CPR 44.3(5) Factors Considered | Proportionality Reduction Applied To Internal Communications Following Line-By-Line Assessment

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The Senior Courts Costs Office has provided valuable guidance on proportionality principles in a personal injury case where a bill totalling £517,985 was reduced by over £193,000 following detailed assessment. In XX v Jordan Young & Aviva Insurance Limited [2025] EWHC 2073 (SCCO), the court examined how vulnerability factors under CPR 44.3(5)(f) interact with proportionality considerations, whilst also clarifying the court’s jurisdiction regarding retrospective conduct allegations.

The Costs Context

The costs dispute arose from personal injury proceedings that settled for £149,000 net of contributory negligence, having been pleaded at up to £2.5 million. Leigh Day’s bill comprised profit costs of £349,826.92, counsel’s fees of £39,638.54, other disbursements of £43,783.05, and VAT of £84,736.49. The defendants challenged whether costs exceeding £500,000 bore a reasonable relationship to the settlement achieved.

Following a three-day detailed assessment before Costs Judge Nagalingam, the initial line-by-line assessment reduced the bill to £339,565.16, representing a 34.4% reduction. However, the court’s proportionality analysis resulted in further cuts, ultimately bringing the total down to £324,029.77.

The Proportionality Assessment | West v Stockport Applied

The court applied the mandatory approach established in West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220, completing the line-by-line assessment before considering proportionality. Having given a preliminary indication that the costs as claimed appeared disproportionate, Costs Judge Nagalingam analysed each factor under CPR 44.3(5).

Sums in Issue | Beyond Settlement Figures

The court rejected any limitation to the £149,000 settlement figure. Instead, it adopted a “notional bracket” approach spanning £149,000 to £2.5 million as representing the range of possible outcomes. The judge concluded, however, that whilst the true value exceeded £149,000, it was realistically closer to that figure than the pleaded maximum.

The court noted that the settlement terms expressly referenced contributory negligence, indicating the gross value exceeded the net settlement regardless of any conduct arguments.

Complexity and Conduct Factors

The litigation was neither straightforward nor particularly complex. Liability remained disputed throughout, with significant injuries creating medical complexity that generated legal complexity in quantifying damages. The court recognised that the defendants’ conduct in keeping liability live without making early settlement proposals generated additional work for the claimants.

Claimant Vulnerability | Multiple Contributing Factors

The court determined that claimant vulnerability was a relevant factor under CPR 44.3(5)(f). The judge identified several contributing factors:

  • Significant physical injuries sustained by the claimant
  • Impact on family members from the same incident
  • Isolation during Covid-19 lockdowns affecting a previously sociable individual
  • Language barriers requiring interpreters for documentation
  • The claimant’s age and specific dialect requirements

The court emphasised there is “no automatic presumption that a Claimant of advanced years alone equates to vulnerability,” but found the combination of factors meant the solicitors were dealing with a vulnerable client requiring additional work.

Surveillance Evidence and Retrospective Conduct Allegations | Court’s Jurisdictional Limits

The defendants tried to use the assessment proceedings to establish misconduct and exaggeration based on surveillance evidence, despite having already agreed settlement terms and a standard basis costs order. The court firmly rejected this approach, stating: “I rejected the assertion that on an assessment of costs I could retroactively conduct a trial of an issue that the Defendant had alleged but neglected to run to trial as an argument.”

The judgment clarifies that agreed terms in costs orders referring to conduct do not create a gateway for retrospective determinations of issues not pursued at trial. Such clauses are unnecessary as parties can always raise conduct issues in points of dispute.

The Final Proportionality Reduction | Internal Communications Targeted

Despite finding vulnerability factors, the court concluded the assessed sum remained disproportionate. Rather than applying a broad percentage reduction, the court adopted a targeted approach, identifying internal communications as requiring further scrutiny.

This element had already been reduced from £27,724.50 to £22,946.15 during line-by-line assessment but was cut further to £10,000 plus VAT on a broad brush basis. The court considered this reasonable for the case circumstances, resulting in base profit costs (excluding assessment costs) of £169,534.99 plus VAT.

Successful Claimant Awarded Only 50% Of Costs Due To “Imprecise, Vague And Wide-Ranging Case”

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Background

The matter concerned an action brought by Illiquidx Limited against Altana Wealth Limited, Lee Robinson, Steffen Kastner and Brevent Advisory Limited for breach of confidence, infringement of trade secrets, breach of contract and copyright infringement. Following a liability trial, Mr Justice Rajah handed down judgment on 13 February 2025, finding that Altana and Brevent had breached a non-disclosure agreement and misused Illiquidx’s confidential information and trade secrets in establishing and operating the Altana Credit Opportunities Fund. The copyright infringement claim failed, as did the claim seeking to establish Mr Kastner’s liability for the acts of Altana or Brevent.

