In the long awaited appeal, the judgment in BNM v MGN  EWCA Civ 1767 has now been handed down. Not unsurprisingly the Court of Appeal has held that additional liabilities will be subject to old regime where base costs will be considered separately in relation to proportionality.
The legal rationale of the Master of the Rolls, Lord Etherton was a simple one. He found that the current PD 48 [1.4] states that the provisions relating to funding arrangements include CPR 43.2(1)(a) (as was immediately prior to 1 April 2013) which defined “costs” to include additional liabilities. Therefore, as the old proportionality test applied to “costs” which thus included the additional liabilities, it would follow the old test should apply to additional liabilities. Further, CPR 48.1 states that “the attendant provisions of the Costs Practice Direction” would apply. The Master of the Rolls held that CPD 11.9, which stated that Additional Liabilities under a funding arrangement would be assessed separately to base costs, would apply where additional liabilities were are now recoverable.
I believe this was an eminently sensible decision. The original decision always seemed to defy logic and defeat the object of success fees regime. Master Gordon-Saker has been previously reined in in relation to his use of proportionality to reduce ATE premiums and now he’s had a further rebuke in respect to additional liabilities more generally. I regret that I believe the senior costs master has been defeated by good old fashioned common sense.Tags: Additional Liabilities, ATE, BNM, BNM v MGN, Court of Appeal, MGN, proportionality, Success Fees