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Barham v Athreya & Anor [2007] EW Misc 6 (EWCC) (15 June 2007)
URL: http://www.bailii.org/ew/cases/Misc/2007/6.html
Cite as:
[2007] EW Misc 6 (EWCC)
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Neutral Citation Number: [2007] EW Misc 6
(EWCC) |
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Case No:
CNC05021 |
IN THE CENTRAL LONDON COUNTY COURT
APPEAL FROM THE SUPREME COSTS OFFICE
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Civil Justice Centre 26 Park
Crescent London W1N 1HT |
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15 June
2007 |
B e f o r e :
HIS HONOUR JUDGE DEAN QC
MASTER
CAMPBELL
____________________
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LISA BARHAM
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Claimant
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- and -
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(1) DR ATHREYA (2) BARKING, HAVERING
& REDBRIDGE NHS TRUST
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Defendant
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____________________
Tape Transcript of Wordwave International, a Merrill Communications Company
PO Box
1336, Kingston-Upon-Thames, Surrey KT1 1QT
Tel No: 020 8974 7300 Fax No: 020
8974 7301
Email Address: mlstape@merrillcorp.com
____________________
MR POOLES (instructed by Gadsby Wicks Solicitors) appeared on behalf of the CLAIMANT
MR MARVEN (instructed by Berrymans Lace Mawer) appeared on behalf of the FIRST DEFENDANT
MR POST (instructed by Kennedys) appeared on behalf of the SECOND DEFENDANT
____________________
HTML VERSION OF JUDGMENT
____________________
Crown Copyright ©
- HIS HONOUR JUDGE DEAN QC: This is an appeal by the
solicitors who acted in a clinical negligence case on behalf of the claimant,
Mrs Barham, which eventually (and I say eventually for reasons which will
become apparent in a moment) she brought against her GP and also the Barking,
Havering and Redbridge Hospital Trust.
- I have a chronology here, which is an extremely
helpful document, produced by Mr Pooles, who has argued this case on behalf of
the solicitors who are seeking to challenge the award of the costs judge,
Master Simons, who reduced the uplift for the success fee under a conditional
fee agreement, a CFA, from the original 100 per cent, which had been included
in that agreement, to some 67 per cent in relation to profit costs of the
solicitors.
- I have to say a little about the background of the
case. In August 2001 Mrs Barham suffered a back injury at work. In December
those symptoms deteriorated and she attended her GP, who ultimately became the
first defendant in the action, where he prescribed antibiotics (she was
suffering a burning sensation in her bladder and in her stomach so obviously
he must have assessed a risk of infection) and various tests. Following that
attendance at the GP's surgery Mrs Barham inquired as to what were the results
of the tests and was told they were normal. She was not happy with this and
insisted on seeing the GP. In January 2002 she made another appointment with
the GP and the decision was made that advice should be taken from hospital. A
couple of days later she again rang the GP and was told to attend and she was
then taken or sent to casualty at Old Church Hospital.
- The following day, on 11 January 2002, she underwent
an MRI scan which showed a prolapsed disc. On the very next day, 12 January
2002, she underwent surgical intervention and following that there was a
subsequent leak of CSF, which is a form of spinal fluid. She was discharged
and went home but then was immediately re-admitted for a lumbar drain. She was
finally discharged from the hospital in February 2002. She resumed work in
April of that year and by November of that year the bladder symptoms appear to
have resolved.
- In May 2003 she attended solicitors, Gadsby Wicks,
who are a well known, highly experienced professionals in clinical negligence
cases. She had attended previously on two occasions when it appears that the
firm had not been willing to undertake her case. In May 2003, following an
interview with a nurse who was employed by the firm, no doubt for making
assessments, the firm decided they would undertake her case on the terms of a
CFA.
- It is now necessary to turn to the CFA and I will
try to identify as briefly as possible the relevant provisions. It is dated 1
May 2003, made between Gadsby Wicks and Mrs Barham. There, first of all, was a
glossary or definition section in the agreement and clause 4(c) is an
important provision. The agreement provided for a success fee and it defined
the circumstances in which that success fee would become payable in paragraph
4(c) in these terms:
"Win. This means that Your Claim is decided in your favour
either by a Final Court Decision or by an agreement which in either case
pays you Damages or Provisional Damages that are to be paid by any one or
more of the persons or bodies who are described in this Agreement as Your
Opponent."
- In subparagraph (e) of clause 4 "your opponent" was
defined, first of all, as the GP by name:
"… or any other person or body to whom we submit a claim on
your behalf whether or not court proceedings are issued against that
person or body."
- Subparagraph (f) defined the claim as:
"This is your claim against Dr Athreya [GP] or any other
person seeking Damages for personal injury caused by clinical
negligence."
- So a success fee was to be payable in the events
there described, that is, success by the payment of damages, broadly speaking,
by either one of the GP, who is identified, or any other person against whom
the claim should subsequently be brought. The success fee, which is of course
the core of the agreement, is contained in paragraphs 34, 35 and 36. The
relevant paragraph is 35, which says this:
"We have set the percentage of 100% of the Basic Charges.
