John O’Hare on how to reduce costs which are reasonable but disproportionate
In cases commenced after 1 April 2013, the old Lownds test of proportionality in costs has been largely replaced by a new test, the Jackson test, set out in CPR 44.3(5). This states that costs incurred are proportionate if they bear a ‘reasonable relationship’ to:
- the sums in issue in the proceedings;
- the value of any non-monetary relief in issue in the proceedings;
- the complexity of the litigation;
- any additional work generated by the conduct of the paying party: and
- any wider factors involved in the proceedings, such as reputation or public importance (emphases added).
Rule 44.3(2) states that on a standard basis assessment: ‘Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred …’. This new test reverses the Lownds test in two ways.
- First, necessary costs are no longer deemed to be proportionate because proportionality trumps necessity.
- Second, the decision as to proportionality
