Kerry Underwood

PROPORTIONALITY AND ADDITIONAL LIABILITIES

with 4 comments


In BNM v MGN [2017] EWCA Civ 1767

the Court of Appeal held that the old pre-1 April 2013 proportionality test applies in relation to additional liabilities, that is success fees and After the Event insurance premiums, no matter when the additional liabilities were incurred.

The decision overturned the first instance decision of Master Gordon-Saker, who had held that the new rules applied.

The Court of Appeal said that if it had been intended that the new proportionality test was to apply, then that would have been made clear in the statutory provisions in relation to the new costs rules, but it was not.

The Court of Appeal rejected the paying party’s argument that the success fee and the ATE premium could be regarded as “fees and expenses”, according to the current definition of costs.

The general rule is that recoverability of additional liabilities remains only in relation to cases where the Conditional Fee Agreement and/or After the Event insurance arrangements were entered into on or before 31 March 2013 and thus this is a dwindling band of cases of nearly five years old or more.

However recoverability still applies in mesothelioma cases and also in defamation and breach of privacy cases, whenever the conditional fee agreement was entered into and whenever the after-the-event-insurance was taken out.

This ruling thus applies to all cases involving recoverable additional liabilities, whether or not the arrangements were entered into prior to 1 April 2013.

What the judgment did not do is to give any guidance as to how the new test of proportionality should be applied, in circumstances where the case is governed by the new rule.

Thus there is no guidance at all on what proportionality means in relation to ordinary recoverable costs in ordinary cases.

Thus we are no further on than we have been for the last five years.

Any such guidance would have been obiter and it makes sense to give guidance in a case where such guidance will be binding, not obiter, but it is to be hoped that that will be sooner, rather than later.

The Court of Appeal also commented that Lord Justice Jackson’s final report on costs did not assist in relation to the proportionality issue and, even if the report was properly admissible as an aid to construction, it was an unsound basis for undermining what the Court of Appeal considered to be the clear intention of the relevant Civil Procedure Rules and Practice Directions.

This was partly because the Civil Procedure Rules and Practice Directions did not implement Lord Justice Jackson’s proposals in relation to proportionality.

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Written by kerryunderwood

November 14, 2017 at 7:22 am

Posted in Uncategorized

4 Responses

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  1. Hi Kerry

    What happens to the ATE premiums in Clinical Negligence taken out post LASPO do they form the old or new test? Obviously there are major issues with these premiums.

    Thank you in advance.

    Maria

    Sent from my iPhone

    mbarker2014

    November 14, 2017 at 7:27 am

    • Maria,

      If you look at paragraph 68 of the Court of Appeal BNM judgment it makes clear that the new proportionality test will apply to the post-LASPO clinical negligence ATE premiums.

      Aaron Vodden

      November 14, 2017 at 10:55 am

      • Aaron

        Many thanks for your comment which is absolutely correct and please see my reply to Maria.

        Many thanks for getting involved in this issue.

        Kerry

        kerryunderwood

        November 15, 2017 at 2:49 pm

    • Maria

      Aaron is spot on – that is the new proportionality tests applies to that element of the ATE premium that remains recoverable in clinical negligence proceedings.

      The reason for this is that this is a new post-LASPO scheme, whereas all other recoverable additional liabilities either relate to pre-1 April 2013 funding arrangements, or relate to those matters such as mesothelioma or defamation/breach of privacy, where the law was not changed and thus the old regime remains in place.

      By analogy those post-31 March 2013 recoverable additional liabilities in relation to insolvency proceedings would also be subject to the old proportionality test.

      Recoverability of those additional liabilities in insolvency cases has now been abolished, but it did continue after 31 March 2013.

      Kerry

      kerryunderwood

      November 15, 2017 at 2:49 pm


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