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England and Wales High Court (Senior Courts Costs Office) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Senior Courts Costs Office) Decisions >> Bensusan v Freedman [2001] EWHC 9001 (Costs) (20 September 2001)
URL: http://www.bailii.org/ew/cases/EWHC/Costs/2001/9001.html
Cite as: [2001] EWHC 9001 (Costs)
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SUPREME COURT COSTS OFFICE
Cliffords Inn Fetter Lane London EC4A 1DQ |
||
B e f o r e :
JULIA BENSUSAN
- and -
BERNARD FREEDMAN
(Mr Corless-Smith for the Claimant)
(Mr Bassani for the Defendant)
JUDGMENT
____________________
| JULIA BENSUSAN |
Claimant |
|
| - and - |
|
|
| BERNARD FREEDMAN |
Defendant |
____________________
____________________
Crown Copyright ©
- On 10 April 2000 Julia Bensusan, the Claimant, an elderly lady of nervous disposition, visited her dentist, the Defendant, to undergo root canal treatment on her lower left wisdom tooth. During the course of that treatment a reamer being used by the Defendant became detached and fell onto the back of the Claimant's tongue, who involuntarily swallowed it. The Claimant was taken to the Accident and Emergency Department of Whipps Cross Hospital where x-ray examination confirmed that the implement had lodged in her intestine. Surgical intervention was not attempted and a month later x-ray examination confirmed that the reamer had been passed. The Claimant suffered shock and anxiety as a result of this incident.
- The Claimant consulted the Dental Law Partnership, a specialist dental negligence practice in Nantwich. Both the partners are qualified dentists as well as being solicitors. The Claimant entered into a conditional fee agreement with her solicitors on 23 August 2000. The success fee was set at 50%. There was no after the event insurance policy.
- The Claimants' solicitors wrote a letter of claim on 7 September 2000, which incorporated a Claimant's offer to settle in the sum of £2,000. That letter was acknowledged on behalf of the Defendant on 11th September by fax, and on 2 October 2000 the Defendant made an offer of £1,000 in full and final satisfaction together with costs. That offer was rejected on behalf of the Claimant on 4 October and on 10 October the Defendant made an offer to settle of £2,000 in full and final satisfaction plus costs to be assessed if not agreed. On 16 October that offer was accepted on behalf of the Claimant.
- The claim had lasted five weeks between claim letter and settlement.
- In accepting the offer of damages on behalf of the client the Claimant's solicitors also sought payment of £2,000 costs on account pending the preparation of their bill. On 19 October 2000 the Defendant's insurers agreed to make a payment of £1,000 on account of costs. That sum, together with the damages, was received from the Defendant's insurers on 25th October.
- The Claimant's solicitors initially instructed their costs draftsman to communicate direct with the Defendant's insurers. However, as a result of queries raised by the Defendant's insurers, the Claimant solicitors wrote to them on 13 November 2000 giving the requested information and stating:
- In an open letter dated 16 November 2000 the Defendant's insurers offered to settle the costs in the sum of £800 for profit costs and stated:
- They indicated that they were prepared to accept the disbursements and costs draftman's fees. That offer was rejected by letter from the Claimant's solicitors dated 23 November 2000, who indicated that they would be commencing costs only proceedings. Messrs Le Brasseur J Tickle Solicitors were nominated to accept service.
- Having failed to agree the costs, a Part 8 application was made to commence costs only proceedings under CPR 44.12A in the Crewe County Court. For reasons which are not relevant to this judgment, that application was at first dismissed (by order dated 18 December 2000) and subsequently restored and transferred to the Supreme Court Costs Office (by order dated 15 March 2001).
- The bill for assessment totals £3,419.69 including £1,170 base fee and £864 (50%) success fee. In addition to these figures there is a claim for £271.35 for work done in connection with the detailed assessment, added to this is a claim for VAT of £501.09, disbursements (in respect of x-rays) of £50 plus VAT of £5.25 - making the total claim of £3419.69.
