The recent divorce case of Young v Young has refocused the discussion surrounding high legal costs and triggered much debate about how proportionality of costs can, in some circumstances, put claimants at a disadvantage.
By way of background, the divorcee Michelle Young was awarded £20 million but spent remarkable £6.4 million in her legal costs which were described by the judge as ‘completely unacceptable’. The judge did acknowledge, however, that these costs were a direct result of her financial difficulties in getting divorced which had caused her to repeatedly change legal teams.
The overriding objective of the Civil Procedure Rules has recently been amended to make sure that the proportionality of costs is a central tenet in settling a dispute. There has been no detailed guidance on how this is to be interpreted but the current theme emanating from the courts appears to be that the amount at stake will be the main consideration when assessing whether costs are proportionate. Consequently, this means that even if costs are reasonably incurred and necessary for pursuing a case, if they appear disproportionate to the amount won, then they will be reduced accordingly.
It can therefore be seen that this current reasoning could work to the advantage of an unhelpful defendant. It is obvious, for example, that if a defendant is repeatedly opposed to the idea of negotiating a financial settlement then the costs will be higher. This can lead to the scenario where the cost of litigation will become too high in relation to likely damages. The result of which means that even if a claimant is successful in bringing their claim they will still not be able to recover all their costs from the defendant.
This issue is not only relevant to high cost divorce cases but may also become an issue for many other claims. In areas where legal aid has been removed, such as with employment disputes, the claimant will have to think carefully when pursuing an action as if their costs are too high then the balance of their incurred costs will have to be factored against the eventual likely settlement they could achieve.
Proportionality of costs could consequently have the impact of making it uneconomical for private individuals to bring relatively small claims. This makes one consider, how well does proportionality of costs sit with the other element of the overriding objective of dealing with a case justly?
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