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New Case on Proportionality - Defendants will be rubbing their hands with glee

Once again, Mr Gordon Exall has brought our attention to an important new case - this one on the new proportionality rules - see link below to Gordon's blog.

In the case of Dr Brian May & Mrs Anita May v Wavell Group Plc, costs claimed at £208,236.54 were reduced to £99,655.74 following assessment on an item-by-item basis and then to a staggering £35,000 based on a global approach to proportionality. Master Rowley, in reaching his decision, had regard to all of the factors set out in CPR 44.3(5) and decided that the agreed damages reflected the sums in issue; some additional time would have been spent in considering the possibility of an injunction; the case was neither legally nor factually complicated; there was nothing in the Defendant's conduct which warranted any additional work having been generated; and there were no factors of wider importance which would have affected the costs generated.

Master Rowley referred to Sir Rupert Jackson's comments in Chapter 3 of his final report on proportionate costs, in which he stated, at paragraph 5.10, that disproportionate costs could not become proportionate simply because they were necessary to bring or defend a claim. Master Rowley then went on to consider comments made by Leggatt J in the case of Kazakhstan Kagazy PLC v Zhunus, where he stated that a party's expenditure over and above "the lowest amount which could reasonably have been expected to spend in order to have its case conducted and presented proficiently" should not be recoverable inter partes.

Master Rowley considered that Kazakhstan was still too generous in claims for small amounts of damages (such as this) and stated:

35. "The amount that can be recovered from the paying party is not the minimum sum necessary to bring or defend the case successfully. It is a sum which it is appropriate for the paying party to pay by reference to the five factors in CPR 44.3(5). It is not the amount required to achieve justice in the eyes of the receiving party, but only a contribution to that receiving party's costs in many modest cases.

42. ...It is to be hoped that cases such as this one, which are in a transitional phase of understanding the new proportionality test, will be relatively rare."

It seems to me, however, that the likelihood is that paying parties will no longer be as willing to enter into negotiations with receiving parties where costs, on the face of it, appear disproportionate. They will, instead, stand firm regardless until the receiving party folds as they won't be able to pay their solicitors the costs not recovered from the other side. Indeed, if there is a risk that, as a result of the new proportionality rules, they might be called upon to pay at least some of the shortfall, will it even be worth their while bringing a claim - even if that claim is a legitimate one?

As Master Rowley himself said in this case, the amount tha can be recovered from the paying party is no longer a sum which it is necessary to bring or defend the case and it therefore "is not the amount required to achieve justice in the eyes of the receiving party." If this is the case, where is the access to justice?

I am truly stunned.
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