The BNM Court of Appeal Decision
Victoria Stewart, Costs Lawyer and Team Leader at PIC reports.
It is here! Over 4 ½ years after the introduction of the new proportionality tests, we now have guidance from the higher courts.
Cases have often cropped up since April 2013 on how to apply the ever-changing rules and the new proportionality test has always been a hot topic. In BNM v MGN Limited  EWHC B13 (Costs) Master Gordon-Saker handed down Judgment to the effect that the new proportionality test applied to additional liabilities still recoverable post-April 2013 and the additional liabilities were not to be assessed separately.
The BNM case was leap-frogged to the Court of Appeal and the principal issue of law in this appeal was whether the former proportionality test in the old CPR 44.4(2) or the new proportionality test in the current CPR 44.3(2) and (5) applies on a standard basis of assessment to recoverable success fees and ATE insurance premiums.
MGN advanced the argument that the new proportionality test applied to the additional liabilities, describing a success fee as a ‘fee’ and an ATE insurance premium as an ‘expense’ under the meaning of costs in the new CPR 44.1(1). The counter argument was 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).
The Court of Appeal allowed the appeal on the ground that the assessment should have been conducted on the footing that the proportionality test in the old CPR 44.2(2), and the relevant provisions in the old CPD applied to the success fee and the ATE insurance premium. Previously, the Senior Costs Judge’s discretion in subjecting both the base cost and additional liabilities to the new proportionality rule was wrong in principle. The decision and the Final Costs Certificate in the sum of £83,964.80 was set aside.
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