Andy Ellis, managing director of Practico Ltd, reacts to the Court of Appeal decision in BNM v MGN on proportionality.
The Court of Appeal’s decision this week is of special but narrow interest – confined to those engaged in publication cases where success fees and ATEI premiums are still recoverable on assessment.
In defamation and privacy cases ATEI premiums are usually high, not only in relation to the amount of cover but also compared to damages.The Senior Costs Judge had determined that the new proportionality test applies to the premium and effectively halved it. The appeal court decided that the old test applies to the premium and the test of necessity is therefore likely to see it restored.
The sting in the tail is that MGN’s cross-appeal was also allowed in respect of its case that the proceedings had been issued prematurely. It is therefore possible that base costs could further reduce (with a consequent reduction to the success fees) and that the premium could be reduced to the stage applicable to a pre-issue settlement. The assessment has been remitted to Master Gordon-Saker so the final outcome, heavily dependent on the facts of the case, is as yet unresolved by the appeal.
This article first appeared in Practico’s Costs Briefing, issue 6 (November 2017) (http://www.practico.co.uk/journal/the-costs-briefing-6).