The procedural history revealed significant difficulties with Illiquidx’s pleadings throughout the litigation. In December 2020, Illiquidx attempted to reformulate its case on confidential information, seeking to adopt terminology from CF Partners v Barclays Bank by pleading a “Big Idea” with component elements called “the Detail”. Deputy Master McQuail rejected this formulation as incoherent and unintelligible, a decision upheld by Mr Justice Miles on appeal. Following further attempts at clarification in early 2022, Illiquidx reframed its confidential information as “the Business Opportunity” with component parts identified in writing as “the Detail”.

At the Pre-Trial Review, the court refused Illiquidx’s application to expand its case on confidential information from the written Detail to include oral conversations and narrative elsewhere in the pleading. Despite these rulings, Illiquidx’s trial skeleton continued an expansive approach, making extensive reference to matters both within and outside the Detail. During closing submissions, Illiquidx’s counsel substantially dropped reliance on the Detail and argued instead that the Business Opportunity was simply the high-level idea of a sanctions-compliant fund, evidenced by only a few documents in the Detail.

The costs hearing took place on 6 June 2025, with judgment reserved. Illiquidx’s costs were stated to be approximately £6.6 million, whilst the defendants’ costs totalled approximately £5.5 million. Mr Robinson had accepted liability for Altana’s liabilities pursuant to paragraph 128 of the liability judgment.

Costs Issues Before the Court

The court was required to determine several discrete costs issues arising from the liability judgment. First, whether costs should be reserved pending determination of quantum or dealt with immediately. The defendants argued that Illiquidx had greatly overstated the value of its claim at £10 million when the true value of damages would likely be £100,000 or less at any quantum trial, and that this potential exaggeration could only be properly assessed after quantum had been determined.

Second, the court needed to determine the appropriate percentage deduction from Illiquidx’s costs to reflect its failure on the copyright and joint liability claims. Illiquidx conceded that some deduction was appropriate, proposing 10%, whilst the defendants argued for 14.7% attributable to these failed claims.

Third, and most significantly, the court was asked to consider whether further deductions should be made to reflect Illiquidx’s conduct of the litigation, particularly its failure to plead its case with clarity and precision. The defendants sought a total deduction of 61.5% of Illiquidx’s assessed costs, incorporating both the failed claims and conduct issues.

Finally, the court needed to determine the appropriate rate of interest on costs (Illiquidx seeking 2% above base rate, the defendants proposing 1% above base rate) and the appropriate interim payment on account of costs, with Illiquidx seeking 60% of 90% of its costs and the defendants proposing 50% of any costs ordered, reduced to account for unpaid interim costs orders in their favour.

The Parties’ Positions

Illiquidx submitted that as the overall winner on liability, the starting point under CPR 44.2(2)(a) was that its costs should be paid by Altana and Brevent. It accepted that a 10% deduction was appropriate to reflect the failed copyright and joint liability claims, which it acknowledged were discrete claims for additional relief rather than alternative routes to the same outcome. Illiquidx argued that costs should be determined immediately rather than reserved, relying on the general principle established in Langer v McKeown that costs should follow the outcome of discrete issues to encourage professional conduct of litigation.

On the conduct issue, Illiquidx resisted any further deduction beyond the 10% for failed claims. Counsel argued that its case, whilst perhaps obscurely pleaded, had ultimately succeeded and was available on the pleadings. It submitted that matters of excessive disclosure costs should be left to detailed assessment rather than dealt with by way of percentage reduction at this stage.

The defendants’ primary position was that costs should be reserved pending the quantum trial, arguing that only then could the court properly assess whether Illiquidx had exaggerated its claim as permitted under CPR 44.2(4)(a) and 44.2(5)(c) and (d). They highlighted that no Part 36 offers had been made but indicated that “without prejudice save as to costs” offers existed which included quantum, though they were unwilling to waive privilege to put these before the court.

On the substantive costs issues, the defendants argued for a 14.7% deduction for the failed copyright and joint liability claims, based on Mr Seadon’s detailed analysis. More significantly, they sought a total deduction of 61.5% to reflect the unnecessary costs incurred due to Illiquidx’s conduct. Mr Seadon’s witness statement attempted to calculate the extent to which costs had been inflated by the “expansive, imprecise and vague” way the claim had been pleaded, including excessive disclosure costs of over £1.1 million resulting in 13,526 documents being disclosed, of which only 452 were referred to at trial.

