedure for the parties to return to the court after they have agreed the “total sum due” to ask the court to make a further “proportionality” adjustment if appropriate.
There has been a staggering failure to think through the practicalities of how the new provisional assessment process will work. But then, there was a notable category of lawyer absent from the rules committee: a Costs Lawyer.