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Proportionality bites again... on entire costs claim

Posted by Toby Moreton on Feb 22 - 2017

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Costs Judge, Master Simons, has slashed a Bill of Costs from £72,320 to £24,600 in a clinical negligence case which settled for £3,250. The reductions were made at provisional assessment and, aside from some minor increases, were maintained at an oral hearing.

Of some significance is the fact that, in agreement with the senior costs judge, Master Gordon-Saker in BNM v MGN Limited [2016] EWHC B13 (Costs), Master Simons found that the new proportionality test applied to pre LASPO additional liabilities. He went on to conclude, in relation to an ATE premium claimed at £31,976.49 (albeit erroneously, and at the hearing amended to £22,225.23):

"Having decided that the amount of the premium is disproportionate I am, as recommended by Lord Jackson, entitled to stand back and decide what a proportionate premium is. At provisional assessment I decided that £2,120, inclusive of IPT, was a reasonable and proportionate premium.... I have decided not to interfere the decision..., so the sum of £2,120 inclusive of IPT should be allowed."

The conclusion that additional liabilities should be subject to the new proportionality test is the subject of increasing uncertainty. BNM is headed for the Court of Appeal. In the meantime, in contrast to the findings of Master Simons and Master Gordon-Saker, two other costs judges, Master Rowley and Master Brown have concluded otherwise, determining that only base costs should be subject to the test.

In King v Basildon & Thurrock University Hospitals NHS Foundation Trust Master Rowley found that:

"Given that the proportionality test in 44.3(5) only applies to work carried out since that definition of costs came into being, the obvious interpretation is that it only relates to the base costs of a CFA. It is not clear to me why additional liabilities should necessarily be caught by a test which is based on a definition recast specifically to exclude such liabilities.”

Sitting as a county court judge in Murrells v Cambridge University NHS Foundation Trust, Master Brown, in a carefully reasoned and highly analytical decision, in concurrence with Master Rowley observed that: 

"To apply the new test to additional liabilities in the way contended for would ... require many litigants to submit to a substantial, if not complete, disallowance of their additional liabilities as against the other party or parties to the litigation, whilst at the same time the liability to pay an insurer or the lawyers the additional liability would be preserved.

“If that were right it would inevitably lead to many litigants, including -it might be observed- victims of mesothelioma, having to give up deserving claims or defences. I agree with Master Rowley: in these circumstances the defendant’s contention cannot be reconciled with transitional provisions and the clear will of Parliament. The intention must have been to provide, at the very least, an orderly retreat from the old funding scheme…

"Parliament could not have intended such a radical departure from the previous approach to the assessment of additional liabilities. It would have had in mind the earlier authorities ... and could not have intended an outcome which would preclude the recovery in many cases of any or any substantial proportion of additional liabilities reasonably incurred. Indeed, had it intended such a radical departure from the earlier approach the rules would have done so expressly."

It seems to us - in respectful disagreement with Master Simons and Master Gordon-Saker - that this position must be right. However, uncertainty will remain until the Court of Appeal hears BNM later in the year.

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