BNM v MGN Ltd – Proportionality and pre-LASPO cases: the test

As is well known, the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”) abolished the recoverability of success fees and ATE premiums after 1 April 2013 save for CFAs entered into, and ATE policies taken out, before 1 April 2013.

To that abolition there have been some limited exceptions.  Those exceptions include “publication and privacy proceedings”.  To date the LASPO abolition still does not apply to such proceedings.

In BNM v MGN Ltd [2017] EWCA Civ 1767, in which the Court of Appeal’s reserved judgment was handed down yesterday (7 November 2017), the Claimant (BNM) had brought privacy proceedings seeking to prevent publication by MGN of details of her relationship with a successful premiership footballer.  Those proceedings settled in July 2014 following MGN’s offer to pay damages of £20,000 and on terms (among others) that MGN pay BNM’s standard basis costs.

BNM claimed costs of £241,817, which included a success fee in respect of her solicitors’ costs of 60 per cent, success fees in respect of counsel of 75 per cent, and an ATE insurance premium of £58,000 plus £3,840 IPT. BNM’s CFAs with her solicitor and counsel, and her ATE policy, all post-dated 1 April 2013. Her costs fell to be considered by the Senior Costs Judge (Master Gordon-Saker) at a detailed assessment.  The core issue before him was whether the assessment of the success fees and ATE premium were to be subject to the pre-April 2013 proportionality rules at the then CPR 44.4(2), or to the current proportionality rules at CPR 44.3(2) and (5).

The Senior Costs Judge ([2016] EWHC B13 (Costs)) had halved the success fees and ATE on detailed assessment, ruling that

  • CPR 48.1 preserved the old pre-1 April 2013 costs provisions of the CPR to “pre-commencement funding arrangements” but that the old CPR 44.4(2) proportionality test was not expressly preserved by CPR 48 PD 1.4;
  • Although BNM’s CFAs with her solicitor and counsel, and her ATE policy were pre-commencement funding arrangements for the purposes of CPR 48.2(1)(b), since the old CPR 44.4(2) did not survive beyond 1 April 2013, those liabilities fell to be assessed by reference to the new CPR 44.3(2) and (5) proportionality test; and
  • In any event it would be absurd to assess the base costs by reference to the new test but the additional liabilities by reference to the old test.

 

The Court of Appeal disagreed with the Senior Costs Judge.  Giving the leading judgment the Master of the Rolls compared the definition of “costs” under the old CPR 43.2(1)(a), which specifically included “any additional liability incurred under a funding arrangement”, with the definition under the new CPR 44.1, which omitted those words.  He said (at [81]) that it was

‘perfectly clear that the reference to “any additional liability incurred under a funding arrangement” was deliberately omitted from the definition of “costs” in the new CPR 44.1(1) because, subject to specific saving and transitional provisions in the 2012 Act, the recoverability of success fees and ATE insurance premiums in an order for costs was abolished by [LASPO] and, where they remain recoverable by virtue of those saving and transitional provisions, they are recoverable in accordance with the old costs rules, including those relating to proportionality, reasonableness and assessment.  If it had been intended that the new proportionality test was to apply to funding arrangements to which the statutory saving and transitional provisions applied, that would have been made clear in the statutory provisions or the new costs rules or both and it was not.’

He rejected the Senior Costs Judge’s conclusions (among other reasons) because (at [77]-[80])

  • The new CPR 48.1’s preservation of the old pre-1 April 2013 costs provisions of the CPR to “pre-commencement funding arrangements” included the attendant provisions of the old Costs PD, which was inconsistent with the new proportionality test in CPR 44.3(2) and (5);
  • The omission of the old CPR 44.4(2) proportionality test from the list in the new CPR 48 PD 1.4 of preserved old CPR costs provisions did not matter: the list was not exhaustive but inclusive;
  • The combined effect of the new CPR 48 PD 2.1 and 3.2 was expressly to preserve all old costs provisions to publication and privacy proceedings (i.e., including the old proportionality test).

Accordingly the Court of Appeal has now clearly ruled that the new proportionality test in the CPR does not apply to additional liabilities in cases either which commenced before LASPO came into force on 1 April 2013 or which, although they commenced after 1 April 2013, are governed by the transitional provisions and exceptions to LASPO.

The Court of Appeal was expressly invited to remit the assessment, on the old test, back to the Senior Costs Judge.  In the circumstances the court did not need to consider whether the Senior Costs Judge’s application of the new proportionality test had been properly done, and therefore offered no guidance on its application.  It is understood (according to the Association of Costs Lawyers) that the issue of the proper application of the new proportionality test will be considered by the Court of Appeal in the near future.

Written by Paul Parker.

© Paul Parker.  The author assumes no responsibility to any party in respect of this article.