- The detailed assessment came before me on 12 July 2001, the Claimant being represented by Mr Corless-Smith, a partner in the Dental Law Partnership, and the Defendant being represented by Mr Bassani, a partner in the firm of Le Brasseur J Tickle, assisted by Mr Howcroft a costs draftsman. It should be pointed out that all the parties to this action are well experienced in this type of litigation and the firms representing the Claimant and the Defendant frequently find themselves on opposite sides. Mr Howcroft has great experience in the field of costs. I was told that this particular case was the tip of the iceberg and that many other cases await such guidance as I am able to give.
- A number of general points of principle arise as well as specific points on the particular bill. The points of principle are:
- The Claimant lives in Tunbridge Wells in Kent and the Defendant is in practice in Ilford, Essex. The Defendant asserts that there was no justification for the Claimant to consult solicitors in Nantwich. They suggest that the proceedings should have been brought in Tunbridge Wells County Court. The Part 8 proceedings were issued in Crewe County Court and the Claimants' Solicitors accepted that, had it been necessary to start substantive proceedings, those too would have been commenced in Crewe County Court. In those cases where substantive proceedings are necessary I was told that Crewe County Court frequently transferred cases of its own initiative to either the Claimant's home court or to the Defendant's home court. In other cases the Defendant applied for transfer which was invariably granted. In any event the court would arrange for the hearing to take place at the venue which was most convenient for the parties and their witnesses. It was not disputed by the Claimant's Solicitors that the issuing of proceedings in Crewe County Court was anything other than a matter of their own convenience.
- Dealing with the question of the Claimant instructing distant solicitors, the test to be applied is that laid down in Wraith v Sheffield Forgemasters Ltd [1998] 1 WLR 132 CA. Lord Justice Kennedy quoted the judgment of Potter J in the lower court ([1996] 1 WLR 617 at 624-625):
- Lord Justice Kennedy stated:
- Lord Justice May in Sullivan v the Co-operative Insurance Society [1999] 2 Costs LR 158 CA stated (at page 165):
- May LJ went on to explain that the factors proper to the consideration had not been given proper weight in the court below (page 166):
- As stated by May LJ it is of course open to the Claimant to instruct whichever solicitors she chooses. I was told that the Claimant sought the comfort of having specialist practitioners dealing with her case. The question which I have to decide is: what reasonable and proportionate costs should the Defendant have to pay? There may well be cases of dental negligence in which there would be no doubt that it would be reasonable (as between the parties) to instruct a distant specialist practice. I do not however regard this as a case in which it is reasonable to instruct specialist solicitors, although the Claimant's Solicitors argued to the contrary, and I will deal with those arguments in due course.
- Having said that, one has to have regard to the place where the work was actually carried out, ie Nantwich. The Claimant's Solicitors claim for a grade 1 fee earner, Mr Corless-Smith, at the rate of £180 per hour plus a 50% success fee. Leaving aside for the moment the argument as to the appropriate grade of fee earner, the guideline rate for the Chester area, which covers Nantwich, for grade 1 fee earners is £110 to £140. The rate for the Maidstone area, which covers Tunbridge Wells, is £150. It is clear therefore that the Nantwich rate is actually lower than the Tunbridge Wells rate and, following Re Ajanaku (28 October 1991 Eastham J, unreported. See Butterworths Costs Service N141 (extract)), it is appropriate to allow the rate for the area where the work was done.
- Mr Corless-Smith, although admitted as a solicitor only in March 1998, had prior to that qualified as a dentist and had practised at the Bar for two years (1992 call). He had then worked as a non-practising barrister for 18 months and I am satisfied, taking all that experience into account, that it is appropriate to treat him as a grade 1 fee earner for the purpose of this exercise.
- It is argued by the Defendant that this case did not warrant a grade 1 fee earner. The accident sustained by the Claimant, it is said, does not require a specialised firm. It was a clear and straightforward negligence claim of the type routinely dealt with by grade 2 fee earners especially legal executives.
- It was argued by Mr Corless-Smith that this argument ran contrary to a submission made by the Defendant to the District Judge in Crewe, to the effect that this was a clinical negligence claim warranting transfer to London. I do not think anything turns on this point. The facts of this case are extremely simple and straightforward and do not of themselves warrant instructing a distant specialist practice. As I have said, the rates in Nantwich are lower than those in Tunbridge Wells and to that extent there is therefore a saving to the Defendant. Had the case gone further and involved travelling expenses to conferences and the like, those expenses might not have been recoverable. On the facts of the present case however there appears to be a positive benefit to the Defendant in the Claimant instructing solicitors in Nantwich.