[That means their basic profit costs in the event of success would be
raised by 100%.] We are not permitted by law to set it at more than 100%.
The percentage at which we have set the Success Fee reflects our
assessment of your prospects of success in pursuing Your Claim at the time
we entered into this Agreement and the fact that if you Lose we will not
earn anything. It does not reflect the fact that if you Win we will not be
paid the Basic Charges until our work is finished."
- Then clause 36 identifies a number of matters
which were said to have been taken into account in assessing the success fee
at 100 per cent uplift on profit costs. I had better read this because a lot
of time has been spent on it:
"Our assessment of your prospects of success in pursuing Your
Claim at the date we signed this Agreement include the following [then
there is a series of lettered sub clauses, nine in all]: (a) the fact of
success or failure will depend to a considerable degree upon the extent to
which the court will be willing to accept your account of the history of
your treatment, the injury which you have suffered and the surrounding
circumstances."
- In other words, whether the claimant is accepted
by the court as a credible and reliable witness.
"(b) the fact that we have not yet had an opportunity to test
the credibility of your evidence with regard to such matters and in
particular have not been able to check it thoroughly against
contemporaneous written records and Your Opponent's version of the
facts."
- That means, as I read it, we are taking your
account on trust as at this moment because we have not had the opportunity to
see if there are matters which are objectively inconsistent or cast doubt on
your case, or, we have not had the opportunity to consider the nature of the
Defence or answer to the claim which the opponents may make.
"(c) the fact that in order to Win you will need through to
the completion of any trial the support of reputable, independent and
suitably qualified medical experts whose expert opinions will be accepted
by the court in preference to the opinions of any experts Your Opponent
may engage to assist them."
- There it is pointing out the risk that in
litigation of this sort very often a substantial (if not the whole) part of a
case will turn on the opinion evidence of medical experts, who may well be
opposed by equally eminent experts on the other side, and the solicitor is at
present unable to make a judgment as to which expert evidence is likely to
carry more weight with the court.
"(d) the fact that we have not yet had an opportunity to
identify experts who will be able and willing to support Your
Claim."
- That means not only is there the risk that I have
just mentioned in (c) but the fact is that we have not yet, as it were,
contacted a suitable expert given the nature of the claim.
"(e) the fact that we do not yet know the extent (if any) to
which Your Claim will be defended by Your Opponent."
- Will the claimant simply be pushing at an open
door because there was an early admission of liability or will it be
strenuously defended?
"(f) the fact that if Your Opponent decides to defend the
claim we do not yet know what experts (if any) will be willing and
available to support the defence."
- Again, just as they are not yet in a position to
identify their own expert, they do not yet know the quality, the strength and
the reputation of the expert who will be sought to assist the Defence. In
medical negligence cases, of course, that can be very important. Very often, I
am not saying necessarily in this case, but very often highly eminent medical
witnesses are called and until one knows the identity of those witnesses and
their past record in giving evidence, and so on, one cannot really assess how
they can be properly compared with your own expert.
"(g) the fact that we do not yet know to what extent and for
what reasons any experts engaged by Your Opponent will be willing to give
evidence to the court in defence of Your Claim."
- There is always a risk, I suppose, that experts
may not be willing to give evidence in Defence of the claim. Again, that is an
element not of uncertainty, but certainly an element which is not known at
this stage to the solicitors advising the potential claimant.
"(h) the fact that for all of the reasons set out above we
have not yet been able to form anything other than a preliminary view of
your prospects of success because we have not yet been able to assemble
all of the evidence which will be necessary to succeed at trial and we
have not been able to assess the strength and credibility of the evidence
(and in particular the expert evidence) which Your Opponent may assemble
to defend Your Claim."
- That means exactly what it says. Obviously at that
stage they are not in a position to have an overall and thoroughly well
informed view of the case in order to form a judgment on the likelihood or
otherwise of success.
"(i) In particular we are concerned that it may not be
possible to establish any breach of duty because the symptoms that you
reported to your general practitioner may not have been indicative of a
serious condition and also that it may not be possible to establish
causation because the earlier surgery may not have resulted in any
improvement of the symptoms."
- That means that we do not yet know, I think it is
saying, whether your symptoms are consistent with and symptomatic of a serious
condition and, furthermore, the very difficult question of causation has not
yet been investigated. So those are the nine criteria which were taken into
account, according to the claimant's solicitors, in assessing the uplift at
100 per cent of the profit costs. There are a number of other clauses but I
think the only one which has really been discussed is clause 97 at page 17 of
the agreed bundle. It provides:
"We can end this Agreement at any time if we no longer believe
that you are likely to Win. If that happens you will only have to pay us
the Expenses. These will include the barrister' fees of any barrister who
does not have a conditional fee agreement with us but will not include the
interest referred to in paragraph 42 of this
Agreement."
- That gives the solicitor the unilateral option to
review the progress of the case from time to time and to reassess the judgment
which the solicitor may well have formed, and did in fact form, when the
agreement was initially entered into. This was what one might call a clause
whereby the solicitor can relieve himself from the possibility of spending
further time without payment of profit. He would also be able to recover his
out of pocket expenditure but in fact he will have no compensation for the
time which he has given to the case to date. But it is an important clause
because it suggests that the decision as at the date of the agreement in
assessment of this is by no means a final one. It also suggests, it has been
put in argument, that at the date of the agreement they did not believe that
the conditions necessary for the operation of that get-out clause, or that
cesser option, were present. That is, there would have been no point in
signing the agreement if the clause would have been immediately operative.
