The Issues:

The issue of law in this appeal heard by Sir Terence Etherton was to decide whether the success fee payable under conditional fee agreements between the claimant and her solicitors and between her solicitors and her barristers together with the premium payable under an after the event insurance policy was subject to the old or the new proportionality rules under the Civil Procedure Rules on an assessment of her costs on the standard basis.

In the original proceedings 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 £20,000.00 on the basis that MGN pay BNM’s standard basis costs. 

BNM claimed costs of £241,817.00 which included a success fee in respect of her solicitors and barrister’s costs and an ATE premium of £58,000.00 plus £3840.00 IPT.  The main issue before Senior Costs Judge, Master Gordon-Saker was whether the assessment of the success fee 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).

Master Gordon-Saker 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 44.3(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.

Held:

Sir Terence Etherton allowed the appeal on the ground that the costs assessment should have been made on the proportionality test under the old civil procedure rules and the relevant provisions applying to recovery of success fees and ATE insurance premiums.

He said it was ‘perfectly clear’ that additional liabilities were recoverable in accordance with old costs rules.  He added ‘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 of the new costs rules or both and it was not.’

The defendant had argued that the new proportionality test applied as success fee and ATE expenses could be regarded as ‘fees’ and ‘expenses’, according to the current definition of costs. This argument was rejected.

Etherton set aside the £84,000 final costs certificate and remitted the assessment to the senior costs judge to consider proportionality again.

Comment:

This is an important case as it finally resolves the issue of whether the recoverability of pre 1 April 2013 additional liabilities is subject to the old or new proportionality test.  The answer is that the old test applies.  

[LINK TO JUDGMENT]

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