SENIOR COURTS COSTS OFFICE
London, EC4A 1DQ
B e f o r e :
| ARLENE FORTUNE
|- and -
Mr Roger Mallalieu (instructed by Lamport Bassitt) for the Defendant
Hearing date: 12 October 2010
Crown Copyright ©
• 8 December 2001 – the road traffic accident;
• 27 January 2003 – criminal conviction of Defendant for dangerous driving;
• 27 March 2003 – liability admitted;
• 11 September 2003 – offer to settle by Defendant (not under Part 36) in the sum of £250,000;
• 14 January 2005 – proceedings served;
• 10 March 2005 – defence served admitting negligence, but denying that Claimant had sustained a head injury;
• 6 April 2005 – judgment entered for damages to be assessed;
• 3 February 2006 – CFA signed;
• 28 September 2007 – Defendant offers £475,000 less CRU;
• 31 January 2008 – round table meeting; "informal" offer of £600,000 from Defendant;
• 3 March 2008 – trial listed for 10-12 March 2008 vacated; trial listed for 30 March 2009;
• 4 April 2008 – Part 36 offer by Claimant in sum of £800,000 less CRU;
• 20 February 2009 – Defendant's Part 36 offer in the sum of £600,000 less CRU; • 12 March 2009 – offer accepted;
• 16 July 2009 – consent order made by Master Eyre.
THE CONDITIONAL FEE AGREEMENT
"Your Conditional Fee Agreement
For use in road traffic cases
What is covered by this agreement?
• the work done in pursuing your claim for damages for personal injury suffered in the course of an accident on 8 December 2001 insofar as your legal costs exceed the limit of the indemnity under the terms of your legal expenses insurance policy issued by Churchill Insurance …
If you win your claim:
• You are primarily liable to pay our basic charges, success fee, your disbursements, after the event insurance premium and VAT.
• You will be able to recover all your legal costs from your opponent providing that these are reasonable …
The success fee will be:
(a) if you win your claim prior to three months before the date fixed for trial or the first date of the trial window (whichever is earlier) 25% of the basic charges; or
(b) if you win your claim at any later date or time: 100% of the basic charges; or
(c) if Rules of Court fix the percentage success fee recoverable from your opponent this will be the percentage which shall apply.
Whichever applies above the whole of the success fee relates to the risks involved in your case and no part thereof relates to the cost of postponement of payment of our legal fees and expenses. The reasons for setting a success fee at the above levels are set out in Schedule 1 attached to this agreement …
Law Society Conditions
The attached Law Society Conditions (which have been modified by Irwin Mitchell) are part of this agreement …
SCHEDULE 1 – Reasons for Level of Success Fee
The Risk Assessment
The percentage success fee shown at (a) above reflects our assessment of the risks of your case, based purely on the information available to us at the time of entering into this agreement. This includes those specific issues which we regard as relevant and appropriate to take into account and which are set out in the table below.
The percentage success fee shown at (b) above reflects all of the risks in the table below which would be enhanced considerably should your case not settle prior to three months before trial. The enhanced risks at trial are due to the potential risk of failing to establish one or more fundamental elements of your case in respect of which the Judge prefers the opponent's evidence, and also the significant risk that you may fail to beat an offer or Payment into Court made by your opponent (see Condition 3(k) – Part 36 Offers or Payments of your Agreement).
|Particular Issue||High Risk||Med
|Type of Accident||...||RTA head on collision|
||...||Liability has been conceded and judgment entered in the Claimant's favour|
|Contributory Negligence||100% liability|
||...||There may be an issue as to the extent of the claimant's head injuries which are presently yet to be fully assessed|
||...||There are several variables including the extent of the claimant's residual earnings prospects, the care claim, the orthopaedic proposals and the head injury|
|Part 36 Offer
||...||The principle risk relates to an effective part 36 payment into court on quantum issues. There have been no part 36 offers to date.|
Law Society Conditions
3. Explanation of Words Used
(b) Basic charges – Our charges for legal work we do on your claim for damages.
(c) Claim – A claim is your demand for damages for personal injury whether or not court proceedings are issued.
(e) Damages – Money that you win whether by a Court decision or settlement.
(g) Interim damages – Money that a court says your opponent(s) must pay or your opponent agrees to pay while waiting for a settlement or the Court's final decision.