"We can end this Agreement at any time if we no longer
believe that you are likely to Win."
- That means that we do believe you are likely to
win at this time but if we no longer have that belief at any time we may
terminate the agreement. It is of course the solicitor's agreement and I doubt
if there was any input at all from Mrs Barham or any independent legal
advisers. I am not in any way suggesting that the agreement is in any way
improper, but the fact is that it is their agreement.
- What happened was the case in fact did not proceed
to final litigation. There were various stages. Ultimately the case settled
against both of the defendants. After the signing of the CFA, in October 2003,
the same year, the claimant's solicitors finally obtained delivery of the
medical records and commissioned reports on liability and causation. Then
having considered the matters, presumably with the assistance of expert input,
on 4 December 2004, well over a year later, the claim form was issued. On 17
January 2005 letters of claim were sent with draft Particulars of Claim. In
September 2005 case management directions were given in the case. Following
those directions, in November 2005, there was an exchange of witness
statements and at that stage the second defendant, that was the hospital, made
an offer of £5,000. On receipt of that offer in November the claimant made a
part 36 offer to the hospital in the sum of £7,000 and in December the
hospital accepted that offer. So the case settled against the hospital after
completion of the documentary disclosure and the exchange of witness
statements, but not exchange of expert evidence, as between that particular
defendant and the claimant.
- The GP held out for a little longer. In January
2006 experts' reports were exchanged with the GP and in February 2006 the
claimant made a part 36 offer in the sum of £25,000. On 24 April 2006 the GP
made a counter offer of £20,000, which was accepted.
- So Mrs Barham successfully obtained damages from
both defendants, happily without the necessity for a full-blown hearing in
court. In those circumstances the success fee clearly became payable to the
claimant's solicitors. There was then a detailed assessment of costs before
Master Simons and during the course of that assessment Master Simons reduced
the uplift on the profit costs from 100 per cent to 67 per cent.
- Just pausing there, I will say now a little about
the law, as little as I can manage, or as little as I can get away with. It is
quite clear and it has not been in dispute, that when a conditional fee
agreement is entered into, in considering the risk, the risk has to be
assessed on the basis of the information which is available to the parties at
the time the agreement is entered into and when the court is faced with a
detailed assessment the court is itself obliged to put itself into that
position. That is the effect of the practice direction which is set out in
practice direction 44.11.7, which in the current edition of the first volume
of the White Book is at page 1197. Part 11.7 says this:
"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
arrangement."
- So one is not allowed to take into account
hindsight. With hindsight of course, although this litigation, particularly in
the case of the first defendant GP, was coming to a stage, I imagine, where
there was nothing else left to do but prepare immediately for trial, in the
case of the hospital they settled at a rather earlier stage and in fact the
settlement was acceptable to the claimant, no doubt on the advice of her
solicitors. So in the event obviously procedural matters had to be dealt with,
witnesses had to be prepared, experts engaged and (inaudible) and the
like, but the critical crunch battle of litigation in court did not take
place. To that extent it was a very successful proceeding so far as Mrs Barham
was concerned.
- I now must make a distinction between the
principles which apply when a costs judge is making a detailed assessment in
the case of first instance, on the first occasion, and the principles which
apply when there is an appeal to this court from a decision which the costs
judge has already made. As I understand it, and it has not been disputed, the
costs judge approaches the matter afresh. He has to make his own judgment
having regard to all the facts and circumstances and, in particular when
dealing with the success fee uplift, the facts and circumstances which were
reasonably known at the time the arrangement was made. He is not as such
hearing a formal appeal from the arrangement which the party and their
solicitors entered into. He is assessing in terms of principle the costs with
particular reference to conditional fee arrangements, ie what should be a
reasonable division of costs on a party/party basis. So the parties present at
that assessment would be effectively the solicitors and the defendants who
have to pay the costs as a result of their concessions in relation to
liability. I assume, although I have not been told in terms, there was an
agreement included in the settlement that each of the defendants would be
responsible for the costs of the claimant.
- So the jurisdiction which the costs judge
exercises is a jurisdiction, as it were, to consider the reasonableness of the
costs, applying the relevant principles, which of course a costs judge, indeed
any judge, must do. He is, as I understand it, obliged to make his own
judicial assessment and obviously it is a jurisdiction which contains a degree
of discretion. This is a case where a considered decision has to be made in
which judgment functions very largely. Costs judges, of course, have
considerable experience of settling these costs accounts. I am not aware that
there are costs judges who specialise in clinical negligence cases, but they
have a wide jurisdiction and no doubt a costs judge will be very familiar with
this type of litigation.
