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Updates, Insight & Analysis


Proportionality and the Importance of Case Planning

Apr 30 2018

At the recent SCIL conference, Anil Virji spoke about the importance of Case Planning. Here Costs Lawyer, Mark Hardcastle and Anil Virji revisit that talk to explain why Case Planning should not just be an aspirational concept or just left until the budgeting process.  

As discussed previously within these pages in the case of Harrison v University Hospitals Coventry and Warwickshire NHS Trust (2017) EWCA Civ 792 (21 June 2017) the Master of the Rolls, Sir Terence Etherington confirmed the position that unless there is a good reason to depart, the costs claimed within a budget are binding. Accordingly, for budgeted costs, if your claim is less than or equal to the amount claimed they will be allowed in full. 

Incurred costs are not that simple and, as Sir Terence Etherington explained, they will remain subject to the test of proportionality. 

By way of a reminder the definition of proportionality can be found within CPR 44.3(5).
Costs incurred are proportionate if they bear a reasonable relationship to –

  1. The sums in issue in the proceedings;
  2. The value of any non-monetary relief in issue in the proceedings;
  3. The complexity of the litigation;
  4. Any additional work generated by the conduct of the paying party; and
  5. Any wider factors involved in the proceedings, such as reputation or public importance.

Within his first white paper Jackson LJ envisaged that costs would be assessed on an item by item basis and then, having reached a figure for reasonableness, the Costs Judge should sit back and if necessary make a further reduction, having regard to the factors listed above, to ensure that the costs are proportionate.

When he retired last month Sir Rupert Jackson stated that he was happy with his reforms, and the proportionality test, albeit he accepted that the Court of Appeal had not given any guidance on how the test would work in practice. 

In BNM v MGN Ltd [2017] EWCA Civ 1767, the Court of Appeal recently had an opportunity to offer guidance on how the new proportionality test should work in practice. However, they declined to do so, instead limiting their decision to additional liabilities (in respect of which proportionality does not apply).

Perhaps the best guidance we have is the recent unreported decision of May v Wavell Group Plc.

Despite Sir Rupert Jackson’s original vision, HHJ Dight stated that the rules do not specifically state that the assessment has to be undertaken in two stages, but they do require the costs judge to apply two tests, namely reasonableness and proportionality. He said it was open to the costs judge to have an eye to both as he or she undertakes an item by item assessment having in mind a figure, or range of figures, which would be proportionate, but is equally open to the judge to apply the tests sequentially.  

… it seems to me that the word proportionate is intended to have a consistent interpretation across rule 44.3(2), rule 44.3(5) and 44.4, which means that in considering proportionality the court is to have regard to all the circumstances which includes, but is not limited to, the further factors specified in CPR 44.4(3) even though they are not specifically referred to in CPR 44.3. There is a considerable degree of overlap but the plain intention is that there should be a holistic approach; the costs judge is intended to stand back and look at the overall picture…  In my judgment the tests of reasonableness and proportionality are intended to work together, each with a specific role, but with the intention of achieving what is fair having regard to the policy objectives.

CPR 44.3(2)(a) states when assessing costs on the Standard Basis, the Court ‘will only allow costs which are proportionate to the matters in issue’.

CPR 44.4(3) are the old seven pillars of wisdom:

Factors to be taken into account in deciding the amount of costs

  1. The conduct of all the parties, including in particular –
    1. Conduct before, as well as during, the proceedings; and
    2. The efforts made, if any, before and during the proceedings in order to try to resolve the dispute;
  2. The amount or value of any money or property involved;
  3. The importance of the matter to all the parties;
  4. The particular complexity of the matter or the difficulty or novelty of the questions raised;
  5. The skill, effort, specialised knowledge and responsibility involved;
  6. The time spent on the case;
  7. The place where and the circumstances in which work or any part of it was done; and
  8. The receiving party’s last approved or agreed budget.

This raises the obvious question, how does one demonstrate to the Court that the costs incurred are proportionate to the matters in issue? 

How can you get the court to accept that at every step of your case you worked in a way which was consistent with the factors under 44.3(2), 44.3(5) and 44.4(3)?

The answer is to provide evidence on the file that, at all stages throughout the case, you were cognisant of the issues which would impact on the level of costs.

In other words prepare a Case Plan.

Controlling costs were at the heart of the Woolf Reforms and subsequently the Jackson Reforms. The vast majority of the recent costs decisions which deal with proportionality refer back to one case Jefferson v National Freight Carriers Plc [2001] EWCA Civ 2082:

“In modern litigation, with the emphasis on proportionality, it is necessary for parties to make an assessment at the outset of the likely value of the claim and its importance and complexity, and then to plan in advance the necessary work, the appropriate level of person to carry out the work, the overall time which will be necessary and appropriate to spend on the various stages in bringing the action to trial, and the likely overall cost…

While it is not unusual for costs to exceed the amount in issue, it is, in the context of modern litigation such as the present case, one reason for seeking to curb the amount of work done, and the cost by reference to the need for proportionality.”

What this makes clear is that Case Plan should be a prepared on all cases. In an ideal world it will be prepared after the initial instructions have been taken. It should include the key considerations set out within the initial risk assessment and letter to the client. 

By extrapolating that information and having regard to the factors listed within CPR 44.3(5) and 44.4(3), an early Case Plan can be easily prepared, which can be used as a reference tool as the case goes on.

The obvious items to rely upon when preparing a Case Plan would some of the factors listed within CPR 44.4(3), for example:

- The amount or value of any money or property involved;
- The importance of the matter to all the parties;
- The particular complexity of the matter or the difficulty or novelty of the questions raised;
- The skill, effort, specialised knowledge and responsibility involved;
- The time spent on the case; and
- The place where and the circumstances in which work or any part of it was done.

Those points can be adapted to justify further issues such as:

- The fee earner(s) with conduct, the hourly rate(s) to be applied and why; 
- The likely work/time needed to fully investigate and advance the claim up to the issue of proceedings/the first CCMC; 
- The likely overall costs to be incurred; and
- Any potential complexities, difficulties or novel matters, which may mean the likely costs could/are likely to exceed the amount or value of the claim.

Having undertaken this exercise the Case Plan should be kept on the top of the file and updated at the salient stages of the case, e.g. after the Letter of Claim is sent; when the Letter of Response is received; or just prior to issue. 

To fully justify the Case Plan an accurate estimate of costs should be attached. Ideally, this will mirror the format used in Costs Budgeting and can easily be prepared by a Costs Lawyer at a reasonable and proportionate cost.  As with the main body of the plan on the file this should be reviewed periodically to ensure that it is correct.

The May decision offered guidance and a level of optimism for receiving parties in relation to how the proportionality test should apply.  However, one cannot escape the fact that different Judges will have their own views on proportionality and its application. With that in mind a Case Plan will be an essential tool in the litigator’s armoury. It offers an opportunity for litigators to extol their virtues and to let the Costs Judge know why the litigation was handled in a certain manner. It also allows litigators to demonstrate to the Court that costs have been managed effectively from the outset and throughout; and that they are proportionate to the matters in issue’.

A good Case Plan can be quoted in (or annexed to) the Bill of Costs and/or Replies to Points of Dispute. 

In short the Case Plan should provide an essential reinforcement that costs are both reasonable and proportionate. 

Should you require further information on the above, or to receive a Template Case Plan and Guidance Notes, please contact either Mark Hardcastle, at the Bristol Office of CCCL by telephone: 0117 203 4351; or by email: or Anil Virji, at the London Office of CCCL by telephone: 0207 842 5953; or by email: