BNM v MGN Limited [2016] EWHC B13 (Costs) (03 June 2016) : A whole new can of worms on proportionality?

​In a surprising decision handed down yesterday in the SCCO relating to privacy proceedings, but applicable across the board, Master Gordon-Saker has determined that the new proportionality can be applied to additional liabilities. The full judgment can be found here

An earlier "line by line" assessment had produced a total for "reasonable" costs of £167,389.45, including an ATE premium of £61,480.

The Court accepted the Defendant's submission that these costs remained disproportionate and should be reduced further.

The subsequent decision on proportionality produced a total figure of £83,964.80, including a reduction to £30,000 of the otherwise reasonable ATE premium, with each individual element of costs (i.e. base costs, counsel's base fees and the costs of drafting the bill) being reduced by roughly one half.

The surprising decision, to my mind, is at paragraphs 50 to 54 :



50. The ATE premium of £58,000 excluding tax is also disproportionate. For the reasons that I gave in the course of the detailed assessment, I could not conclude that the premium was unreasonable. I also accept that it was necessary for the Claimant to purchase after the event insurance. But costs may be disproportionate even though they were necessary: CPR 44.3(2)(a).

51. This was not the premium which would cover the whole claim. £58,000 was the premium payable at the fourth of seven stages. Had the claim proceeded to judgment, the premium would have risen to £112,500 plus tax.

52. As is common, the policy insures the Claimant against her liability to pay the premium in the event that she does not succeed; and, if she does succeed, the premium is limited to the amount allowed by the court on assessment. However the court approaches the new test of proportionality, if the premium is reduced on the basis that it is disproportionate, it is important that the court should identify the figure allowed.

53. The premium has added significantly to the costs that were reasonably incurred,  broadly matching the aggregate of base profit costs and counsel's fees. I concluded in the course of the detailed assessment that, at the outset, the Claimant's prospects of success were "significantly in excess of 50/50". Those prospects did not reduce. The Defendant made substantial admissions in its Defence. A premium of £58,000 at the stage that the claim settled, potentially doubling to £112,500, cannot be said to bear a reasonable relationship to a claim which settles for £20,000, where there was no substantial claim for non-monetary relief, which was not particularly complex, where no significant additional work was generated by the conduct of the paying party and where there were no wider factors involved.

54. In my judgment no more than one half of that amount could be considered proportionate.

Master Gordon-Saker, BNM -v- MGN  [2016] EWHC B13 (Costs)

​In this particular case it seems the premium was in fact limited to the amount allowed on assessment, but what if it was a pre-paid premium? In a case where the court has found that it was necessary for the claimant to purchase a premium, and that the amount paid for it was otherwise reasonable, how does reducing what the claimant can recover in respect of it possibly contribute to access to justice? In this case the Claimant would have been left with a shortfall which would have left her in a far worse financial position than she would have been had she simply not bothered asserting her legal rights!

More surprising is that Master Gordon-Saker had already made made what appears to me to be a final decision in a previous hearing in this case (that hearing concerning the defendant's unsuccessful argument that the additional liabilities were incompatible with their right to freedom of expression as a publisher under Article 10 of the European Convention on Human Rights), in which at paragraph 40 he allows the success fees at 33% and the ATE premium "as claimed".

Proportionality divorced from necessity (when clearly from paragraph 54 above proportionality is a concept that is entirely subjective) is simply not conducive to access to justice.