- That is a major difference between that approach
and the approach when the matter comes before this court on appeal. If one of
the parties is dissatisfied with the decision of the costs judge then they
have a limited right of appeal to this court. Taking this from the skeleton
argument of the second defendant, which was prepared by Mr Post of counsel,
the appeal is brought under part 52 of the CPR and the test on appeal is
therefore: was the decision of the lower court wrong or unjust because of a
serious procedural or other irregularity in proceedings in the lower court?
This is not a general appeal. The jurisdiction which is exercised by this
court on such an appeal is one which is akin in many respects to the approach
of a court when considering a judicial review type jurisdiction and what the
court must do is not see whether it agrees as a matter of substantive merit
with the decision of the costs judge, but it must be concerned to see that the
costs judge has not fallen into error of law in arriving at his decision.
- Of course the ways in which such an error may be
established are more than one, there are many ways. One is that if the judge
below, the costs judge, misdirected himself on the law, if he put forward a
proposition in law which was not a correct proposition of law. If, for
instance, to take a very easy case, instead of having regard to the facts and
circumstances known at the time when the CFA was entered into he looked at the
whole history, noted that this case resulted in a settlement and said that it
obviously was not worth a 100 per cent uplift, if he did that he would be
wrong in law in a very obvious way. There are other ways in which a costs
judge may render himself susceptible to the intervention of this court
exercising a limited jurisdiction. For instance, it is important that the
judge when coming to his assessment must take into account only those matters
which are material and relevant to the particular decision which he is seeking
to make. Further, the opposite side of that coin is that he must not take into
account matters which are immaterial or irrelevant to the decision which he is
required to make. Obviously he must act fairly, giving each party the chance
to put their case and meet the case which the other party is putting.
- There is a final safety net, as it were, which is
sometimes called Wednesbury unreasonableness, which is that even if the costs
judge cannot be criticised or even if a fault cannot be found in the direction
on law, the regard to material and not immaterial matters, nonetheless at the
end of the day if the decision is so way out beyond what a reasonable,
properly instructed judge could have come to on the facts before him, it can
be said to be wrong, that is called Wednesbury unreasonableness. It is a very
high threshold to overcome. It is the safety net of last resort for somebody
who is seeking to challenge the decision of a lower court, or an
administrative tribunal for that matter, where the only power in the higher
court is one of review rather than a hearing of a substantive appeal on the
merits. Our jurisdiction is so limited and the contrary has not been argued.
- Having laid that background I will now seek to
deal with the judgment of Master Simons. This was an ex tempore judgment. It
was considered in the course of what I understand was quite a substantive
assessment and he had to deal with many matters and the uplift under the CFA
was only one of them. I understand he delivered this judgment orally during
the course of the assessment and before the assessment had been finally
concluded. He took this as a discrete point, no doubt at a convenient point in
the argument. Master Campbell and I sitting here today have been provided with
a transcript of the judge's judgment. It is quite short and I will try to read
most of it. He correctly identifies the issue in paragraph 1:
"The issue that I have got to decide is with regard to the
level of success fee."
- Then he mentions it was set out in the agreement
of 1 May and, he points out, "at a very early stage in the proceedings". Then
he refers to the definition of the claim, which I have already read. Then in
paragraph 3 he says this, and this is an important paragraph because Mr
Pooles, on behalf of the solicitors who are challenging the reduction of the
success fee from 100 per cent to 67 per cent, says at this stage the judge
fell into the classic error in the classic case where a reviewing court can
interfere of failing to take into account matters which were relevant to the
issue and which he ought to have taken into account. I will read paragraph 3
in full carefully:
"3. The success fee was set at 100 per cent. A risk assessment
is set out in paragraph 36 of the conditional fee agreement, which sets
out nine different factors, of which the first eight are all, as Mr Marven
says, pro forma and can apply to any case. The only one which appears to
be pertinent is condition (i) which says: 'In particular we are concerned
that it may not be possible to establish any breach of the duty because
the symptoms reported to your general practitioner may not have been
indicative of a serious condition and also that it may not may not have
resulted in any improvement in the symptoms.' It seems to me that at the
time of the risk assessment only proceedings against Dr Athreya [the GP]
were being contemplated.
"4. Mr Marven [who appeared for the first defendant and who
appeared in this court for the first defendant] says that the CFA says
that the solicitors are entitled to be paid, as long as there is success
against someone. He says that estimating the risks on a 50/50 case, which
will entitle to a 100 per cent success fee, is clearly over-pessimistic.
There was a nurse adviser who made the assessment and she should know
something about whether there was likely to be a risk and she was perhaps
more expert than the normal solicitor and therefore would be more
qualified to assess the risks in a better way."
- Just pausing there, I should explain that 100 per
cent, as the CFA itself recites, is the maximum uplift allowed by law. There
is a table which sets out the uplift which should be available dependent upon
the degree of risk which is assessed for a particular case. The 100 per cent
uplift is for a 50/50 case. The next one down is a 60 per cent chance of
success case, in which case the uplift decreases rather dramatically from 100
per cent to 60 per cent. 67 per cent is what the costs judge awarded in this
case. So there is not a direct linear relationship between the assessment of
risks on a percentage basis and the permissible profit uplift on costs. A
comparatively small drop of 10 per cent in risk results in quite a dramatic
change in the level of the uplift.
