Guidance on Proportionate Costs

A decision of Mr Justice Nugee to make a costs management order during the course of the “HBOS Shareholder” litigation, Sharp & others v. Lloyds Banking Group & Others [2017] EWHC 141, has recently been published. In his short judgment, Nugee J addresses the question of how the Court decides what costs are “proportionate” and considers several previous decisions. The further guidance will be welcomed by practitioners, especially following the widespread disappointment that wider guidance was not provide by the Court of Appeal in BNM v. MGN [2017] EWCA Civ 1767.


The Defendant had submitted that the Court only had to be concerned with the amount of the costs in comparison to the value of the claim and, as the estimated costs of £24,000,000.00 were only 7% of the value of the claim, they were clearly proportionate. Nugee J took the view that the Court needed to be concerned with what “is or ought to be involved in the action”.


Interestingly, Nugee J accepted that, by using this definition, it “really becomes quite difficult to distinguish the reasonableness question from the proportionality question” but that the two concepts were distinct and that it was possible to categorise some costs as reasonable but not proportionate.


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