Don’t be a victim – shore up your terms of engagement now

Only costs proportionate to the matters in issue will be allowed. Proportionality will be measured by comparison with:

• the sums in issue in the proceedings
• the value of any non-monetary relief
• the complexity of the litigation
• any additional work caused by the conduct of the paying party, and
• any other relevant factors, such as public importance.

Costs considered to be disproportionate in amount may be disallowed or reduced, even if they were reasonably or necessarily incurred (CPR 44.3(2)(a)). (See also PD 44.6.) Where there is doubt about whether costs are reasonable and proportionate, the uncertainty will be resolved in favour of the paying party (CPR 44.3(2)(b)). This enhanced ability of the court to disallow or reduce recoverable costs may well be a source of friction between experts and those who instruct them. But prudent experts will have pre-empted this potential upset in their terms of engagement.

[These provisions will only apply to costs assessed on the standard basis, which accounts for the vast bulk of all costs orders that are made. Costs assessed on an indemnity basis are not required to satisfy the test for proportionality because there is a presumption of proportionality in favour of the receiving party (CPR 44.3(3)).]