- Going back to the judgment, at paragraph 5 Master
Simons continues:
"5. There seemed to be, on the face of it, evidence that
something had gone wrong [that is with the patient's medical care] and he
also refers to the fact that success fee of 100 per cent was claimed
against the second defendant [the hospital] before that second defendant
had been identified. He, as does Mr Sorrell, [I gather he would have been
for the second defendant at that stage, although Mr Post appears for the
second defendant before us] refers me to the case of KU v Liverpool
City Council in which the court encouraged parties to enter into CFAs
that provide for a two stage success fee and indicated that if this is
done there would be a much greater chance of recovering a high success fee
should the matter progress towards trial.
6. Mr Filtness says that at the time they did not know whether
they were going to be able to establish any claim against anyone, one
cannot look at the question in hindsight and there are difficulties in
establishing cases of negligence. These are difficult cases, there were
risks and 100 per cent is completely justified.
7. I have to say that the decision in KU seems to me to
be especially pertinent in this case. As I put it to Mr Filtness, if 100
per cent is going to be claimed on cases of this nature with no staging,
it seems to me that every case that comes to his client's firm will
generate a 100 per cent success fee because at the time of course there is
no evidence because a client comes in and will make a statement and all
the factors that have been set out in the CFA will apply, and clearly at
that stage they have got no information other than what they have been
told by the claimant. The fact that the second defendant had not been
identified and there was no risk assessment even made against the second
defendant and that the risk assessment came under the general heading
seems to me a perfect illustration as to why a staged success fee is
appropriate and as the Court of Appeal said that solicitors are much more
likely to achieve 100 per cent success fee if they have provided in their
agreement that there should be a staged success fee just in case there is
a position where cases do not go to trial, and where the risk throughout
seems to diminish. In a case that I suggested where the second defendants
had, say, accepted liability immediately, nevertheless a claim for 100 per
cent success fee would have been made against them and that, it seems to
me, is not reasonable.
8. It must be appropriate there is a staged success fee
otherwise it seems to me that practically every case, except where a
client comes to a solicitor with an admission of liability, the solicitor
will be able to claim 100 per cent success fee, which I think defeats the
whole object of success fees. I think that a staged success fee would have
been appropriate in this case and therefore I do not think it is
reasonable to allow a 100 per cent success fee.
9. This was a very widely drawn CFA. I think that Mr Marven
and Mr Sorrell are correct when they say that the solicitors were
over-pessimistic about the possibility of success in the case. I accept
that there were difficulties and they are not allowed to use the benefit
of hindsight, but in the absence of there being a staged success fee I am
going to set the success fee at 67 per cent, which I think is
reasonable."
And, although it does not say so, that represents a risk assessment of 60
per cent as opposed to 50/50.
- That was the judge's judgment. He has been
criticised for a number of reasons by Mr Pooles both in a carefully prepared
skeleton argument and structured submissions which have been made during the
course of today. I think I can, without doing injustice to all his
submissions, pick up what appear to me at any rate to have been the main
burden of them. First of all, as I have already indicated, he takes what was
said in paragraph 3, where he said that the judge had really abandoned any
consideration of the first eight risk factors set out in paragraph 36 of the
conditional fee agreement and had concentrated only on the final one,
condition (i). I will read it again:
" The success fee was set at 100 per cent. A risk assessment
is set out in paragraph 36 of the conditional fee agreement, which sets
out nine different factors, of which the first eight are all, as Mr Marven
says, pro forma and can apply to any case. The only one which appears to
be pertinent is condition (i) which says: …" [Is the one which I have
read, concerning whether there was an indication of a serious illness and
possible difficulties of causation]."
- What Mr Pooles says in relation to that is true in
many, if not all cases. The first eight factors which are identified in
paragraph 36 of the CFA may well be relevant. Nonetheless, he said, the fact
that they may be relevant in the majority, or even every case for that matter,
does not mean to say that they do not have weight. They may be relevant in
many cases just because they have weight and because these are serious hazards
of litigation, particularly of clinical negligence litigation. The judge
effectively, he submits, has really given them no weight at all and in that he
fell into error.
- One has to be very careful about this. This is not
a reserved judgment, it is an ex tempore judgment delivered orally, as I have
already said, not even at the end of the assessment process but during its
continuation. It is not a reserved judgment and one must be a little careful
not to attribute to particular use of language more weight than it can bear.
What it appears to me, and my colleague, the judge was here saying was not
that he had disregarded all those factors. I should mention that of course he
had all the material which had been available to the solicitor, including the
statements from Mrs Barham, and I do not know, but probably some form of the
notes of the nurse, I am not sure if he would have had those, but nonetheless
he had all the material. He had detailed submissions supporting and attacking
the 100 per cent uplift.
- He has not said he disregards the issues in
paragraphs (a) to (h). What he is saying is they are not pertinent. As I read
that, he means they do not carry any strong relevance or any persuasive
elements in this case, but considering the only issue which he was concerned
with at this point, which was the 100 per cent uplift, all those were present
and if they were to be applied in every case they would always justify a 100
per cent uplift. That is really what he is saying. What is relevant on the
facts of this particular case, given the particular nature of this lady's
complaint, is the question of whether her condition really was serious and
whether, even if it was serious, any earlier surgical intervention could have
made a difference because I think one of the complaints against the GP is that
he had delayed unnecessarily in seeking a referral.