The defendants emphasised the basic injustice of facing vague and expansive pleadings which failed to properly identify the case they had to meet, arguing this had discouraged settlement and placed them on an unequal footing. They submitted that the lack of clarity and precision justified a substantial departure from the general rule on costs.

The Court’s Decision

Mr Justice Rajah first addressed whether costs should be reserved, holding that they should be determined immediately. He applied the principles from Langer v McKeown, emphasising that requiring losing parties to pay costs as they lose encourages professional conduct of litigation and selectivity in points taken. The court noted that apart from policy considerations, it was desirable to deal with costs whilst the trial and judgment remained fresh in the judge’s mind.

On the reservation point, the court held that if the defendants wished exaggeration of the claim to be considered at the liability stage, they could have made a global Part 36 offer giving the claim its fair value, or some other costs-protective offer. The existence of “without prejudice save as to costs” correspondence was insufficient, particularly where the defendants were unwilling to waive privilege. The court applied the principle from Langer that parties cannot “have it both ways by withholding admission of the evidence of the offer but still asking the court to take account of it”.

Turning to the substantive costs determination, the court found that costs had been significantly increased by Illiquidx’s failure to identify its case clearly. The judgment detailed how costs had been increased “at every turn” – in pleadings, disclosure, evidence, trial preparation, cross-examination and inter-solicitor correspondence. The court particularly criticised the disclosure exercise, which resulted in millions of documents being harvested at a cost exceeding £1.1 million, describing Illiquidx’s approach as “casting about to find a case”.

However, the court declined to displace the general rule entirely. Three factors influenced this decision: first, Illiquidx had won on a case that was pleaded, however obscurely; second, the defendants’ defence remained unaffected but unsuccessful; and third, the defendants had advanced a false case that Mr Robinson was already aware of most of the information and had independently conceived the fund idea.

The court ordered the defendants to pay 50% of Illiquidx’s assessed costs on the standard basis, representing both a reduction for the failed claims and the court’s disapproval of how the claim had been prosecuted. Interest was awarded at 2% above base rate from the date of payment to Illiquidx’s solicitors until judgment. The interim payment was set at 50% of the reduced figure (i.e., 25% of total costs), taking a cautious approach given the high hourly rates exceeding guideline rates and outstanding interim costs orders of approximately £77,000 in the defendants’ favour.

The court expressly rejected the suggestion that excessive disclosure costs should be left to detailed assessment, holding that where disclosure had been ordered or agreed by reference to pleaded issues, the Costs Judge would not revisit whether a different disclosure exercise should have been undertaken. The 50% reduction therefore reflected both the court’s disapproval of Illiquidx’s conduct and the likely additional costs caused by that approach.

Interpreter’s Fee Of £924 Deemed Recoverable Under The RTA Protocol But Disproportionate To £20,000 Settlement | Reduced To £794.40

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This case involved a determination regarding the quantum of a specific disbursement in the claim between Raphael De Lima Santiago (the Claimant) and the Motor Insurance Bureau (the Defendant). The procedural journey began when the Claimant, a Brazilian national whose first language is Portuguese, was involved in a road traffic accident on 22 May 2018 while working as a delivery driver in London. The accident, involving a Honda motorcycle driven by him and a scooter driven by Mr Joshua Odubolo, led to the motorcycle being deemed uneconomical to repair. Subsequently, the Claimant’s legal action included a claim for the cost of hiring a replacement motorcycle, amounting to over £46,000. The claim was initiated through the Road Traffic Accident (RTA) Protocol and filed at the County Court Money Claims Centre on 17 May 2021, a day before the expiration of the limitation period. Mr Odubolo did not mount a defense, leading to the Motor Insurers’ Bureau (MIB) being involved as a second defendant due to uncertainties regarding Mr Odubolo’s insurance status. The claim proceeded to trial at the County Court after being allocated to the Fast Track. The Claimant’s witness statement, originally in Portuguese, was translated into English by Bond Turner Solicitors, who also booked an independent interpreter for trial compliance. This direction was necessitated by the court’s conditions, precluding the use of internal translators from the Claimant’s solicitors at trial. On the day of trial, 11 August 2022, the case settled, with the MIB agreeing to pay £20,000 and the Claimant’s costs summarily assessed at £13,746.03. However, the Deputy District Judge Sneddon excluded the Interpreter’s Fee, citing CPR 45.29I(h) and relying on the Court of Appeal’s decision in Cham (A Child) v Aldred. Permission to appeal was granted, leading the matter to the Court of Appeal, which focused on the interpreter’s fee recoverability as a necessary disbursement due to the access to justice principle outlined in the overriding objective and Practice Direction 1A. The Court of Appeal, in its decision dated 14 July 2023, remitted the case for further determination of the reasonableness and proportionality of the interpreter’s fee quantified at £924. The court’s directions included guidelines for the defendant to challenge the fee if necessary within a given timeframe. The case was remitted to the court court and came before HHJ Dight CBE on 6 September 2024. Judgment was handed down on 21 February 2025.

