Proportionality – still no further forward

Earlier this month, the Court of Appeal handed down the long awaited case of BNM v MGN Limited [2017] EWCA Civ 1767. The judgment was significant in that it overturned Master Gordon-Saker’s decision that the new test of proportionality applied to additional liability claims in the dwindling pool of pre-LASPO cases. The Court of Appeal held that the old pre-1 April 2013 proportionality test continues to apply in relation to additional liabilities, that is success fees and After the Event insurance premiums, regardless of when the additional liabilities were incurred.

Recoverability of additional liabilities remains only in cases where the Conditional Fee Agreement and/or After the Event insurance arrangements were entered into on or before 31 March 2013. In mesothelioma cases and also defamation and breach of privacy cases the additional liabilities currently remain recoverable regardless of when the conditional fee agreement was entered into or the after-the-event-insurance was taken out.

The Court of Appeal said that, had it 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 this was not the case.

However, those litigators expecting wider guidance upon the application of new test of proportionality on base costs and fees were bitterly disappointed. Even on the facts of this case we are none the wiser as the matter has been referred back to Master Gordon-Saker for reconsideration. Thus we are no further forward than we were when the new proportionality test was introduced.

It was noted by the Court of Appeal that Master Gordon-Saker in his judgment and both parties in their written and oral submissions referred to Sir Rupert Jackson’s Review of Civil Litigation Costs and to statements in Sir Rupert’s Final Report on that Review. The Court concluded that the Report did not assist in the resolution of the proportionality issue as it was common ground that the applicable post 1 April 2013 statutory provisions, costs rules and practice direction did not entirely reflect all the recommendations made within in the Final Report in relation to proportionality.

It is understood that ‘three conjoined cases are set to come before the Court shortly’, which will provide the opportunity for the much needed guidance on the application of the new proportionality test to be given.