Following his decision concerning CPR 3.18(b) and good reason to depart HHJ Dight went on to consider proportionality.
HIS HONOUR JUDGE DIGHT:
43. I turn then to the third ground of appeal, the question of the application of the global proportionality test, contained in CPR 44.3, where, in sub-rule (2), the rules provide:
“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 may be disallowed or reduced, even if they were reasonably or necessarily incurred. [Sub-rule 5 goes on to provide] Costs incurred are proportionate if they bear a reasonable relationship to (a) the sums in issue in the proceedings, (b) the value of any non-monetary relief in issue in the proceedings, (c) the complexity of the litigation, (d) any additional work generated by the conduct of the paying party, and (e) any wider factors involved in the proceedings, such as reputational public importance.”
44. In undertaking such an exercise, there is necessarily a wide range of potential outcomes, and I remind myself that this court on appeal should not interfere with the conclusions reached by the costs judge undertaking such an exercise except in a plain case. The paying party in this case submits that there is no reasonable relationship between the value of the claim, the £7,000 settlement, and the £40,000 at which the learned costs judge concluded was the proportionate figure for costs, having regard to the 44.3(5) factors. Mr Hutton submits that £25,000 is the figure which the paying party should ultimately have been obliged to pay. Mr Mallalieu, on behalf of the receiving party, says that the Master directed himself correctly and that the weight to be given to each factor was a matter for him, and his conclusion cannot be challenged.
45. I heard submissions in effect in respect of each of the sub-paragraphs of rule 44.3(5): the learned judge dealt with those factors in paragraphs 65 to 78 of the transcript of the judgment.
So far as factor (a) is concerned, the sums in issue in the proceedings, the learned Master dealt with this in paragraphs 66 and 67, where he said that the maximum potential value of the claim was somewhere between £10,000 and £12,000, at most £10,000 and £15,000.
He held in paragraph 66 that the sum claimed was by reason of the defendant’s stance on liability the whole sum claimed in the proceedings. The paying party submits that the learned judge overstated the figure in issue, but not significantly.
The paying party’s real submission made in reliance on this factor was that the learned Master gave insufficient weight to it; it should have been given primacy among the relevant factors because £40,000 bears no reasonable relationship to the value of the claim and the £7,000 for which it settled.
The parties were in agreement that there were no non-monetary questions in issue in this case.
47. There was some dispute about factor (c), the complexity of the litigation. The learned Master dealt with it in paragraph 69 of his judgment; he said:
“It is both complicated and arguably rendered more straightforward by the fact that it is not an accident as such that occurred during surgery, but rather the question of posture during surgery, which, on the first or one hand, makes it at least in conception a more straightforward concept, but on the other hand a more difficult concept to construe and decide, given the difficulty in finding an expert capable of giving clear opinions on that issue.”
48. He referred to the fact that there were two experts on each side, on both liability – ie breach of duty – and causation, and said, “So, to that extent the claim has some complexity, but, again, in comparative terms, a claim of relative straightforwardness”. The paying party says that the case was not in fact complex, even though it was a clinical negligence claim, because the issue was whether the claimant’s arm was positioned incorrectly during surgery, and, in any event, the alleged complexity was not causative of additional work or costs. The receiving party says that it was a relatively complicated case because the experts were not in agreement, there was room for legitimate disagreement between them, it was a clinical negligence case. In any event, the receiving party does not really suggest that the learned Master in his analysis of complexity got it wrong.
It seems to me that, when one is looking at complexity of the litigation, it has to be looked at in the context not of the particular category of litigation which it forms part of, but of the overall work of the court, where it is one of the cases which is being dealt with.
Undoubtedly, this was not a complex clinical negligence case, but it was in the great scheme of things more complicated than much of the usual work of the County Court, and, in my judgment, 44.3(5)(c) requires one to look not only at the niche area in which the work falls, but at all the circumstances including the general run of work which the court handles.
It is, of course, only one of the factors which can render the overall relationship between the costs and the factors reasonable or not.
50. Sub-paragraph (d) has caused more debate between the parties; it is “any additional work generated by the conduct of the paying party”. The learned Master dealt with this, on the face of it, in paragraph 72 of his judgment, where he said:
“Paragraph d. Any additional work generated by the conduct of the paying party, the key phrase in that part of the sub-paragraph is ‘additional work’. Insofar as the defendants amounted a bullish defence and did not concede liability until a comparatively late stage, when they offered terms of settlement, that generated necessarily work in litigation, but it is not really additional work that falls within this category that falls within the complexity of the litigation. There is no culpable or contumelious conduct on behalf of either party, let alone the paying party, that led to additional work unnecessarily generated.”