- The Claimant's Solicitors put this case as a clinical negligence case of moderate complexity. I do not accept that submission. It is possible that it could have become more complicated had some allegation of contributory negligence been made, or had the Defendant denied any fault on his part, but this never happened. The Claimant's submission that the Defendant had instructed a partner in this case and always used grade 1 fee earners in clinical negligence cases does not in fact assist. The instruction of Mr Bassani was brought about because of the difficulties which have arisen with the costs only proceedings and is nothing to do with the actual claim. Had a substantive action been commenced it may well be that the Defendant would have instructed a grade 1 fee earner to take overall responsibility but that is not the situation here.
- Mr Corless-Smith drew my attention to the provisions of CPR 44.5 and suggested that the guideline rates were a starting point only, even though they incorporate a basic charging rate and uplift (a notional 50%). Mr Corless-Smith submitted that, although the claim was relatively low value, it was a claim of importance to both the Claimant and the Defendant because it involved professional negligence. The Claimant was an elderly lady of 75 years who had been traumatised and very upset. It was submitted that the case was complex because there were liability issues: liability had not been admitted; there were issues of foreseeability; and as to the precautions which were or were not taken by the Defendant. It was also suggested that there might be an allegation of contributory negligence by the Claimant in that she moved her head suddenly.
- It was submitted that had the Claimant consulted any other solicitors they would have instructed an independent expert at this stage with inevitable further expense and delay. It was also said that the claim was difficult to quantify because there is a dearth of reported cases of low value damages. It was submitted that any other firm would have instructed counsel to advise on quantum.
- Having considered the facts of the case as known to the Claimant's Solicitors at the time they were dealing with it, I do not accept any of these submissions. The facts were simple and straightforward, the Claimant was not severely damaged. The solicitors put a value of £2,000 on the claim at the outset, which in my view any competent litigator would have been able to do. The instruction of experts or counsel at this stage would not have been reasonable. The liability issues never actually crystallised and did not warrant more than the recognition that these issues might arise.
- Taking these factors into account I am of the view that this is a case which should be treated as being suitable for a grade 2 fee earner. On that basis I allow £110 per hour as opposed to the £180 per hour claimed.
- When I heard this matter the judgment of the Court of Appeal in Callery v Gray was still awaited and the parties agreed with my suggestion that they should put in written submissions once the judgment had been handed down. The judgment of the Court of Appeal relating to success fees is dated 17 July 2001 and on 8 August I received written submissions from both parties. The Lord Chief Justice giving the judgment of the court on what was termed "the reasonableness issue" said this:
- The court went on to deal with the possibility of a two stage success fee and although this particular case is not concerned with such a success fee I include the remarks of the Court of Appeal on this subject because this judgment may affect a number of other cases. The Court of Appeal said this:
- Although the Claimants solicitors in this case did not have the benefit of the Court of Appeal judgment at the time they were instructed by their client, it is clear from that judgment that in future, the requirement to act reasonably will mean that, the solicitors will have to consider using a two-stage success fee.
- The Claimant's solicitors seek a success fee of 50%. The statement of reasons for the success fee in the conditional fee agreement is as follows:
- The Claimant's solicitors in assessing the risks identified two potential defences to the allegation of negligence, namely the issues identified at paragraph (d)(i) & (ii) in the conditional fee agreement quoted above. Mr Corless-Smith points out that the Defendant's insurers did assert that the Claimant had moved her head suddenly in their letter of 2 October 2000 (the letter in which an offer of £1,000 damages was made). He also submits that at no time was liability ever admitted, and the fact that the claim settled within the protocol period is not a factor which can be taken into account in considering the reasonableness of the risk assessment.
- Just as the Court of Appeal had no evidence of success rates upon which to base its decision, neither have I. In this regard Mr Corless-Smith states that clinical negligence is generally acknowledged as carrying a higher level of litigation risk compared to non clinical negligence personal injury litigation. He identifies three features which add to this higher risk: (1) professional judgments are less certain in the field of medicine and dentistry than in other fields; (2) defences are more rigorously pursued by medical defence organisations; (3) the costs of investigating clinical negligence claims can be extremely high as liability, causation and quantum issues are usually complicated and expert evidence is required in support of such issues.