Costs Issues Before the Court

The primary costs issue before the court was the assessment of the interpreter’s fee under CPR 45.29I(h). Following a remittance by the Court of Appeal to consider this disbursement, the central question was whether the fee for instructing an interpreter at the trial of the claim, claimed at £924 including VAT, was proportionate and reasonable. The Defendant’s contention included an alleged failure by the Claimant to provide a breakdown of the fee, suggesting the court either assess the fee at nil or reduce it to £300, drawing on the market rate for such services. The considerations also involved whether any part of the fee constituted an irrecoverable agency element, and if so, the impact of such an element on the recoverability of the total fee.

The Parties’ Positions

The Claimant, represented by Ben Williams KC, maintained that the interpreter’s fee, although involving an intermediary service provider, was a reasonable and proportionate fee within market standards. They argued that the booking was necessitated by the professional service context, and thus, a higher fee encompassing operational costs of the service provider was inevitable. The Claimant supplied comparable market quotations to substantiate their position, indicating the fee fell within a typical range and emphasising that any reduction should still recognise a reasonable market cost. Contrarily, the Defendant, through Robert Marven KC, contended the fee was unreasonably inflated and included an agency component that should not be recoverable under CPR 45.29I(h), referencing Crane v Canons Leisure Centre. They stressed the need for transparency, urging the court to compel disclosure of the fee breakdown, and argued for a reduction to a minimal sum of £300, aligned with direct bookings from public registers of interpreters at standard flat rates.

The Court’s Decision

His Hon Judge Dight CBE held that the interpreter’s fee was indeed a recoverable disbursement under CPR 45.29I(h). The Judge, after a meticulous analysis, rejected the argument that the fee should include an irrecoverable agency component when sourced through an intermediary. It was acknowledged that market practices for obtaining professional services often involve such intermediary costs, and the fee should be judged against prevailing market rates. The Court referenced the competitive market context for such services, drawing on data provided by the Claimant’s costs draftsman, Mr Neil Ryder, which showed a reasonable range of fees from similar service providers. The decision also took into account the proportionality rule under CPR 44.3, considering the entirety of the claim. The Judge held that the £924 fee was at the high end of the market range and was not proportionate to the claim’s settlement value and should be adjusted. Consequently, he determined an adjusted reasonable fee would be £662 plus VAT, totalling £794.40, thereby ensuring the fee was fair, reasonable and aligned with the proportionality bounds in relation to the claim’s overall value.

Costs Management | “Unrealistic And Unreasonable” Costs Budget Leads To Adverse Costs Award

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Background

These proceedings concern a complex construction dispute involving multiple defendants related to alleged defects in student accommodation constructed using modular building techniques. The claimants, GS Woodland Court GP 1 and GP 2 Limited, acting as general partners for GS Woodland Court Limited Partnership, brought proceedings against seven defendants involving significant allegations concerning fire safety attenuation and construction defects.

The construction was managed on a construction-management basis, with seven defendants spanning different aspects of the project: the construction manager, architect, cladding contractor, modular unit supplier, developer, fire-stopping works contractor, and installer. The claim involved allegations that numerous fire safety defects had not been properly implemented in the modular accommodation.

A half-day Costs Management hearing was convened to assess and manage the litigation costs, during which an unusual application was made by several defendants for their costs of the Costs Management hearing itself. The total claim against the defendants was approximately £11 million, with potential remediation costs estimated at £30 million.

Costs Issues Before the Court

The primary costs issues before the court included:

1. Assessment of the reasonableness and proportionality of the claimants’ costs budget
2. Evaluation of the claimed hourly rates against guideline rates
3. Consideration of the defendants’ application for costs of the Costs Management hearing
4. Determining an appropriate approach to costs management in multi-defendant construction litigation

The Parties’ Positions

The claimants (represented by Ms Packman KC) argued that the complexity of a multi-defendant case justified their approach. They initially sought a costs budget of £8.74 million, which was subsequently reduced to approximately £7.4 million.