51. The paying party relies on the fact that, when the learned Master came to the identify the figure finally be paid appears to have reached a conclusion (paragraph 77) which was inconsistent with paragraph 72 (above). He said:
“After some considerable thought, and cautiously in the light of all the factors I have made, that, given specifically in this case on the one hand the value of the claim as represented by the sums in issue, but on the other hand this cuts the other way, the complexity of the litigation in the context of the defence’s deliberate and unnecessarily belligerent defence, this is a case where some further adjustment is necessary. ”
52. The paying party submits that the learned Master therefore reached inconsistent conclusions in respect of sub-paragraph (d) of the rule in his comments contained at paragraphs 72 and 77, that his reasoning cannot be properly understood, and that, insofar as he came to the conclusion that the defendant’s behaviour was “belligerent” and ought to have the impact of increasing the amount of costs which they had to pay, there was no material on which he could properly have come to that conclusion.
53. Mr Hutton says that the defendant was entitled to defend the claim on the basis of its expert evidence, and that the stance that it took was proper, that its position was neither bullish nor belligerent. But it seems to me that, with the greatest respect, the paying party has misread what the learned judge said: in paragraph 72, the learned judge directed himself correctly as to the test to be applied when he set out the words of CPR 44.35(d), and he specifically identified the fact that there had to be a causal connection between the conduct of the paying party and the costs said to have been incurred (as a result) by the receiving party, and he found that there was no such link. It seems to me that there is nothing wrong with paragraph 72; it does not contain a misdirection.
54. Paragraph 77, however, has to be considered in its proper context. That is the paragraph in which the learned judge balanced the various factors (a) to (e) and reached his conclusion, and, in that context, the reference to an “unnecessarily belligerent defence” is properly understandable. The whole passage reads as follows:
“This is a case where, after some careful reflection, and on the facts of this particular case, I’ve reached the conclusion that the costs are, as assessed, prima facie disproportionate, and that this is one of those cases where it is necessary to apply a second stage assessment to bring the total back into the realms of reasonable proportionality. I do so again after some considerable thought, and cautiously in the light of all the factors I have made, that, given specifically in this case on the one hand the value of the claim as represented by the sums in issue, but on the other hand this cuts the other way, the complexity of the litigation in the context of the defence’s deliberate and unnecessarily belligerent defence, this is a case where some further adjustment is necessary.”
55. Standing back, what the learned judge was doing, it seems to me, was reducing the amount of the costs that are payable because of the relatively low value of the claim, but he also increasing the sum payable, not because of the behaviour of the paying party, but because of the complexity of the litigation.
The reason why he referred to the behaviour of the paying party is because it is that behaviour, and in particular the way in which they drafted the defence, which made the case more complicated than it need otherwise have been.
It does not mean that additional work was incurred and that factor (d) was engaged,
it means that the litigation became more complicated because there were more issues in dispute than there would otherwise have been had the paying party accepted some of the matters which it was criticised for making non-admissions in respect of in its defence.
56. There is, in my judgment, no inconsistency between paragraph 72 and 77; the reasoning is perfectly clear.
57. Looking at the whole of this section of the judgment, the learned judge went through the factors which he was obliged to have regard to, in a structured way, he analysed each of them, and, in paragraph 77, carried out the balancing exercise.
One cannot expect a judge to attribute specific figures or percentages to any of these factors, but, merely to weigh them and come to a balanced conclusion in the way that the learned judge did.
As he said in paragraph 78, he started with a figure of £52,000-odd, and, “employing a necessarily broad brush to the question of proportionality, I’m going to reduce that figure to a net subtotal of £40,000”.
58. That conclusion cannot properly be impugned. It was within a reasonable range of outcomes in the assessment of the reasonable relationship between the costs and the factors in 44.35, approached in the correct way, and, in my judgment, the learned judge cannot be criticised for it. I would therefore dismiss the third ground of appeal.
59. The consequences, however, of the conclusions that I have reached are that, having allowed the appeal on the first two grounds, it follows that the starting-point for the exercise for the application of the proportionality test might have shifted.
60. There will have to be, in the absence of an agreement, a re-assessment, which can be undertaken by this court, of the figures properly payable in respect of parts 15 and 17, and then, given the way in which the learned judge approached the question of proportionality, it seems to me – again in the absence of agreement – that the court is going to have to reassess the proportionality if the starting figure is different to the £52,000-odd that the learned Master first assessed the costs at, but in that respect I am open to further suggestions from the parties. For all those reasons, I would allow the appeal.