Pressure on litigation costs from “Proportionality”

New rules on the losing side paying the costs of the winning side in litigation can leave “winners” significantly out of pocket.

If you sue someone, and win, it is normal practice for your lawyers to ask the court to require the losers to pay for your costs in the action. A recent high profile case has shown, that you may not be awarded all, or even the majority, of your costs.

The musician Brian May sued his neighbours over a three year programme of noisy basement development. Mr May won, and was awarded £25,000 in compensation. He then requested, and was granted, his costs of more than £200,000. The other side objected. At this point the courts decided that Mr May’s costs were unreasonable, so they were reduced to less than half. Then the new rule of “proportionality” was applied, which dictates that if the costs are much higher than the damages, they must be reduced to be “in proportion”. So Mr May ended up with about £67,000 (including the compensation) as compared with the £208,000 that he spent on the suit.

In another example, a national newspaper settled a privacy claim with a primary school teacher for £20,000. After the proportionality rule had been applied to her application for costs, she was awarded £80,000 compared to the £240,000 that her legal advice and support had actually cost.

Rob Stubbs, a partner in local law firm Banner Jones Solicitors said, “It would appear that the new proportionality rule is aimed both at reducing the costs of litigation and encouraging the use of alternative dispute resolution mechanisms”.

If you would like assistance in relation to a neighbourhood dispute, call 0330 017 6309* to speak to our team or email info@bannerjones.co.uk.

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