Additional liabilities and proportionality
One of the current battlefields in costs is over the issue of whether additional liabilities should be included (where still recoverable) when considering proportionality.
One would have thought this was at least one area where there was no room for dispute as there is an express transitional provision dealing with this issue at CPR 48.1(1):
“The provisions of CPR Parts 43 to 48 relating to funding arrangements, and the attendant provisions of the Costs Practice Direction, will apply in relation to a pre-commencement funding arrangement as they were in force immediately before 1 April 2013, with such modifications (if any) as may be made by a practice direction on or after that date.”
To what extent the current debate is down to poor drafting or the ingenuity of lawyers is a matter I will leave to others.
It is usually a mistake to try to determine the merits of an argument based on the number of people who share it, even to the extent to which they are experts. As matters currently stand, this seems to be a relatively evenly balanced point based on the first instance judgments that are circulating, with the slight edge going in favour of the view that additional liabilities are to be considered separately (or does a Senior Costs Judge count for double?).
Senior Costs Judge Master Gordon-Saker in BNM v MGN Limited  EWHC B13 (Costs):
“When applying the new test of proportionality, the court need not consider the amount of any additional liability separately from the base costs.”
Master Simons in Rezek-Clarke v Moorfields Eye Hospital NHS Foundation Trust  EWHC B5 (Costs):
“the Claimants submit that when looking at the question of proportionality I should look separately at profit costs and additional liabilities. That may well have been the case prior to the 1 April 2013 but in my judgment the position is now different. Costs must include those costs that are claimed in the Bill of Costs that are presented to the Court.”
Master Rowley in King v Basildon & Thurrock University Hospitals NHS Foundation Trust  EWHC B32 (Costs):
“when considering whether the costs in this case were proportionate, the relevant costs to consider … were in my judgment the base costs, exclusive of success fee and ATE premium”
Regional Costs Judge Besford in Mather v Doncaster & Bassetlaw Hospitals NHS Foundation Trust when faced with a bill of costs that straddled the Jackson reforms decided the court should consider both the pre and post April 2013 costs when deciding whether it was proportionate, but ignore any additional liabilities.
Master Brown in Murrells v Cambridge University NHS Foundation Trust:
“In the circumstances I respectfully disagree with the decision of Master Gordon-Saker in BNM as to the application of the new proportionality test to additional liabilities and therefore also as to the need to aggregate base costs with additional liabilities.”
Hopefully, the Court of Appeal will finally resolve this issue in October in the appeal in BNM v MGN Ltd.