The defendants (particularly represented by Ms Stephens KC) contended that the claimants’ costs were disproportionate and unreasonable. They highlighted significant discrepancies between the claimed rates and the Guideline Rates, with the claimants’ solicitors charging substantially higher rates without meaningful justification.

The Court’s Decision

Mr Justice Constable made several critical observations:

1. Rates: The claimed rates significantly exceeded Guideline Rates, with Jones Day charging rates substantially higher than recommended. The court indicated a potential downward adjustment of approximately £1.4 million solely based on rate reductions.

2. Proportionality: While acknowledging the case’s complexity, the judge suggested the claimants’ costs were potentially disproportionate, particularly when compared with the defendants’ aggregate costs.

3. Costs Management Hearing: Applying recent authorities (Nicholas Worcester v Dr Philip Hopley and Jenkins v Thurrock Council), the court determined that the claimants’ unrealistic initial budget warranted potential cost consequences.

4. Final Outcome: The court approved a reduced budget of £4.212 million for estimated costs and granted the defendants’ application for costs of the Costs Management hearing, with D2, D3, and D4/D5 recovering their reasonable attendance costs from the claimants.

Medical Agency Fees | “Proportionality Demands Transparency”

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Ena Aminu-Edu versus Esure Insurance Company Limited involved a dispute over the recoverability of a medical agency fee within a pain management expert report disbursement. The Claimant argued that under the fixed costs regime, disclosure of a breakdown was unnecessary, while the Defendant maintained that transparency was essential to assess reasonableness and proportionality. The court held that transparency is crucial, and commissioning solicitors should evaluate the reasonableness of agency fees before incurring them. The judge ordered that unless the breakdown was provided, the Claimant’s recoverable costs for the disbursement would be reduced from £2,430 plus VAT to £750 plus VAT.

“The Claimant (or her advisers) can use agencies that are prepared to be transparent rather than those who are not. Alternatively, the work can be done in-house as it always was. It seems to me to be that it would be an enfeebled court system that buckled under any suggestion that a non-transparent cartel would simply withdraw its services en mass from the market if required to be open. The agencies may be cheaper than in-house services in which case the agencies should not hesitate to tell us and should be displaying their proportionality for all to see.”

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Costs Of Attending Rehabilitation Case Management Meetings Not Inherently Irrecoverable | CA Decision

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“…for the reasons we have given, we allow the appeal. But the only real consequence is that the defendant can take all the reasonableness/proportionality arguments that they always wanted to take at the assessment stage. Those are arguments for which, as we have said, we have sympathy. In all those circumstances, we would urge the parties to agree a realistic order as to the costs of this appeal.”

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Costs Budget Comparison Not Intrinsically Irrelevant

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In Woolley v Ministry of Justice, the claimant brought a personal injury claim against the Ministry of Justice following an assault he suffered while a remand prisoner. At a CCMC HHJ Baucher significantly reduced the claimant’s  costs budget. The claimant argued that the judge had erred in law by refusing to consider the defendant’s agreed costs budget when assessing proportionality of his own. He also submitted the approved budget left him with much lower funding than the defendant, failing to keep the parties on an equal footing. The Ministry of Justice contended that comparisons between budgets were of limited relevance. It was for the judge to assess proportionality of the claimant’s budget, which she had done. The High Court allowed the claimant’s appeal, finding that the judge had disregarded a relevant consideration in refusing to hear submissions based on the defendant’s budget. Her language when addressing claimant’s counsel was also criticised and termed “indefensible”.

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Letters Of Claim, Schedules Of Loss, Experts’ Fees And Hourly Rates | A Standard, Standard Basis Assessment

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In the judgment of HD v Northern Devon Healthcare NHS Trust [2023] EWHC 2118 (SCCO), Costs Judge James decided several preliminaty issues concerning the reasonableness and proportionality of Fortitude Law’s costs in representing claimants in several clinical negligence cases. The NHS Trust challenged the extensive and duplicative nature of the Letters of Claim and the over-pleading of the Schedules of Loss. They also criticised the medical experts’ fees, highlighting the extensive use of precedents and questioning the correlation between the fees claimed and the work undertaken. The judge, after thorough examination, found several aspects of Fortitude Law’s costs to be disproportionate. The judgment underscored the importance of maintaining proportionality in legal costs, especially in cases settled pre-issue. It also emphasises the need for legal practitioners to ensure that costs correlate reasonably with the work produced, particularly when using precedents.

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