(k) Part 36 offers or payment – This is an offer by your opponent(s) to settle your claim made strictly in accordance with Rules of Court and which has certain consequences for recovery of legal costs. If your opponent(s) makes a Part 36 offer or payment to settle your claim then:
• If you reject and supported by our advice you continue to pursue your claim but you recover damages that are less than the sum offered or paid by your opponent(s) we will not charge you our basic charges or success fee for the work done after the expiry of 21 days following receipt of the notice of the offer or payment.
(m) Success fee – The percentage of basic costs that we add to your bill if you win your claim for damages.
(n) Win – Your claim for damages against your opponent … is finally decided in your favour, whether by a court decision or an agreement to pay your damages. … "Finally" means that your opponent(s):
• is not allowed to appeal against the Court decision; or
• has not appealed in time; or
• has lost any appeal."
"11.7 When the court is considering the factors to be taken into account in assessing an additional liability, it will have regard to the facts and circumstances as they reasonably appeared to the solicitor or counsel when the funding arrangement was entered into and at the time of any variation of the arrangement.
11.8 (1) In deciding whether a percentage increase is reasonable relevant factors to be taken into account may include:
(a) the risk that the circumstances in which the costs, fees or expenses would be payable might or might not occur;
(b) the legal representative's liability for any disbursements......."
THE SUBMISSIONS FOR THE DEFENDANT
"8. It was common ground that the purpose of a success fee under a CFA is to compensate solicitors for the risk of failing to recover any fee at all. However, that does not mean that they can charge, and subsequently recover if successful, whatever success fee their client is prepared to agree, because it is subject to assessment under CPR Part 44 (insofar as it is payable by the opposing party) and paragraph 11.8(1) of the Costs Practice Direction makes it clear that in deciding whether a success fee is reasonable one of the principal factors to be taken into account (normally the most significant) is the risk that the circumstances in which the costs, fees or expenses would be payable might or might not occur. …
10. The principal ground on which Mr. Morgan QC challenged the calculation of the success fee was that the defendant had already admitted liability at the time the CFA was entered into. In those circumstances, he submitted, there was no significant risk that Mrs. C would fail to recover substantial damages in respect of her injuries, even if she were found partly to blame. Accordingly, it was wrong to approach the assessment of risk, and thus the calculation of the success fee, in the way that would have been appropriate if liability had been in doubt. …
12. In my view there is much force in Mr. Morgan's argument. The CFA itself speaks of "winning" and "losing", "winning" being defined in terms which include any situation in which the claimant is successful in recovering damages from his opponent and "losing" as meaning a failure to recover because the claim has been lost or terminated on advice prior to trial. …
14. … In the absence of any evidence that the accident had been caused by anything other than negligence on the part of the driver and in the light of the fact that his insurers had already admitted liability on his behalf, it is difficult to see how Mrs. C could have failed to recover substantial damages given the serious nature of her injuries. …
15. To add a further 20% success fee to reflect the size of the claim was, in my view, also wrong. It is probably true in general that high value claims tend to be more complex and to involve a greater amount of work than claims of lower value, but that does not of itself increase the risk …"
THE SUBMISSIONS FOR THE CLAIMANT
"The reasoning which the Court of Appeal applied to the facts of that case [C v W] showed clearly why, where there is a single stage success fee, the assessment of risk of failure to win should have been considerably lower than it was. Insofar as that reasoning could be applied to the first stage success fee of 50% in the instant case, there would have been a strong argument for reducing that significantly. However, as C v W anticipated the approach to risk assessment for a two-stage success fee is very different, simply because it is designed to deal with the very problems facing both parties in a highly complex case such as the instant case. In my judgment the Regional Costs Judge was right to distinguish C v W by accepting Mr Foy's submission that for those reasons it was not relevant to consideration of a second stage success fee 100%."
Miss Lambert placed reliance on that passage to support her contention that the success fee should be 100%.
"In summary, the major risks relate to quantifying this claim in the fact of [any] Part 36 payment in or Part 36 offer for periodical payments. At the moment assessing long term outcome for our client in terms of her needs for care, accommodation and her earnings capacity is not straightforward."
""win" means your claim for damages against your opponent is finally decided in your favour, whether by a court decision or an agreement to pay you damages".
"To add a further 20% success fee to reflect the size of the claim was, in my view, also wrong. It is probably true in general that high value claims tend to be more complex and to involve a greater amount of work than claims of lower value, but that does not of itself increase the risk of losing."