The new test of proportionality has been effective for two years now and the old Lownds test of necessity is gradually falling away (although there are a fair number of paying parties still apparently unaware of the change which is potentially a welcome let off for receiving parties).

Despite many judges failing to get to grips with it, application of the new test is actually straight forward requiring the judge to carry out and complete an assessment based on reasonableness, and to subsequently consider whether those costs are disproportionate with regard to the factors under 44.3(5). A further reduction may be made on those grounds regardless of whether costs have been reasonably incurred.

Given there’s no spreadsheet based method currently being utilised by judges on Provisional Assessment to re-calculate bills as they go, and there are obvious difficulties for judges to manually re-calculate bills within the allotted time, it is simply not done. Therefore without knowing the amount of costs assessed on grounds of reasonableness, the proportionality test cannot be carried out.

Andrew Hogan, of Ropewalk Chambers, suggests the problem could be addressed in two ways.

“The first is for practitioners to recast their case on proportionality and put the proportionality point at the end of the Points of Dispute and suggest a figure, for what they contend is a proportionate sum for the total sum of costs to be allowed notwithstanding any conclusions on the reasonableness of individual items. In effect instead of asking a costs judge to rule that costs are proportionate or disproportionate, to rule what figure would be a proportionate award of costs. In a sense, this is not only the ultimate question on assessment, it has the potential to be the only question.

The second is to specifically ask the costs judge not to rule on proportionality, until the maths has been done by the parties, on the basis of his conclusions on the reasonableness of individual items. Then and only then, will he be able to conclude whether the costs as allowed to that point are proportionate or whether a further reduction is required.”

We are seeing those judges with a handle on things sending bills back to the parties following Provisional Assessment to re-calculate and requesting it is re-submitted when a figure has been agreed in order for them to then apply the proportionality test. In effect, a two-stage assessment.