24th September 2019
Gwendoline Davies, a Partner in Walker Morris’ Commercial Dispute Resolution Team, highlights a Court of Appeal case which offers important guidance on the application of the test for proportionality of litigation costs.
Hot on the heels of the first High Court decision to deal with the proportionality test under the Civil Procedure Rules (CPR)  comes another key judgment, this time from the Court of Appeal. Although this most recent case dealt specifically with after-the-event insurance premiums in the clinical negligence context, its significance is much wider, as the Court of Appeal’s decision contains important guidance on the application of the proportionality test and goes some way to unifying the different approaches used by the courts to date.
The judgment in West v Stockport NHS Foundation Trust and Demouilpied v Stockport NHS Foundation Trust  represents another step in the right direction in terms of clarity and transparency for parties and practitioners when it comes to determining proportionality in litigation costs. The courts continue to recognise that there has previously been a lack of consistency in the way costs have been assessed, and that there is a need to balance a cohesive, practical approach to proportionality with sufficient flexibility to ensure that litigation costs are assessed appropriately and fairly in each case.
This recent case helps to clarify the practical steps that a judge will take in order to carry out an assessment of proportionality. However, the issue remains that it is intrinsically difficult to apply a concrete definition to the concept of proportionality and it is important to note that each case will still inevitably involve an element of an individual judge’s subjective interpretation.
The claimants purchased after-the-event insurance premiums as part of two separate clinical negligence claims against the same NHS hospital trust. In the first instance, the premiums were reduced by costs judges because they were considered to be disproportionate. The Court of Appeal reversed the decision and, in conjunction with their specific determination regarding the treatment of insurance premiums of this type, provided some comprehensive guidance on the proper approach to be taken by judges when assessing costs.
As noted in our previous article, under the CPR , costs incurred in the course of litigation are considered proportionate if they bear a reasonable relationship to:
However, the Court of Appeal made clear in this case that assessments of proportionality should not be limited to just these specific circumstances, but should also take into account any wider circumstances where these are relevant .
While the Court of Appeal was cautious of imposing any overly-complex or inflexible rules upon judges when assessing a bill of costs, it did offer the following guidance:
 For information and advice, please see our earlier briefing
  EWCA Civ 1220
 CPR 44.3(5)
 As identified in CPR 44.4(1)