CPR 44
Part 44 of the Civil Procedure Rules sets out the general rules about costs, including the rules on Proportionality when conducting detailed assessment, as well as the factors which should be taken into account when deciding the amount of costs, dealt with under CPR 44.4. At detailed assessment, the pillars of wisdom, found under CPR 44.4(3) are often also taken into consideration when considering the total amount allowable, particularly in relation to hourly rates.
CPR 44.3 and Proportionality
CPR 44.3(5) states that “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.”
This rule of proportionality is of high importance when drafting your Bill of Costs. Factors of proportionality are very often raised in an opposing parties Points of Dispute; therefore, it is essential that all parties know how to approach proportionality when it comes to detailed assessment.
The Court of Appeal provided some very useful guidance on proportionality in the case of West v Stockport NHS Foundation Trust & Demouilpied v Stockport NHS Foundation Trust [2019] EWCA Civ 1220 . In section 9 of this case, it was clarified that , although the typical factors of CPR 44.3(5),(which states that costs should bear a reasonable relationship to certain factors) should be taken into consideration, CPR 44.4(1) should also play a part in our approach to proportionality.
It was stated in this case that certain elements, such as Court Fees, VAT and costs of preparing the bill, should not be included in proportionality reductions as they were considered “fixed and unavoidable.” It was, however, stated that Solicitor and Counsel fees were to be controlled by the test of Proportionality.
Section 10 of the case provides guidance on approaching issues of proportionality in a detailed assessment of costs. It stated:
“First, the judge should go through the bill line-by-line, assessing the reasonableness of each item of cost. If the judge considers it possible, appropriate and convenient when undertaking that exercise, he or she may also address the proportionality of any particular item at the same time. That is because, although reasonableness and proportionality are conceptually distinct, there can be an overlap between them, not least because reasonableness may be a necessary condition of proportionality:”
CPR 44.4 (3) – The Pillars of Wisdom
The rules set out in CPR 44.4 (3) have came to be known as the pillars of wisdom. They are often used in parties’ Points of dispute to justify aspects of their costs, such as hourly rates. This section of CPR 44 states that the Court will take into consideration:
“the conduct of all parties,… the amount or value of any money or property involved, the importance of the matter to all the parties, the particular complexity of the matter or the difficulty or novelty of the questions raised, the skill, effort, specialised knowledge and responsibility involved the time spent on the case, the place where and the circumstances in which work or any part of it was done, and the receiving party’s last approved or agreed budget.”
In the case of Merrix v Heart of England NHS Foundation Trust [2016] EWHC B28 (QB) (13 October 2016), Judge Lumb explained that this section of CPR 44 should “be taken into account when deciding the amount of costs to be allowed apply both at the budgeting and assessment stages.”
He further commented that “as the tests are applied at different times when considering different documents (a budget and a bill) there is no certainty that they would produce identical results.”
How Can Legal Practice Support Assist?
The Legal Practice Support team are always happy to help with any costs issues, and our Costs Director, Robert Collington, can be contacted via email on enquiries@legalpracticesupport.co.uk or by telephone on 01204 930234.
If you would like to find out more information on preparing your bill of costs, or the process of detailed assessment, have a look at these sections on our website. Feel free to have a look at our legal costs section to find out more about out legal costs services.
In addition, if you would like any information on how your Proclaim system can be developed to track proportionality of your costs, or to assist with with the preparation of the new electronic bill of costs, get in touch with our Head Proclaim Developer, James Denby, via e-mail on enquiries@legalpracticesupport.co.uk.