- Whist I accepted that these matters are factors which can contribute to higher risks in litigation, none of them appear to apply in this particular case, the facts of which were straightforward.
- Mr Corless-Smith states in his written submission:
- No source is given for the figures relied on by Mr Corless-Smith but judicial notice can be taken of the fact that, of clinical negligence cases which go to trial, the success rate is modest and it may well be that, viewed across the whole spectrum of clinical negligence cases, the success rate is 50%. I have insufficient data to make such a funding. Mr Corless-Smith argues that the success fee should be assessed by reference to the risk of losing the case and to reflect the claims experience of this category of litigation and compensate for those cases which lose and yield no fees. He also points out that dental negligence claims have a further risk factor in that they tend to be of modest quantum and are particularly vulnerable to the costs risks imposed by Part 36 offers.
- Mr Bassani on behalf of the Defendant asserts that liability was never in dispute and he points out that settlement was achieved within a week of the first substantive open correspondence detailing the alleged negligence ie. the failure to safeguard the patient's airway. The initial letter of claim of 7 September 2000 contained a Claimant's offer and was written on a without prejudice basis. Mr Bassani takes the point that the Claimant had not provided the information about funding arrangements required by CPR 44.3B(1)(c). Given that no proceedings were commenced that rule does not apply. The Practice Direction relating to Pre Action Protocols does however apply as follows:
- The Claimant's solicitors stated in their letter of 7 September 2000:
- In relation to the two potential liability issues identified by the Claimant's solicitors in the CFA, the success fee was set at 50% before any issue was raised as to any possible defence of the claim and before any investigation had been made of the dental notes. Mr Bassani points out that protection of the patient's airway is one of the most fundamental principles of dentistry. He suggests that the Claimant's solicitor, being a former dentist, would have been aware that allowing a dental instrument to be swallowed during treatment was unlikely to be defensible.
- Whilst Mr Bassani acknowledges that clinical negligence claims are generally afforded special treatment, given what are often complex issues of negligence and causation, he puts this claim at the very lowest end of the spectrum of complexity with no special features which could have raised an apprehension that the claim may have proved not to be sound. He suggests that this was "a modest and straightforward claim for compensation".
- Mr Bassani suggests that a reasonable success fee in relation to a CFA entered into at the outset should have been limited to 20%. Mr Corless-Smith had referred to an open letter of 30 November 2000 in which the Defendant had made an offer in respect of the success fee of 30%, that offer was subsequently withdrawn and at the hearing of the assessment on 12 July the Defendant (without having seen the Callery judgment) put forward an offer of 10%. Having considered the judgment Mr Bassani now submits that the success fee should be no more than 20%.
- In arriving at the figure of 20% in the case of straightforward road traffic accidents, the Court of Appeal was influenced by figures put forward by APIL which demonstrated that even where there was a high level of success it was necessary to recover success fees of 20% or above in order to break even. Bearing in mind that the Court of Appeal decision was specifically limited to straightforward claims in road traffic accident cases and the terms in which it is couched, it can form no more than a starting point for deciding the appropriate success fee in this case.
- Paragraph 11.7 of the Costs Practice Direction provides:
- Paragraph 17.8(2) provides:
- The combined effect of these two paragraphs is to prevent the costs officer from using hindsight in arriving at the appropriate success fee, and to prevent excessive claims for success fees in cases which settle without the need for proceedings when it was clear, or ought to have been clear from the outset, that the risk of having to commence proceedings was minimal.
- Taking all these matters into account and bearing in mind that this is a claim at the lowest level of complexity, I am of the view that in the light of the solicitor's knowledge on 23 August 2000 when the CFA was entered into, the appropriate success fee in this case is 20%.
- To sum up therefore:
- I turn now to deal with the specific items in the bill.
- The Claimant's solicitors conceded that they were not entitled to an additional charge in respect of these items which I have therefore deleted.
- I have seen the correspondence in question and am satisfied that it is reasonable.
- The Defendant challenges the 6½ hours claimed under this head and puts forward a figure of 3 ¾ hours. Having considered the time spent and the work done I have reduced the time allowed to 5 hours.
