Proportionality and pre-commencement funding arrangements

Hold the front page; four weeks after hearing argument on the appeal in BNM – v – MGN (2017) EWCA Civ 1767, the Court of Appeal has today handed down judgment on whether additional liabilities payable under pre-commencement funding arrangements are subject to the ‘new’ post-April 2013 test of proportionality. It was published while I was speaking at an AVMA costs roadshow, and I was eager to see the decision.

The background will be familiar to most if not all readers, so I won’t go over it here, though if you have managed to avoid it then have a look at the first twenty-three paragraphs of the judgment. Similarly, if a roundup of the rules relevant to the issue is the focus of your interest, see paragraphs 24 to 59.

The headline however is that the ‘new’ test does not apply to additional liabilities payable under a pre-commencement funding arrangement and they remain subject to the rules as they stood prior to April 2013. The matter is therefore to be remitted back to Master Gordon-Saker to reconsider his decision as to the proportionality of the costs.

On the additional issue raised by cross-appeal as to whether proceedings had been issued prematurely, this too is to be remitted back to Master Gordon-Saker to make explicit that he has considered the issues raised by the Court of Appeal at paragraph 90, with the comment that it was ‘nevertheless certainly not a question in respect of which there is only one answer.’

The Court of Appeal has therefore answered one question, but we are still some way from certainty as to how (this issue aside) the new test of proportionality should operate in practice.

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