Search

How can we help?

Icon

Just because it’s reasonable doesn’t mean it’s proportionate

The Jackson reforms of costs in civil litigation (mostly) came into force on 1 April 2013, including a new test for proportionality.  However, in the intervening four years, there has been precious little authority as to what proportionality means in practice.  This has changed as a result of the judgment of the Senior Costs Judge, Master Gordon-Saker, in BNM and MGN Limited.

The litigation (as so often seems to be the case) concerned a relationship between an anonymous Claimant and a premiership footballer.  The Claimant lost her phone and it came into the possession of the Sunday People newspaper.  Although the phone was eventually returned to the Claimant, two years later she issued a claim for an injunction to restrain use of her confidential information and damages.  She entered into a conditional fee agreement (CFA) with both her solicitor and counsel and took out an after the event (ATE) insurance premium.  (Generally, additional CFA and ATE liabilities are no longer recoverable in litigation but the Claimant benefitted from transitional provisions for privacy cases).

The case settled before trial upon payment of £20,000, some low value non-financial relief and MGN’s agreement to pay the Claimant’s costs.

The Claimant sought costs in the sum of £241,817.  This included a success fee on her solicitor’s CFA of 60% and 75% on counsel’s CFA and an ATE premium of £61,480, including tax.

On assessment the Senior Costs Judge reduced the costs payable to £84,855 – just 35% of the total sum claimed.  He adopted a two-stage process to arrive at this figure.

  • He firstly assessed the costs for reasonableness on the usual ‘line by line’ basis. He reduced the success fee for both solicitors and counsel to 33% and, having reduced other base costs, brought the sum down to £167,389.
  • He then considered the issue of proportionality, taking into account the relatively low value of the settlement. In doing so, he reduced each of the sums claimed by a further half, including the ATE premium.

Chambers and Partners

The Clarkslegal team are commercial and good to work with. They get what our business needs and tell me what I need to hear.

There are several important lessons to be drawn from this decision.

  1. The proportionality test has real teeth. Even when costs have been reduced to a “reasonable” level, if disproportionate, they can be dramatically reduced still further.
  1. The proportionality tests allows for reductions to additional liabilities for CFA and ATE (although such examples will reduce as the transitional provisions come to an end).
  1. The ATE premium was also reduced by 50% even though the Court accepted that it was a reasonable price to pay in the market. In fact, the total costs awarded were only £23,375 more than the ATE premium paid, leading to a very large shortfall to be picked up by the Claimant, solicitor and/or counsel.

This decision may give some encouragement to litigants to bring proceedings, in the knowledge that they will not be ordered to pay disproportionate costs if unsuccessful.  Equally, it is clear warning that if litigation is conducted in a disproportionate manner the successful party will have to foot the shortfall in its costs.

About this article

Disclaimer

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

About this article

Read, listen and watch our latest insights

art
  • 29 July 2025
  • Commercial Real Estate

Right to Renew: The Law Commission’s Statement

Many commercial tenants occupy their premises under tenancies. Part 2 of the Landlord and Tenant Act 1954 (the “Act”) gives these business tenants the right to remain in their premises when their tenancies would have otherwise come to an end, this is known as a “right to renew” or “security of tenure”.

art
  • 29 July 2025
  • Corporate and M&A

Articles of Association v. Shareholders Agreement in England and Wales: Which one works best for you and your company?

The decision of whether to solely rely on a company’s Articles of Association or implement a bespoke Shareholders’ Agreement depends on the specific needs and priorities of the individual shareholders and the company alike.

Pub
  • 28 July 2025
  • Employment

Talking Employment Law: The Employment Rights Bill – Part 3

In part three of the Employment Rights Bill podcast series, Louise Keenan and Lucy White, members of the employment team, will discuss changes to fire and re-hire practices, harassment, zero-hour contracts and tribunal limitation periods.

art
  • 24 July 2025
  • Corporate and M&A

Deal Announcement: Clarkslegal’s corporate lawyers advise on the sale of Just Construction Recruitment Ltd to ASAP TT SAS

Clarkslegal’s corporate team is pleased to have advised the shareholders of Just Construction Recruitment Ltd on the sale of the company to French based, ASAP TT SAS.

art
  • 23 July 2025
  • Immigration

Home Office Announces Major Changes to Skilled Worker Route

On 1 July 2025, the Home Office released a new Statement of Changes (HC 997), delivering on the first phase of what the government calls a “sweeping reform” to the immigration system, as set out in the May 2025 Immigration White Paper. The changes to the Immigration Rules were enforced on 22 July 2025.

art
  • 21 July 2025
  • Employment

When the ‘Kiss Cam’ Captures More Than Just a Moment: Romantic Relationships in the Workplace and the Legal Risks

Imagine this: A packed Coldplay concert. Tens of thousands of fans. Suddenly, the “kiss cam” camera pans to the crowd and lands on a man and woman sharing an affectionate embrace.