A NEW HOPE ON PROPORTIONALITY – SCCO MASTERS SPLIT ON HOW THE NEW RULES APPLY TO ADDITIONAL LIABILITIES.
In a recent decision at the Senior Courts Costs Office, Master Rowley has declined to follow the approach of the Senior Costs Judge, Master Gordon Saker in BNM v MGN, where Master Gordon Saker found that additional liabilities should be taken into account with base costs when reaching a decision on the proportionate costs to be allowed.
In King v Basildon and Thurrock University Hospitals NHS Foundation Trust, Master Rowley found that additional liabilities should be treated separately from base costs and that to do so was not a significant hindrance to the Court’s role in allowing reasonable and proportionate costs.
The decision of Master Gordon Saker had been the subject of some criticism because it represented a radical departure from the approach adopted prior to 1 April 2013, where the rules made it explicit that additional liabilities and base costs had to be considered separately for the purposes of proportionality.
Master Rowley supported his finding on the basis that the revised proportionality test (and in particular CPR 44.3 (5)) only applies to base costs because additional liabilities are not mentioned within the rules and therefore cannot form part of the new definition of costs. He also felt that such a decision was appropriate because it was consonant with the approach to budgeting where Precedent H explicitly excludes Additional Liabilities from appearing in a Budget. Given that the purpose of budgeting is to ensure that the costs fall within a proportionate range, it follows that additional liabilities do not form part of the same consideration.
He also made the point that if the base costs are allowed at a proportionate level, then any additional liability based upon a percentage increase must, as a matter of course, also be proportionate.
Master Rowley made the comment that the debate here is limited to those cases where there was a funding arrangement entered into prior to 1 April 2013 and therefore is something of a transitional problem. That may be the case, but there are very many cases out there to which the issue applies and therefore this is of considerable importance for those Solicitors who have taken the risk of conducting a case and now expect their due rewards.
King was a clinical negligence matter where the Claimant recovered £35,000 in damages after a three-day trial. It is of some interest that in allowing base costs in excess of £88,000, Master Rowley was of the view that costs at such a level would almost always be proportionate in such a case unless the damages were very modest. He found that £35,000 in damages was not modest for that purpose. He did say that if he were wrong as to the approach to be adopted, then he would not have found that the £234,000 of costs incurred after 1 April 2013 (inclusive of additional liabilities) was proportionate.
Leave to Appeal has been given with the likely date in October 2017. However, this decision certainly adds an element of interest to the appeal in the matter of BNM and the view of the Appeal Court as to the appropriate approach to be adopted.