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SCCO v BNM – Costs Judges tussle over proportionality

Master Howarth and Master Brown have been very busy at the beginning of 2017 disagreeing with the Senior Costs Judge's decision in BNM. Interestingly, both decisions were released and dated 17th January 2017.


In the first case of Savings Advice Ltd v EDF Energy Customers plc [2017] EWHC B1 (Costs) (17 January 2017) Master Haworth held that the law relating to the recovery of insurance premiums is governed by the pre-April 2013 costs rules and costs practice directions, and proportionality must be assessed on the same basis.


As a result he found that there was no evidence before him that the Claimants' ATE insurance premiums (together almost £256,000 in a claim for just over £1 million but which settled for £400,000) were disproportionate.


Even if the new test of proportionality applied, he could distinguish this case from BNM because he had not been asked to assess the claimants' costs on a line-by-line basis (as they had already been agreed by the parties) but simply to determine what was recoverable by way of the ATE premiums.


Applying the new test to the premiums alone and not globally with the costs, the relevant factors here were the sums in issue and the complexity of the litigation. On this basis too, he concluded that the premiums were not disproportionate.


In Murrells v Cambridge University NHS Foundation Trust, a clinical negligence case, Master Brown expressly disagreed with the Senior Costs Judge on the issue of whether pre-LASPO additional liabilities should be subject to the new proportionality test.


Master Brown said that additional liabilities should not be aggregated with the claimant’s base costs for the purposes of the test. If the test did apply to additional liabilities, it would have “a considerable prejudicial effect upon those litigants and lawyers who have entered into pre-commencement funding arrangements”.


He went on to say:


“To apply the new test to additional liabilities in the way contended for would, however, require many litigants to submit to a substantial, if not complete, disallowance of their additional liabilities as against the other party or parties to the litigation, whilst at the same time the liability to pay an insurer or the lawyers the additional liability would be preserved. If that were right it would inevitably lead to many litigants, including -it might be observed- victims of mesothelioma, having to give up deserving claims or defences. I agree with Master Rowley: in these circumstances the defendant’s contention cannot be reconciled with transitional provisions and the clear will of Parliament. The intention must have been to provide, at the very least, an orderly retreat from the old funding scheme…”


The BNM case is being appealed (currently listed for October 2017) and so this position may change. It does certainly appear that - like most Solicitors and Costs Lawyers - both Masters are of the opinion that the BNM case was incorrectly decided and appears to fly in the face of every decision made before it. We will all no doubt welcome the much needed clarity the Court of Appeal will hopefully provide in October (some 4.5 years after LASPO redefined proportionality)