In his Judgment in BN v. MGN Limited  EWHC B13 (Costs), dated 3 June 2016, Master Gordon-Saker has given guidance as to the need for costs awarded on the standard basis to be deemed. In this matter the Master was assessing costs following a claim for an injunction and damages, flowing from the Defendant obtaining confidential information about the Claimant (who was in a relationship with a celebrity footballer) from their lost mobile phone. The claim had been settled for a sum of £20,000 exclusive of costs.
After initially assessing reasonable costs in the sum of £167,389.45 the Master found that these sums were out of proportion to the nature of the claim, and he therefore halved the costs awarded (bar the court fees), allowing a total of £83,964.80. The Master noted that CPR 44.3, which came in to force after 1st April 2013, states as follows:
(2) Where the amount of costs is to be assessed on the standard basis, the court will –
(a) only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and
(b) resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party.
The inclusion of a requirement for costs to be proportionate was introduced after Sir Rupert Jackson’s final report, following his review of civil litigation costs, which proposed at Part 1, chapter 3, paragraph 15.3:
“ I propose that in an assessment of costs on the standard basis, proportionality should prevail over reasonableness and the proportionality test should be applied on a global basis. The court should first make an assessment of reasonable costs, having regard to the individual items in the bill, the time reasonably spent on those items and the other factors listed in CPR rule 44.5(3). The court should then stand back and consider whether the total figure is proportionate. If the total figure is not proportionate, the court should make an appropriate reduction”.
The Master then considered whether the new test of proportionality should be applied to additional liabilities. It was noted that whilst there was, before 1st April 2013, a requirement to consider additional liabilities separately from base costs under CPR 44.5, that requirement was not, in the Master’s view, preserved in the new provisions and “Ringfencing and excluding additional liabilities from the new test of proportionality would be a significant hindrance on the court's ability to comply with its obligation under CPR 44.3(2)(a) to allow only those costs which are proportionate”.
In assessing which costs were proportionate the Master noted that there was a lack of guidance and took in to account a number of factors, including the complexity of the case, specifically that the nature of the work was deemed “Londoncentric”, the applications that had been made in the matter and the work necessary for the Claimant’s representatives to undertake because of the Defendant’s conduct. The Master also noted the sentiment expressed by some that the costs should never exceed the value of a claim, but dismissed this, noting that it would have been simple for the rules to have specified this if that been what was intended and to restrict the approach to “financial proportionality” could, in the words of Mr Justice Warby in Stocker v. Stocker  1634 QB: “run the risk of disabling litigants from fairly presenting their cases”.