Do you lose the right to allege “dis-proportionality of costs” if your own costs are disproportionate ?

Do you lose the right to allege “dis-proportionality of costs” if your own costs are disproportionate ?

“It is inappropriate to judge proportionality only by reference to a notional financial value when money is not the point of the claim.”

 

Arjomandkhah v Nasrouallahi [2018] EWHC B11 (Costs)         (6 July 2018)

Master Leonard, sitting in the Senior Courts Costs Office, rejected the Claimant’s argument that the Defendant’s costs (approximately one-third of the Claimant’s costs budget) was disproportional.

The underlying litigation was a claim in relation to the Claimant’s Application for a final injunction against the Defendant due to alleged threats and attempted blackmail which the Claimant stated the Defendant had made after their two-year “close relationship” had come to an end.

The Court had dismissed the Claimant’s application for a final injunction against the Defendant, discharged the interim injunction and ordered the Claimant to pay the Defendant’s costs.

The case before Master Leonard was an appeal from a detailed assessment by Costs Officer Piggott of the Defendant’s costs at £23,253.80 (including VAT). Both parties accepted Mr Piggott’s assessment of the Defendant’s reasonable costs. The parties also accepted (subject to the outcome of the appeal) Mr Piggott’s award to the Defendant of the costs of the detailed assessment at £3,335.40. However, the Claimant appealed against Mr Piggott’s refusal to reduce the assessed costs further on proportionality grounds, with his focus on the low financial value of the claim.

The Claimant argued that in order to judge proportionality, the Court must consider and make a finding about the value of the claim.

However, it was found that despite the fact that the claim had a notional value of between £3,000.00 and £5,000.00, the Defendant’s costs were not disproportionate.

Master Leonard said that the Court should not consider proportionality only by reference to a notional financial value of the claim and ignoring the wider criteria expressly set out in the rules. Further, he said: “… given the potential effect of the claim upon the Defendant’s reputation, are of much more significance in this case than the fact that the Claimant was not seeking an award of damages. Mr Piggott, in concluding that her reasonable costs were not disproportionate, put some emphasis on the importance of the matter to the Defendant, and he was right to do so.”

Furthermore, Master Leonard noted that the Claimant’s Costs Budget was in the sum of almost £60,000.00 and that the Claimant indicated to the Defendant that he had every intention of seeking to recover his costs at that level. “That does not assist the Claimant now in arguing that base costs assessed at one third of that figure, incurred in defeating that claim, are disproportionate,” the master said.

He also rejected the Claimant’s arguments that his own disproportionate approach did not necessarily justify the same approach from the Defendant. He said that the Claimant’s “approach to the litigation was inevitably going to have an effect upon the costs to be incurred by the Defendant”.

Master Leonard referred to CPR 44.3 (5) and emphasised that “the costs are proportionate if they bear a reasonable relationship to the specified criteria. That is not the same as whether they were reasonably incurred or reasonable in amount”.

The Master upheld Mr Piggott’s decision. He rejected multiple criticisms of the Defendant’s conduct and concluded that the Defendant “was fully entitled to proceed on the basis that the very serious allegations made against her must be either disproved or withdrawn”.

The Judgment is significant in that it emphasises the importance of the Court taking into account the facts of the case and the significance of each of the criteria set out in CPR 44.3 and 44.4 when considering the issue of proportionality.

Our view :

Proportionality is a slippery character. It’s an undefined, unscientific and confusing concept which, having regard to these characteristics, is difficult to apply.

Costs Judges try their best to factor it into to all standard basis assessment as they are obliged to do but this is not always easy. Arguably the process of applying the principle is arbitrary and unnecessarily time-wasting.

Judges should be free to undertake a costs assessment and then, if deemed appropriate for whatever reason, they ought to have unfettered discretion to make further alterations for “general reasons”.

This case of Arjomandkhah v Nasrouallahi illustrates inter-alia that the answer to the question of “What is proportionate?” will vary depending upon who is asked. As such, it is a subjective concept and consequently one which provides very little if any certainty.

 

Tanya Bland & Guy Platt-Higgins

Law Costing Ltd

13th July 2018