Proportionality

1. Lownds v Secretary of State for the Home Department CA, TLR 5th April 2002

General guidance was given on the application of the test of proportionality:  Before the Court considers the detail of a claim for costs it must consider whether the overall claim is proportionate. If the claim is proportionate then the item by item approach need only consider the items reasonableness. If the overall costs claim appears disproportionate, then only costs that were both reasonable and necessary will be allowed.

2. Devine & Franklin [2002] EWHC 1846 (QB) HHJ Gray, 28/5/02

The above was an appeal as to costs in an unusual personal injury claim. Special Damages were agreed at £195 with General Damages assessed at £500. Costs were claimed in the sum of £10,396, but were reduced on assessment to £7,023.59.  On Appeal Mr Justice Gray considered the award of costs "over generous" and ordered that the Defendant pay fixed costs permitted under Part 27.14 for a Small Claims Track cases but with an additional £1,000 to reflect the "unreasonable behaviour of the Defendant".

3. Nutrinova v. Scanchem [2001] FSR 43 (Pumfrey J).

In this patent action the Claimant's costs were £1.1 million, the Defendant's £300,000. However the value of the action was very substantial and therefore "It would not be right to say that … the Claimant's expenditure had been so disproportionate that a special Order was required over and above the normal scrutiny which the costs would receive on a Detailed Assessment".

4. Clyde v Thompson Holidays (unreported, SCCO, 1 November 2002, CJ Campbell)

In applying the test proportionality, the costs judge decided that he must look at the total costs incurred, including those incurred before the introduction of the CPR on 26 April 1999.

5.  Rugby Mansions Ltd v Ortwein, 28 July 2003 Mr Justice Lloyd (Sitting Without Assessors)

The claimant was a co-operative and owned the freehold of a block of flats where the defendant was a lessee.   The claimant commenced proceedings for non payment of service charges, to which the defendant counterclaimed for damages estimated at £500,000 for breach of the claimant’s obligations as a landlord.   Following an 11 day trial the counterclaim was dismissed and judgment entered against D who was ordered to pay the costs of the counterclaim subject to detailed assessment.  £120,000 was paid on account and the claimant’s bill was for £350,000.    The defendants raised before the Costs Judge the issue of proportionality but the Costs Judge held that the costs were not apparently disproportionate and proceeded over three days to assess the bill, which he reduced to £300,000.  On appeal the Judge held that the Costs Judge had misdirected himself in respect of the Lownds test, and remitted the case to a different Costs Judge to consider whether the costs as assessed were proportionate or not.    If they were, then the assessment was to stand, but if not, presumably it would have to start de novo.  However the Judge said that it was not necessary for a Costs Judge to go through the items set out in CPR 44.5 as a check list in deciding the question of proportionality under the Lownds principle