- That, in our judgment, is exactly the sort of
exercise which a costs judge is entitled to undertake. If he were to be
criticised on, as it were, absolute perfect grammatical expression and syntax
then it would be almost impossible for costs judges to produce the work in the
light of the very heavy pressure which lies upon them, particularly if he
produces it as speedily as possible, which I am sure the parties are
interested in. We do not read that as saying: I am abandoning all of these. We
do read it as saying: if these were the only factors then there would be room
for a 100 per cent success fee in every case. He is saying: in this particular
case the real problem was whether she had a problem at all in medical terms
and whether, if she did, she could prove that she has sustained any loss
because of the way in which it was attended to or not attended to, as the case
may be. That, in our judgment, is precisely the exercise the judge is expected
to undertake.
- The other matter which forms a substantive part of
the argument on appeal was whether in some way the judge had misdirected
himself when saying that you could never have a 100 per cent success fee
unless you had an arrangement which provided for reconsideration of the risk
in stages. In other words, in the initial stages, before any investigation had
been done, the fee may be on one level. As the case progressed and the
difficulties began to emerge there was provision for other uplifts on that. In
this case, this agreement was entered into at the very earliest stage, even
before there had been exchange of the protocol letters. For all the claimant's
solicitors knew, one or other of the defendants may have admitted liability on
exchange and being challenged. That did not happen yet. It does seem that the
Defence of the second defendants would not even (inaudible). I am not
allowed to look at hindsight, I know, but Mr Pooles has done with a view to
(inaudible) as to say whether it is reasonable. I had better not
trespass into that area at all.
- Looking at it at the time, they did not know.
Indeed they say they do not know. So this is not a success fee assessed by
reference to known difficulties. It is assessed in terms because they did not
know the difficulties, they did not know anything really other than their
client's case. Mr Pooles said that they must have had doubts about it because
this was her third attempt to get them to be involved in her case. We know
nothing of that at all, there has been no evidence about why the two earlier
attempts were not successful, that is in obtaining legal assistance from this
firm. All we do know is that as a result of the assessment carried out by the
nurse and, in this court at any rate, rather brief details of the nature of
the complaints, they were prepared to take it on under an agreement, which I
have said (although it is fair to say the costs judge did not mention this)
that itself suggests that at a later stage they may think that success is
something less than likely, if that means anything, something less than the
50/50 chance. But, as I say, perhaps too much weight should not be put on that
paragraph 97, the escape clause. "We no longer believe you are likely to win."
That is what it appears to say, but it is fair to say that was not taken into
account by Master Simons and perhaps one should not put too much weight on it
here.
- As I see it, the second major point was that the
costs judge seems to have believed that you will never get a 100 per cent
uplift unless you engage in a CFA which contains provision for a review and
reassessment of the risk at stages and the opportunity to uplift the profit
costs at these stages. He says this is a misreading of the decision which was
mentioned and it has been cited to Master Simons. That is the decision in
KU v Liverpool City Council. That decision was a very different case
from this, as indeed Mr Pooles points out, and he says the facts were so
different that what was said by the Court of Appeal cannot really have had any
relevance to more sophisticated and complicated forms of litigation.
- This was a case against Liverpool City Council
which, as a simple description, and lawyers will almost immediately recognise,
was said to be a case of somebody who had been injured by falling into a hole
on the property occupied or under the control of the City Council, what in the
trade are known as tripping cases. But this is not such a case. It is a rather
different type of case. That involved a young claimant who had fallen into a
substantial hole. At the very early stage the solicitor undertook to prosecute
the claim with a CFA with a 100 per cent uplift. But it is apparent that when
he made even the initial investigations the hole was in the nature of a trap,
a hidden danger to a young person, and therefore the case was likely to have
fallen into that category where success could be reasonably assured, or
certainly a better than 50/50 chance. The matter is dealt with in the judgment
of the Court of Appeal, delivered by Brooke LJ at paragraphs 20 and onwards. I
will read some of these:
"When a court has to assess the reasonableness of a success
fee it must have regard to the facts and circumstances as they reasonably
appeared to the solicitor at the time when the CFA was entered into. [He
cites practice direction 11.7 and a case called Atack v Lee.] The
principle that the use of hindsight is not permitted when costs are being
assessed is an old one [and he cites authority for that and he also quotes
from a judgment of Megarry J in The Duchess of Argyll v Beuselink,
again a case where the facts are far removed both from KU and this one.]
Megarry J said in that case:
"'In this world there are few things that could not have
been better done if done with hindsight. The advantages of hindsight
include the benefit of having sufficient indication of which of the many
factors present are important and which are unimportant. But hindsight
is no touchstone [of negligence].'"
- It was in the context of negligence he was
talking, but hindsight is expressly disavowed as being relevant under the
practice direction. At paragraph 21 Brooke LJ in the KU case goes on:
"In October 2001 the claimant's solicitor would not have had
access to the post-2001 evidence or other material cited in paragraphs
12-16 above. When deciding upon a success fee he had two choices. He could
have taken the view that this claim would probably settle without fuss at
a reasonably early stage, but he wished to protect himself against the
risk that the claim might go the full distance and might eventually fail.