- The level of success fee is reduced to 20% in accordance with the decision which I have set out above (paragraphs 28 – 46).
- I will hear further argument from the parties on the subject of costs of detailed assessment.
- I have been asked if I could give general guidance in relation to costs only proceedings. The procedure is entirely new and appears to have given rise to considerable confusion. The procedure is dealt with in rule 44.12A and in the Costs Practice Direction at Section 17.
- Rule 44.12A was introduced with effect from 3 July 2000 to provide a procedure enabling parties who have settled the substantive dispute between them to resolve any outstanding question relating to costs. The new procedure appears to be being misused by both claimants and defendants in breach of the overriding objective. This misuse has given rise to difficulties for District Judges.
- It appears that some solicitors acting on behalf of claimants, having settled the amount of damages, are saying to defendants' insurers: "Our costs are £x and if this figure is not agreed/paid within 14 days costs only proceedings will be commenced". Defendants' representatives for their part make unreasonably low offers in respect of pre-proceedings costs and in some cases accompany the offer with a statement that the offer is made for the purpose of negotiation only and that they do not agree to the matter being resolved by use of the costs only procedure.
- If a claimant is forced to commence proceedings under Part 7, rather than costs only proceedings under Part 8, defendants will find themselves having to pay, not only the reasonable and proportionate costs of the claim itself, but also the costs of the Part 7 proceedings and any related assessment proceedings. If the defendant has acted unreasonably in compelling the comencement of Part 7 proceedings, the court will consider making an order for costs on the indemnity basis.
- Two distinct steps are required: firstly the Part 8 application seeking an order for costs; and secondly detailed assessment of those costs. The intention is that the proceedings should be brought with the consent of both parties as a simple and convenient means of resolving the dispute over costs. The prescribed court fee of £30 reflects this. If the acknowledgment of service indicates that the application is not opposed the court may make an order for costs without a hearing. Paragraph 17.9 sets out the circumstances in which the court may dismiss the application without a hearing.
- The procedure under rule 44.12A is intended to be cheap and straightforward. The steps are as follows:
- The parties must have reached an agreement on all the issues including which party is to pay the costs.
- That agreement must be made or confirmed in writing.
- No proceedings must have been started and the parties (after a proper attempt at agreement) must have failed to agree the amount of the costs.
- Either party may start costs only proceedings under rule 44.12A. The claim should be issued in the court which would have been appropriate had proceedings been brought in relation to the substantive claim.
- The Part 8 claim form must:
- The evidence filed in support of the claim must include copies of the documents on which the claimant relies to prove the defendant's agreement to pay the costs.
- The matter will not be placed before the Costs Judge or District Judge until an acknowledgment of service has been filed. If the defendant agrees that the order should be made, or a consent order is filed, the court will make the order without the necessity of a hearing.
- If the time for filing acknowledgment of service expires, the claimant may request the court by letter to make an order in the terms of the claim. If the defendant files an acknowledgment of service out of time but before the court has made an order in the terms of the claim paragraph 17.9 applies.
- The court may (i) make an order for detailed assessment of the costs; or, (ii) dismiss the claim. The court must dismiss the claim if it is opposed. A claim is treated as opposed if the defendant states in the acknowledgment of service that it intends to contest the making of an order for detailed assessment or to seek a different remedy. The court will then dismiss the claim without a hearing.
- A claim will not be treated as opposed and dismissed if the defendant states in the acknowledgment of service that he disputes the amount of the claim for costs, or that the application has been issued in the wrong office.
- The court may make an order by consent in terms which differ from those set out in the claim form. The order will be treated as an order for the amount of costs to be decided by detailed assessment.
- In no circumstances should a District Judge or Costs Judge hear the application and then immediately embark upon a summary assessment of the costs in dispute. Arguments that the District Judge/ Costs Judge should do so are inapt, since a summary assessment is an assessment made by a Judge who has decided the substantive issue. In costs only proceedings the only issue decided by the Judge is whether or not there should be a detailed assessment of the costs.
BACKGROUND
THE COSTS ISSUE
"We do not intend to engage in protracted correspondence regarding the Claimants costs. We will allow 21 days to reach agreement in relation to costs, failing which costs only proceedings pursuant to CPR rule 44.12A will be issued. Please nominate solicitors to accept service on behalf of the Defendant in default of agreement on costs."
