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Provisional Assessments and Proportionality
Practice Direction 14.4 (2) provides that once the provisional assessment has been carried out the court will return the Precedent G with the court’s decisions noted upon it. Within 14 days of receipt of the 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 proportionality then? 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” or whether they are “proportionate” on the reductions already made?
My own personal view is that judges still do not know how to apply the new proportionality test and very few courts tend to calculate the assessed bill as they go. Even when judges have re-calculated the bill, their calculations are often incorrect. From a Defendant point of view, the procedure for assessing bills on paper does not foresee parties returning to the court after the arithmetic has been agreed to make a further proportionality adjustment if appropriate. Leaving only the option to appeal the decision, have an oral review hearing and achieve a 20% adjustment in the paying party’s favour.
Budgeting and Proportionality
In Redfern v Corby Borough Council  EWHC 4526 (QB), HHJ Seymour QC upheld the decision of Deputy Master Eyrne in a case where the Deputy Master considered that a proper figure for the costs of the case as a whole was £220,000.00. The Deputy Master came to the conclusion that the cost budget was not proportionate and in particular that a disproportionate amount of costs had already been incurred prior to the CMC. The amount allowed of £220,000.00 more or less totalled the incurred costs to date.
In CIP Properties (AIPT) Ltd v Galiford Try Infrastructure Ltd  EWHC 481 (TCC) the judge found that the Claimant’s costs budget contained figures which were wholly unreasonable and unjustified and that the upper limit of what is reasonable and proportionate was 4.3 million in both incurred costs and estimated costs. The Claimant had already incurred costs of over 4.2 million with future estimated costs being over 5 million. The matter had already been adjourned because of the level of costs claimed within the budget on a previous occasion which the first budget claiming over £10 million for both incurred and estimated costs. The judge identified four options on how best to proceed:-
(1) To order the Claimant to prepare a new budget – this option was not taken due to the court originally asking the Claimant to prepare a new budget following the first adjournment. The judge decided that on the balance of probabilities the budget was unlikely to be reduced further by the Claimant’s legal representative given the previous attempt and that if anything the incurred costs figures would not have been reduced and that the costs overall may increase due to a third budget having to be prepared.
(2) To decline to approve the Claimant’s costs budget – this option was decided against due to the simple fact that Claimant’s costs would not be limited and that the Defendant would not be aware of the potential cost claimable against them if the Claimant was to succeed in his/her claim.
(3) To try and set a costs budget on a phase by phase basis, looking primarily at the estimated costs rather than the actual costs – this was the option taken by the judge.
(4) Simply to refuse to allow anything more in the costs budget beyond that which had already been spent, so that the Claimant could not recover more costs than already incurred – needless to say this was the option favourable by the Defendant and third party, however, the judge found that the same was too restrict and stated that at detailed assessment the Defendant may achieve a double reduction due to the incurred costs being up for scrutiny.
Application of the new test of Proportionality in the SCCO
In Hobbs v Guy’s and St Thomas NHS Foundation Trust  EWHC B20 (costs), Master O’Hare considered proportionality in relation to a low value clinical negligence case. The claim settled for £3,500.00 before issue and the Claimant’s bill was £32,329.12. Master O’Hare , on provisional assessment , reduced the bill by two thirds without any reference to proportionality. He made that reduction purely on the grounds of reasonableness in line with the Lownds v Home Office test. Having already reduced the bill, the Master then looked at the remaining one third of the original bill and decided that even that greatly reduced sum was disproportionate. The overall bill was reduced to £9,879.34 including VAT, a reduction of 69.44%.
Master O’Hare’s comments are interesting to note especially in relation to hourly rates, use of particular fee earners and Counsel. The Master disallowed all Grade A fee earner work and allowed a mid-range fee earner at £200.00 per hour and that advice could have been obtained from a more senior practitioner or Counsel should sufficient complexities arisen in the matter. This was the reduction made when the Master considered the Lownds test.
Upon considering the test of proportionality, the Master decided that the costs were not proportionate and decided to reduce three items within the bill. The three items were the cost of the consultant anaesthetist, the making of a Part 36 offer and reducing the rate from a Grade B fee earner to a Grade C fee earner.
A Grade A fee earner had actually done the work and the Master found that it should have been carried out by a Grade B fee earner due to the nature of the claim, however, on the grounds of proportionality allowed Grade C rates. The Master concluded that proportionality required the work to be done by someone who was not capable of doing it, or rather was not of such seniority as to be likely to do the work properly.
Rebecca Parsons – Costs Supervisor
24 March 2016