Mrs Mavis Ann Hobbs v Guy’s and St Thomas’ NHS Foundation Trust

Summary of Facts

The Senior Court Costs Office has confirmed that when claiming costs, proportionality   trumps the reasonableness of their being incurred.

The case settled for £3,500 in damages – however the legal costs were £32,329.12. The court reduced these by two-thirds.

The case is a useful illustration of the new rules concerning costs and is relevant to all litigation.

The Decision

When the case came before a costs Judge, he criticised the fact that most of the work by the solicitors representing the Defendant was done by a senior solicitor. He did not accept “that this case merited a top level fee earner at any stage.” He decided that the conduct of the case was “not of such weight or responsibility” which would justify this.

He went on to explain that the new test of proportionality was to be applied to the case in respect of costs incurred after 1 April 2013. The factors to be taken into consideration of whether or not costs are proportional are set out in the Civil Procedure rules, as follows:

  1. the sums in issue in the proceedings;
  2. the value of any non-monetary relief in issue in the proceedings;
  3. the complexity of the litigation;
  4. any additional work generated by the conduct of the paying party; and
  5. any wider factors involved in the proceedings, such as reputation or public importance.

Further, the Civil Procedure Rules also state that “costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred”.

The Judge found that the costs incurred by the Claimant in this case were reasonable, however they were not proportionate. His approach was to exclude “particular items of work” incurred rather than remove a portion of the total costs incurred. He went on to say “although it was reasonable for the Claimant’s solicitors to incur these costs it is unfair to expect the Defendant to pay for these items.”

The adjustment made on the ground of proportionality reduced the total costs provisionally allowed to a figure below £10,000 (including VAT but excluding the costs of the provisional assessment). However, he went on to say that the costs were still high compared to the value of the claim. This was justified on the basis that it was necessary in light of the complexity of clinical negligence claims which involve more work than other claims of similar value.

Conclusion

Costs must be proportional to the value of the claim. That is the simple rule that litigants need to know when budgeting for costs. As this case illustrates, even costs that were found to be reasonable could still be irrecoverable if they are disproportionate.

In some low value cases, it will be harder than ever to recover costs. Even in high value claims, the court will expect the costs to be proportional to the complexity of the claim. It is important to note that the court expects litigants to endeavour to resolve disputes through mediation and alternative dispute resolution.