"We do not consider the success fee should exceed 25% of the profit costs."
DETAILED ASSESSMENT
A. The location of the Claimant's Solicitors and the appropriate hourly rate for such Solicitors; and the linked issue of venue for issue of the proceedings.
B. The appropriate grade of fee earner.
C. The success fee.
A. THE LOCATION OF THE SOLICITORS AND THE VENUE OF THE PROCEEDINGS
"in relation to the first question "were the costs reasonably incurred?" it is in principle open to the paying party on a taxation of costs on the standard basis to contend that the successful party's costs have not been "reasonably incurred" to the extent that they have been augmented by employment of a solicitor who, by reason of his calibre, normal area of practice, status or location, amounts to an unsuitable or "luxury" choice, made on grounds other than grounds which would be taken into account by an ordinary reasonable litigant concerned to obtain skilful, competent and efficient representation in the type of litigation concerned ... However, in deciding whether such an objection is sustainable in practice, the focus is primarily upon the reasonable interests of the plaintiff in the litigation so that, in relation to broad categories of costs, such as those generated by the decision of a plaintiff to employ a particular status or type of solicitor or counsel, or one located in a particular area, one looks to see whether, having regard to the extent and the importance of the litigation to a reasonably minded plaintiff, a reasonable choice or decision has been made. If satisfied that the choice or decision was reasonable, it is the second question "what is a reasonable amount to be allowed?" which imports consideration of the appropriate fee for a solicitor or counsel of the status and type retained. If not satisfied that the choice or decision was reasonable then the question "reasonable amount" will fall to be assessed on the notional basis of the costs reasonably to be allowed in respect of a solicitor or counsel of the status or type which should have been retained. In either case, solicitors' hourly rates will be assessed, not on the basis of the solicitor's actual charging rates, but (in a case where the decision to retain was reasonable) on the basis of the broad costs of litigation in the area of the solicitor retained or (in a case where the choice made was not reasonable) of the type or class of solicitor who ought to have been retained."
"That in my judgment is right."
He did however take issue with the way in which the principle was applied to the particular facts of Wraith.
"Thus in determining whether it is objectively reasonable to instruct lawyers who may be said to be out of the way or a luxury the court takes account of and balances a wide range of relevant circumstances. The fact that a union or other organisation no doubt for understandable reasons habitually uses a particular firm of solicitors is a relevant factor but of limited relevance on taxation in an individual case. Litigants are entitled to engage any lawyer they choose, and from a subjective point of view the choice may be entirely reasonable, but the question is to be judged objectively. The fact that a case has no obvious connection with London is a relevant factor, the more so if the case does not require expertise only to be found there."
"Firstly although the Judge undoubtedly had well in mind that this was a Manchester case with no obvious connection with London, this does not feature in the balance of the stated reasons. In the light of Kennedy LJ's judgment in Wraith, this is an important consideration. Secondly, I consider that the Judge's reasons substantially overstate the scope and difficulty of this case. This is not to diminish in any way the importance of the case to the plaintiff himself. All cases are of the greatest importance indeed to those involved in them. In particular this case concerned Mr Sullivan's health and the future prognosis of a serious condition. However in objective terms this was an asbestosis case without extraordinary legal complication and similar with the regrettably large number of similar cases with which the legal profession and the courts are unfortunately all too familiar. It had no special feature or unusual complication. Thirdly, I consider that the Judge's reasons substantially understate, by clear inference, the availability of fully competent legal practitioners in the Manchester area. There is no doubt whatever that there are in the Manchester area plenty of legal practitioners fully able and qualified to conduct litigation of this kind with full competence. There are in Manchester, and many other centres outside London, many such practitioners who conduct cases of this kind and cases of substantially greater weight and complexity every day of their working lives. The shadowy possibility that this might be regarded as something of a test case would not seem to me to diminish the availability of Manchester lawyers to deal with it. In addition, it seems that it was, in so far as it may have been a test case, a test case for the Manchester area. It is of some, but, in my view, of limited significance that medical experts may generally be found in London. That would not, however give the case a connection with London."
