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New Proportionality - "...a real change in the assessment of costs"

View profile for Nicholas Lee
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If you still need persuading that the post April 2013 proportionality regime has teeth, then look no further than Master Gordon-Saker’s decision in BNM v MGN Limited [2016] EWHC B13 (Costs) (03 June 2016). The effect of proportionality was that the assessed costs were further reduced by approximately 50%.

In these proceedings the Claimant sought an injunction to restrain the Defendant from using or publishing confidential information taken from her phone, damages and an order for delivery up of any confidential information. Proceedings concluded approximately a year after they were commenced when it was agreed that the Defendant would not use or disclose the confidential information and would pay £20,000 damages plus costs.

Costs were sought in the sum of £241,817 which included a 60% success fee for the solicitor, a 75% success fee for Counsel and an ATE premium in the sum of £61,480 including IPT.

On a line by line assessment the costs were assessed in the sum of £167,389.45 which included a 33% success fee and the ATE premium in full. Having then concluded that those assessed costs remained disproportionate, they were further reduced to £83,964.80 with the ATE premium being cut to £30,000.

In this matter there were pre-commencement funding arrangements entered into prior to April 2013 meaning that additional liabilities were recoverable from the Defendant. There was a question as to whether proportionality applied to additional liabilities under the new proportionality test. The Master found that when applying the new test of proportionality, the Court need not consider the amount of any additional liability separately from the base costs.

In considering proportionality the Master commented that “Had it been intended that costs should never exceed the sums in issue the rule could easily have stated that. There will be cases in which the costs bear a reasonable relationship to the sums in issue even though they exceed those sums”.

Whilst this claim included an injunction, the Master ruled that but for the claim for damages, it is unlikely that a claim would have been pursued. The phone had been returned to the Claimant in May 2011 and yet it was not until March 2013 that she instructed solicitors to consider a claim. Whilst it was a claim of some importance, suitable for London specialists and reasonable to issue without notice, it was not a complex case. However these were factors which impacted on the consideration as to the reasonableness of the relationship between the costs and the value of the claim. The claim settled before the first case management hearing, there were no major issues as to conduct and no wider factors involved. All factors considered, the base costs that were originally assessed at more than three times the amount of damages, were disproportionate. Whilst not unreasonable or unnecessary, the ATE premium was also found to be disproportionate.

So the costs claimed were £241,817. The sum of £167,389.45 was reasonably incurred and reasonable in amount. But the proportionate amount of costs was only £83,964.80.