In those circumstances he could select the two-stage success fee discussed
by this court in Callery v Gray. In this situation he would be
willing to restrict himself to a low success fee if the case settled
within the protocol period -- or within such other period, perhaps until
the service of the defence, as he might choose -- and to have the benefit
of a high success fee for the cases which did not settle early. As things
turned out, he would have benefited on the facts of this case if he had
adopted this course: a high two-stage success fee would have been more
readily defensible in a case which did not settle until proceedings were
quite far advanced.
"Alternatively, he could have selected, as he did in fact, a
single-stage success fee, being a fee which he would seek to recover at
the same level however quickly or slowly the claim was resolved. In those
circumstances it would not be possible to justify so high a success
fee."
- So what the court is there saying is that if you
are going to lock into a high success fee at too early a stage, you might find
it difficult when you come before a costs judge to justify that decision
because if you had taken the decision to take a lower profit uplift at the
initial stages, with a further uplift if the case proceeded beyond those
initial stages, because that was a time when there would be a better risk
assessment, and so on, then that on the face of it sounds more easy to justify
or, to use a word, more reasonable. The learned Lord Justice went on:
"We must therefore consider the reasonableness of the
single-stage success fee on this basis. Although Mr Williams, who appeared
for the claimant, cautioned us to be aware that we lacked the local
know-how that would be readily available to district judges in Liverpool,
we must do the best we can on this re-hearing on the evidential material
the parties provided to us.
"This was not a typical case involving an alleged tripping
accident on a city pavement. The solicitor had visited the scene and could
see that the hole represented a concealed trap for the unwary. He had also
spent 78 minutes taking his client's instructions before the CFA was
entered into. The identification of the owner of the grass should not
prove over-complicated, and the likelihood of a defence proving successful
was not particularly high (despite the arguments raised by Mr Williams in
paragraph 14 of his skeleton argument, which we have considered
carefully). In a claim as small as this, it is not reasonable that the
defendants should have to pay the claimant's solicitor a higher success
fee against the risk that the value of the claim was so low that legal
costs would not be recoverable at all: this is a risk the solicitor must
bear himself if he is willing to act at all."
- What Mr Pooles says about that is that puts that
case and the observations on the desirability of staged success fees into its
factual context. This was a claim where even before the document was signed
off, the solicitor had the opportunity to assess the locus and make a
real assessment of whether this presented an actionable risk to his client and
make a real assessment of the likelihood of any Defence succeeding. So, Mr
Pooles says, this is really no more assistance than being an illustration of a
case where a 100 per cent success uplift was manifestly inappropriate and,
obviously, as a characterisation of the facts of that case that submission
cannot be faulted.
- At paragraph 25 the learned Lord Justice goes on:
"In our judgment an appropriate single-stage success fee would
have been 50% in this case. On the hypothesis that winning and losing
claims are of equal weight, this would reflect a 2:1 chance of success.
This, incidentally, represents a figure that is closer to the chances of
success shown in the Pascoe Pleasance study [which he then refers
to]."
- Some reference has been made to similar figures
showing the success or otherwise in clinical negligence cases. As all counsel
have urged on us, we are considering an individual appeal in an individual
case with a limited jurisdiction to see whether the costs judge has gone
outside the parameters of law, as I have sought to describe them.
- I feel, and I believe my colleague agrees with me,
that a close analysis of more general matters would not be appropriate. I
should say that interesting arguments have been made upon the public policy
basis for permitting success fees in litigation of this sort and the problem
is that, although some cases will succeed, others may not, and unless courts
assessing costs are reasonably careful to consider the interests of solicitors
involved in litigation, particularly complicated litigation of this sort, the
policy of achieving representation for worthwhile cases may be defeated
because solicitors are not prepared to take the costs risk.
- Those general considerations do not seem to us
particularly pertinent or material to the particular matters of this case. It
did not seem to us that Master Simons was laying down a priori
imperious conditions about success fees, nor was he seeking to penalise
(as at one time seemed to be suggested, but I think that may have been just a
misunderstanding of language) the solicitors because they had the temerity to
seek to bargain for a 100 per cent uplift. What he makes clear is that he is
considering very carefully, given the nature of the judgment, which I said was
ex tempore, this particular case and these conclusions are directed at
arguments in this particular case. I take it up at paragraph 4:
"Mr Marven says that the CFA says that solicitors are entitled
to be paid, as long as there is success against someone. He says that
estimating the risk of a 50/50 case, which will entitle you to a 100 per
cent success fee, is clearly over-pessimistic."