B. THE GRADE OF FEE EARNER
C. THE SUCCESS FEE
"There has not yet been any authoritative guidance from the higher courts as to the level of success fee which would be considered reasonable on an assessment of costs in litigation supported by a CFA ...
102. It should be recognised that any general guidance that we provide is given in the context of the type of claims which are the subject of this appeal, that is to say, modest and straightforward claims for compensation for personal injuries resulting from traffic accidents ...
103. There is some statistical support for a success rate in respect of claims of the type with which we are concerned of up to 98%. However, at this stage of the court's experience of funding arrangements it is not possible to be precise as to what is the correct percentage. We do not consider that it can ever be said that a case is without risk. In this category of litigation, the prospects of some success on liability is increased because of the ability of a court to make a reduced award on account of contributory negligence. It is, however, impossible to foresee all the circumstances in which a straightforward claim can become one with a material degree of risk. In the case of a claim by a passenger, for example, the risk will be small. However, the fact that a Claimant contends that his or her driving was perfect whilst that of the proposed Defendant was atrocious provides no guarantee that, if the case is contested, this is what the Judge will decide. In the circumstances we think that it is reasonable to proceed on the premise that at least 90% of such claims will settle without the need for proceedings, or will succeed after proceedings have been commenced.
104. After careful consideration and having reflected on the reasoning in the judgments below in the two appeals, we have concluded that, where a CFA is agreed at the outset in such cases, 20% is the maximum uplift that can reasonably be agreed. In reaching this conclusion, we have been particularly assisted by the reasoning placed before us by APIL. We wish to emphasise two matters in respect of this conclusion. The first is that it assumes that there is no special feature that raises apprehension that the claim may not prove to be sound. Where there is such a feature, the appropriate uplift will be higher, but it may not be reasonable to attempt to assess that uplift until further information about the defendant's response is to hand.
105. The second matter is that our conclusion is based on very limited data. In particular, it is too early to see what effect the new costs regime is having on the rate of settlements, and this judgment may itself affect that rate. It will be desirable to review our conclusion once sufficient data is available to enable a fully informed assessment of the position."
"106. In concluding this portion of our judgment, we wish to draw attention to an alternative type of success fee, which we consider that it is open to the solicitor and the client to agree at the outset of proceedings. We can describe this as a "two-stage" success fee.107. A success fee can be agreed which assumes the case will not settle, at least until after the end of the protocol period, if at all, but which is subject to a rebate if it does in fact settle before the end of that period. Thus, by way of example, the uplift might be agreed at 100%, subject to a reduction to 5% should the claim settle before the end of the protocol period.
108. The logic behind a two-stage success fee is that, in calculating the success fee it can properly be assumed that if, notwithstanding the compliance with the protocol the other party is not prepared to settle, or not prepared to settle upon reasonable terms there is a serious defence. By the end of the protocol period, both parties should have decided upon their positions. If they are prepared to settle, they should make an offer setting out their position clearly and providing the level of costs protection which they determine is appropriate.
109. A further advantage of a two-stage success fee would be the knowledge that if a claim was not settled, the full success fee would be payable. This knowledge would encourage rigorous consideration of the merits of the claim during the protocol period and therefore accord with the intent of the CPR.
110. If a claim is settled before the end of the protocol period, it would be reasonable that there should still be a success fee payable since:
i) the lawyers are entitled to be compensated for accepting a retainer on a no-fee-no-win basis with the inevitable risk that this involves, however small this risk may appear in many cases.
ii) An appropriate success fee would contribute towards those cases where no fees are payable because they end unsuccessfully.
111. A two-stage success fee would have the advantage that the uplift would more nearly reflect the risks of the individual case, so that where a claimant's solicitor had to pursue legal proceedings, this would be in the knowledge that, although a significant risk of failure existed, the reward of success would be that much the greater. Where, on the other hand, the claim settled as a consequence of an offer by the defendant, he or his insurer would have the satisfaction of knowing that he had ensured that the success fee would be reduced to a modest proportion of the costs.
112. We have considered the risk that a two-stage success fee would encourage claimant's solicitors to take claims past the protocol stage in order to benefit from the higher uplift. Such conduct would, however, be prevented by a defendant who was prepared to settle by making a formal settlement offer, putting the claimant at risk as to costs.
...
...
