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
  • 26 June 2025
  • Employment

A shift in EHRC guidance on single sex spaces in the workplace

In a recent significant shift, the Equality and Human Rights Commission (“the EHRC”) has quietly amended its guidance on single sex spaces in the workplace.

art
  • 25 June 2025
  • Immigration

Immigration Changes in Statement HC 836 – what do they mean?

The UK government has released its latest Statement of Changes to the Immigration Rules (HC 836), with shocking implementation dates throughout July 2025.

art
  • 20 June 2025
  • Privacy and Data Protection

Data Protection reform receives Royal Assent: What is the Data (Use and Access) Act 2025 (DUAA) and what it means for your business

The UK’s data protection framework is about to undergo its most significant change since the UK GDPR came into force. After months of parliamentary debate, the Data (Use and Access) Act 2025 (‘DUAA’) has successfully received Royal Assent.

art
  • 18 June 2025
  • Employment

Pride Month: How Can You Celebrate as an Employer

The UK held its first Pride Parade in 1972, inspired by events held in major American cities following the Stonewall rebellion in New York in June 1969.

Pub
  • 16 June 2025
  • Privacy and Data Protection

WhatsApp in the workplace: Is it legally safe?

In this podcast, Lucy White and Monica Mastropasqua, members of the Data Protection team at Clarkslegal, will address frequently asked questions from clients regarding the use of WhatsApp at work.

art
  • 13 June 2025
  • Employment

Human Resources – A Shift Towards artificial intelligence?

On 6 May 2025, the SRA authorised the first law firm providing legal services through artificial intelligence. Garfield.Law will provide an AI-powered tool which can assist businesses with the small claims court process, to aid in recovering unpaid debts.