- Then he mentions the assistance which the nurse
adviser could make by way of input. Mr Pooles says perhaps that is not really
material. Although a nurse may have greater knowledge of medical treatment and
medical conditions and the significance of presenting symptoms, she is less
likely to be familiar with the legal issues raised by clinical negligence and
an experienced clinical negligence solicitor is probably in as good a position
to make an assessment. The fact remains in this case they did have the benefit
of some medical input in making the risk assessment and I understand it was in
fact the nurse's decision that ultimately persuaded the claimant's solicitors
to accept the case. He goes on at paragraph 5:
"There seemed to be, on the face of it, evidence that
something had gone wrong and he also refers to the fact that success fee
of 100 per cent was claimed against the second defendant before that
second defendant had been identified. [That is true enough.] He, as does
Mr Sorrell, refers me to the case of KU v Liverpool City Council in
which the court encouraged parties to enter into CFAs that provide for a
two stage success fee and indicated that if this is done there would be a
much greater chance of recovering a high success fee should the matter
progress towards trial."
- That is a perfectly legitimate conclusion to draw
from the case. He does not say the court directed that initial success fees of
100 per cent are always susceptible to adjustment on a costs assessment. He
merely says, what is perhaps rather obvious, that a matter which contains the
possibility of review at various stages in a case where litigation is ongoing
and developing and where risk assessment will inevitably be changing as more
material is processed, on the face of it, all things being equal, is more
likely to result in a justification for a 100 per cent uplift if that has not
been claimed at the beginning and has only been claimed when the true nature
and risk of the litigation is apparent.
- Master Simons goes on:
"Mr Filtness says that at that time they did not know whether
they were going to be able to establish any claim against anyone, and one
cannot look at the question in hindsight and there are difficulties in
establishing cases of negligence. These are difficult cases, there were
risks and the 100 per cent is completely justified."
- That submission comes very near to saying that in
clinical negligence cases where nothing is known at all the default provision
should be a 100 per cent uplift. If that is meant to be a matter of policy
neither I nor my colleague are prepared to endorse it. The matters have to be
treated individually on a case by case basis and although, of course, over
time, no doubt, an expectation will develop depending on the nature of the
categories of cases, the stage has not yet been reached that one can say there
is an automatic default position, particularly in cases which are at a very
early stage.
- At paragraph 7 Master Simons goes on: "I have to
say the decision in KU seems to me especially pertinent in this case."
He is not saying it is pertinent on the facts of this case. He is not saying
this is a simple case like a little girl falling into a hole, but he is saying
the principle seems to be pertinent, as we read it. He is not saying the facts
are directly applicable, but the principle there stated, namely, a staged
provision for payment, is inherently more likely to be held to support a 100
per cent uplift at some stage.
" As I put it to Mr Filtness, if 100 per cent is going to be
claimed on cases of this nature with no staging, it seems to me that every
case that comes to his client's firm will generate a 100 per cent success
fee because at the time of course there is no evidence because a client
comes in and will make a statement and all the factors that have been set
out in the CFA will apply, and clearly at that stage they have got no
information other than what they have been told by the
claimant."
- In other words, if you choose to enter into a CFA
at such an early stage you are, as it were, giving yourself the right to argue
for or to bargain for 100 per cent and that cannot be right. It puts a premium
on ignorance rather than the contrary.
"The fact that the second defendant had not been identified
and there was no risk assessment even made against the second defendant
and that the risk assessment came under the general heading seems to me a
perfect illustration as to why a staged success fee is appropriate and as
the Court of Appeal said that solicitors are much more likely to achieve
100 per cent success fee if they have provided in their agreement that
there should be a staged success fee just in case there is a position
where cases do not go to trial, and where the risk throughout seems to
diminish. In a case that I suggested where the second defendants had, say,
accepted liability immediately, nevertheless a claim for 100 per cent
success fee would have been made against them and that, it seems to me, is
not reasonable."
- In other words, he said it is premature to put
your initial assessment on the facts of this case at 100 per cent uplift.
- He concludes in paragraphs 8 and 9:
"8. It must be appropriate there is a staged success fee
otherwise it seems to me that practically every case, except where a
client comes to a solicitor with an admission of liability, the solicitor
will be able to claim 100 per cent success fee, which I think defeats the
whole object of success fees. I think that a staged success fee would have
been appropriate in this case and therefore I do not think it is
reasonable to allow a 100 per cent success fee.
9. This was a very widely drawn CFA. I think that Mr Marven
and Mr Sorrell are correct when they say that the solicitors were
over-pessimistic about the possibility of success in the case. I accept
that there were difficulties and they are not allowed to use the benefit
of hindsight, but in the absence of there being a staged success fee I am
going to set the success fee at 67 per cent, which I think is
reasonable."
- So he is not penalising them for seeking 100 per
cent, he is just saying it was unreasonable in his judgment, and it was his
jurisdiction to make such a judgment, to set it so high. If it had been set at
a lower rate with the opportunity for a staged increase then that might have
been more reasonable. For my part I cannot fault that reasoning at all. It is
possible to make what are essentially semantic or verbal points on the
agreement, but if one reads this judgment sensibly it is perfectly apparent,
at least to myself and I believe to my colleague, that the costs judge was
directing his attention (i) to the individual agreement, (ii) in general terms
a staged agreement was more likely to find favour for a high success fee than
one which simply assumed it or took it right from the very beginning.
- For my part, I can find nothing to fault in the
reasoning of Master Simons and I would not allow this appeal. I understand
Master Campbell agrees with me.