07 December, 2017
BNM v MGN LTD (2017) EWCA Civ 1767 CA (Civ Div)
In this anticipated Judgment the Court of Appeal overturned the decision of the Senior Costs Judge and confirmed that the old proportionality test applies to pre-commencement and recoverable additional liabilities.
The Claimant had commenced a privacy claim against the Sunday People Newspaper in July 2013 with the benefit of a CFA and an ATE insurance policy. The Claimant's claim succeeded and when the matter of costs came to be determined by the Senior Costs Judge, it was ruled that the new proportionality rule applied to the assessment of the additional liabilities. As a result the sums awarded to the Claimant were significantly slashed on the basis that they were disproportionate (although deemed by the Judge to be both reasonable and necessary).
At the appeal, it was concluded by the Court of Appeal that the assessment of the success fees and the ATE insurance premiums should have been conducted in accordance with the proportionality test in the old CPR.44.4(2) and the relevant provisions in the old costs practice direction supplementing Pt 44. If it had been intended that the new proportionality test was to apply to such funding arrangements that would have been made clear in the statutory provisions or the new costs rules. The assessment will now be remitted to the Senior Costs Judge to reconsider the proportionality of the costs.
Whilst this decision has confirmed the appropriate approach to be applied to additional liabilities when considering proportionality, the Court of Appeal refrained from offering any guidance on the practical application of proportionality which is currently resulting in unpredictable and inconsistent outcomes. Three conjoined appeals are due to be heard by the Court of Appeal shortly and it is hoped that the Court of Appeal will use this opportunity to refine the principle of proportionality.