It’s been six years since the introduction of the “new” proportionality rule in CPR 44.3(5). In that time there have been a handful of decisions at circuit judge level but none from the higher courts, until now. On appeal from Master Whalan in the Senior Courts Costs Office, The Hon. Mr Justice Marcus Smith was tasked with determining a number of issues arising from the detailed assessment of costs including the correct approach to proportionality. Unfortunately, but not surprisingly, the decision does not offer much in the way of general guidance.

In Business Environment Bow Lane Limited v Deanwater Estates Limited [2009] EWHC 2014 (Ch), the Court of Appeal had ordered the tenant to pay the landlord’s costs of a preliminary issue, which the tenant won at first instance but lost on appeal. The claim was ultimately settled for a nominal sum, with the trial judge finding that the landlord had grossly exaggerated the claim and ordering it to pay the tenant’s costs on an indemnity basis. On the assessment of the landlord’s preliminary issue costs, the costs judge disallowed them entirely, holding that they were unreasonably incurred in light of the claim’s exaggerated nature. The High Court allowed the landlord’s appeal, finding that the Court of Appeal’s costs order was a self-contained decision that had to be given effect to and assessed based on reasonableness within the context of the preliminary issue alone, irrespective of the claim’s ultimate outcome or findings of exaggeration. The landlord relied on Cope v United Dairies [1963] 2 QB 33, in which it was held that an assessing tribunal must carry out the assessment as directed by the previous court, and cannot refuse to do so because it considers the order to be wrong.

Following proceedings for an account by the claimants as executors of what they had done with the deceased’s estate HJJ Matthews ordered that defendant do pay 80% of the claimant’s costs. He was then asked to decide whether the claimants should be entitled to an indemnity for the remaining 20% balance from the estate. Concluding that whilst they had lost on some issues the claimants had not behaved improperly or unreasonably and in accordance with section 31 of the Trustee Act 2000 (applied to executors by section 35) and CPR Part 46 Practice Direction, paragraph 1 they were entitled to such an indemnity.