West & Demouilpied v Stockport NHS Foundation Trust
New test? We say “new”, we are actually now 6 years post LASPO and 6 years since the implementation of the “new” proportionality test. We have had limited guidance in those 6 years but an awful lot of frustration regarding the inconsistency and different approaches taken regarding the test of proportionality.
Following on from the Court of Appeal’s decision this morning in West & Demouilpied v Stockport NHS Foundation Trust we have finally been provided with some further clarification on how the Courts should approach the “new” proportionality test in costs. Whilst we recently saw the decision of Malmsten v Bohinc  EWHC 1386 (Ch) in which it was concluded that at the end of the costs assessment a step back needed to be taken by the Court and weight given to the relevant factors as contained within CPR 44.3(5) the case of West & Demouilpied v Stockport NHS Foundation Trust has provided even more guidance.
It is clear since the “new” proportionality test was introduced there has been real sense of inconsistency at lower Court level as to how the “new” test should be applied. The case of West does now give stronger guidance on this point, but how does this impact us in practice? Where does this leave us when assessing whether costs are proportionate?
The Court were anxious not to restrict Judges or for them, when assessing a Bill to follow inflexible or overly-complex rules. However, in practice does this assist litigators when in reality the issue of proportionality has a significant impact on advice provided to clients in terms of recovery? Whilst we are in no doubt that this Judgment does provide further guidance, it is questioned as to whether it goes far enough.
The assessment itself…
Once a line-by-line assessment has taken place, where each item has been assessed as to its reasonableness the Court can then also consider the proportionality of individual items.
At the conclusion of the line-by-line exercise, there will be a total figure which the Judge considers to be reasonable (and which may, also take into account at least some aspects of proportionality). That total figure will have involved an assessment of every item of cost, including court fees, the ATE premium etc.
The proportionality of that total figure must be assessed by reference to both CPR 44.3(5) & CPR 44.4(1). If that total figure is found to be proportionate, then no further assessment is required. If the Judge regards the overall figure as disproportionate, then a further assessment is required. That should not be line-by-line, but should instead consider various categories of cost, such as disclosure or expert’s reports, or specific periods where particular costs were incurred, or particular parts of the profit costs. Subsequently we anticipate this will lead to the Court taking a step back and giving consideration to the individual phases or categories.
However, any reductions for proportionality should exclude those elements of costs which are properly regarded as unavoidable, such as court fees, the reasonable element of the ATE premium in clinical negligence cases, and the like as touched upon in Malmsten v Bohinc  EWHC 1386 (Ch) regarding VAT.
The Judge will undertake the proportionality assessment by looking at the different categories of costs (excluding the unavoidable items noted above) and considering, in respect of each such category, whether the costs incurred were disproportionate. If yes, then the judge will make such reduction as is appropriate. In that way, reductions for proportionality will be clear and transparent for both sides. Once any further reductions have been made, the resulting figure will be the final amount of the costs assessment. There would be no further stage of standing back and, if necessary, undertaking a yet further review.
We are hopeful that this provides some level of comfort for litigators but we wait to see how much this decision impacts on a practical level with the assessment process. We have separately reported on the ATE element of this case which will be of keen interest to clinical negligence practitioners in particular.
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