115. A two-stage success fee of the type we propose, agreed at the outset, would be likely to be agreed before the merits of the individual claim were apparent. Thus, the uplift would be unlikely to reflect precisely the likelihood of failure of any individual claim that did not settle. The determination of the reasonable figures for the full uplift and the rebated uplift would have to be based on overall claims experience with the proportion of contested cases which succeed, and the costs earned from such cases being particularly significant. While the exercise involved in determining a reasonable two-stage fee would be more complex, we suggest that, once the necessary data is available, consideration will need to be given to the question whether where fees are agreed at the outset, the requirement to act reasonably mandates the agreement of a two-stage success fee."
The Claimants Submissions
"The Success FeeThe success fee is set at 50% of basic charges and cannot be more than 100% of the basic charges.
The percentage reflects the following:
(a) The fact that if you win we will not be paid our basic charges until the end of the claim;
(b) our arrangements with you about paying disbursements;
(c) the fact that if you lose we will not earn anything;
(d) our assessment of the risks of your case.
These include the following:
Liability issues
(i) the raising of an issue of contributory negligence, namely whether you precipitated the mishap by moving suddenly;
(ii) the raising of a defence that Mr Freedman either attempted to apply a rubber dam or attempted to use an instrument suitably attached to his finger or alternatively considered that the use of rubber dam or other means of protecting the airway were impossible.
(e) any other appropriate matters.
The matters set out at paragraphs (a) and (b) above together make up 0 % of the increase on basic charges. Matters at paragraphs (c), (d) [and (e)] make up 100% of the increase on basic charges. So the total success fee is 50% as stated above."
"Statistics on the success rate of clinical negligence actions are scant but are generally acknowledged to be in the region of 50% compared to the accepted 90% of personal injury cases. Therefore the ratio of winning to losing cases will be 1:1 for clinical negligence actions compared to 9:1 for personal injury actions making the risk of losing a clinical negligence case 9 times greater than losing a personal injury case. The costs of losing a clinical negligence action are also significantly greater than losing a personal injury action particularly in terms of disbursements."
The Defendant's Submissions
"Information about Funding Arrangements
4A.1 Where a person enters a funding arrangement within the meaning of rule 43.2(1)(k) he should inform other potential parties to the claim that he has done so.
4A.2 Paragraph 4A.1 applies to all proceedings where the proceedings to which a pre action protocol applies or otherwise.
(Rule 44.3B(1)(c) provides that a party may not recover any additional liability for any period in the proceedings during which he failed to provide information about a funding arrangement in accordance with a rule, practice direction or court order).
"... we put you on notice that our client's claim is funded by way of a conditional fee agreement."
It does appear that the Claimant's solicitors have therefore complied with the Protocol Practice Direction. For the future it would be helpful if the Form of Notice of Funding were used.
Conclusion
"Subject to paragraph 17.8(2), 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 agreement."
"In cases in which an additional liability is claimed the Costs Judge or District Judge should have regard to the time when and the extent to which the claim has been settled and to the fact that the claim has been settled without the need to commence proceedings."
A. Although it is open to the Claimant to instruct solicitors in Nantwich, the test in Wraith is not met, but on the particular facts of this case the instruction of distant solicitors resulted in a saving to the Defendant in relation to the conduct of the claim itself, but it has also led to additional cost in relation to the costs only proceedings, a matter which will have to be addressed when the costs of those proceedings are dealt with. The commencement of proceedings in Crewe County Court was purely for the benefit of the Claimant's Solicitors. It appears that had substantive proceedings been issued the court would, either on its own initiative or on application, have made an appropriate order for transfer.
B. On the particular facts of this case the appropriate grade of fee earner is grade 2.
C. For the reasons given at paragraphs 28 to 46, I allow a success fee of 20%.
SPECIFIC ITEMS
In-coming correspondence:
Correspondence: obtaining x-rays
Documents:
The Success Fee
Costs of Detailed Assessment
COSTS ONLY PROCEDURE
a. identify the claim or dispute to which the agreement to pay costs relates;
b. state the date and terms of the agreement on which the claimant relies;
c. set out a draft of the order sought;
d. state the amount of the costs claimed; and
e. state whether costs are claimed on the standard or the indemnity basis.
PTH\W23\Bensusan v Freedman
5.9.01