New Proportionality And Additional Liabilities : Murrells v Cambridge University NHS Foundation Trust

20th January 2017

Shaman Kapoor successfully represented the Claimant in this case before Master Brown who was sitting as a judge of the County Court, albeit in the SCCO. The case arose out of a claim for clinical negligence that settled shortly after the defence for a sum of £9,650 plus costs on the standard basis.

The case involved the application of both the old and the new proportionality tests, and when it came to the application of the new test, it raised issues about the application of ‘new proportionality’ to the additional liabilities.

The costs claimed were £140,000 odd net of VAT.  Part 1 (to which the old test applied) claimed £59,000 odd, and Part 2 (to which the new test applied) claimed £81,000 odd (which included the staged premium of £22,737).

The CFA was entered into on 04/09/12 with the benefit of an ATE policy taken out on 11/09/12.  Thus the additional liabilities were all pre-LASPO.

Part 1 base costs (£32,000) were deemed to be disproportionate and the Court allowed £16,000 odd.  Part 2 base costs were also reduced to £20,000 odd following the line-by-line assessment.

The success fee was assessed at 82% (instead of 100% claimed).  The premium had not been separately challenged in the PoDs, and was attacked only through the overall submission that the new proportionality test should apply to Part 2 and to additional liabilities following Master Gordon-Saker’s judgment in BNM v MGN Ltd [2016] EWHC B13.

After the Court’s application of proportionality to Part 1, determination of the preliminary points (hourly rate, success fee etc.) and the line-by-line assessment, the Court arrived at the total figure of £94,000 odd on the bill.  In considering the application of ‘new proportionality’ to Part 2 and the additional liabilities, the Court was referred to BNM and Master Rowley’s judgment in King v Basildon & Thurrock University Hospitals NHS Foundation Trust (30/11/16).

Master Brown agreed with Master Rowley (thus disagreeing with the decision of Master Gordon-Saker) in finding that additional liabilities are not subject to the new proportionality test, and that even if they were, that they should not be aggregated with the Claimant’s base costs for the purposes of applying that test.

In his analysis of the treatment of additional liabilities historically, Master Brown took heed of the approach in Coventry v Lawrence [2015] AC 106; Atack v Lee [2005] 1 WLR 2643 (success fees); and Rogers v Merthyr Tydfil [2007] 1 WLR 808 (ATE premiums).  From those cases he found that the approach had always been to consider the proportionality of additional liabilities separately in any case.  He noted also the change in the definition of “costs” under the new rules (as had Master Rowley in King) and concurred that costs in new CPR 43 should not encompass additional liabilities.  He concluded that it was the intention of Parliament to preserve the rules which related to the recovery of additional liabilities.  If that were not the case, there would be considerable prejudice upon litigants and lawyers who entered into such arrangements in the reasonable expectation that the additional liabilities would continue to be recoverable as they were pre-LASPO.

On the question of the application of the new proportionality test more generally, Master Brown was taken to Kazakhstan Kagazy Plc v Zhunus [2015] EWHC 404; Hobbs v Guy’s & St Thomas’s NHS Foundation Trust (02/11/15), Master O’Hare; May v Wyvell Group [2016] EWHC B16, Master Rowley; and the rule on proportionality itself.  Upon reflection, after the line-by-line assessment on Part 2, the Part 2 figure was not held to be disproportionate and no further reduction was made.

Permission to appeal has been granted.

Judgment handed down on 17/01/17 – Master Brown.

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