Kai Surrey (A Child and Protected Party, by his Litigation Friend, Amy Surrey) v Barnet and Chase Farm Hospitals NHS Trust
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison,Lord Justice Longmore,Lady Justice King |
| Judgment Date | 16 March 2018 |
| Neutral Citation | [2018] EWCA Civ 451 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2016/3419/3418/3417 |
| Date | 16 March 2018 |
[2018] EWCA Civ 451
Lord Justice Longmore
Lord Justice Lewison
and
Lady Justice King
Case No: A2/2016/3419/3418/3417
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, QUEEN'S BENCH DIVISION
Mr Justice Foskett
QB/2015/0487:QB2016/0028:QB/2016/0113
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Benjamin Williams QC & Mr Robert Marven QC (instructed by Irwin Mitchell LLP) for the Respondents
Mr Alexander Hutton QC (instructed by Acumension Limited) for the Appellants
Hearing dates: 7 and 8 March 2018
Judgment Approved
Where a party to litigation is entitled to have his costs assessed, the court will not allow costs “which have been unreasonably incurred or are unreasonable in amount.” Where the assessment takes place on the standard basis, any doubt is resolved in favour of the paying party: CPR Part 44.4 (1) and (2). In deciding whether costs have been proportionately and reasonably incurred the court must “have regard to all the circumstances of the case”: CPR Part 44.5 (1).
The issue raised on these appeals from Foskett J (sitting with Senior Costs Judge Gordon-Saker as assessor) is the approach that the court should take in deciding whether costs are reasonable or unreasonable in a case where, after liability has been admitted, the funding of the claim changes (at the client's request) from funding by legal aid to funding under a conditional fee agreement (a “CFA”) supplemented by a self-funding after the event insurance policy (“ATE insurance”). The judge's judgment is at [2016] EWHC 1598 (QB); [2018] 1 WLR 499. Since all these appeals are second appeals, our primary focus must be on the decisions at first instance.
Each of the three cases under consideration involves claims for clinical negligence resulting in very serious injury. In the Surrey case the claimant suffered very serious brain damage at birth. In the AH case the adult claimant also suffered devastating brain injury as a result of strokes, as well as becoming blind and paralysed. In the Yesil case the claimant was born with very serious mental and physical disabilities. The details of the individual cases do not bear on the legal issue, save to the extent that the quantum of damages recoverable in each case was likely to be very large if liability were established. Further factual details about each case can be found in the judge's judgment. However, the litigation history in each case is of relevance.
The litigation history in each of the three cases was as follows. In the Surrey case a legal aid certificate was granted on 9 January 2006. Liability was agreed in March 2013 and that agreement was subsequently approved by the court. By the end of February 2013 the claimant's solicitors had served a schedule of loss and experts reports. The defendant had made no Part 36 offer. On 15 March 2013 the legal aid certificate was discharged. On 21 March 2013 the claimant entered into a CFA with solicitors, Irwin Mitchell; and the claimant took out a ‘LitigATE’ policy of ATE insurance with Allianz Insurance plc on 22 March 2012. On 29 August 2013 there was a round table meeting at which quantum was agreed, in the lump sum of £2.4 million plus annual periodical payments for life starting at £74,400 and rising to £154,236. That agreement was approved by the court on 4 November 2013.
In the AH case a legal aid certificate was granted on 4 March 2010. A letter of claim was sent on 7 September 2011. The defendant's reply of 19 January 2011 contained a partial admission accepting that breach of duty led to the claimant being admitted to intensive care; but causation remained substantially in issue because it was not admitted that the breach of duty caused the strokes or the consequential brain damage. Thereafter, on 31 January 2013 proceedings were served. The defendant had made no Part 36 offer. On 27 February 2013 the claimant's solicitors, Irwin Mitchell, applied to discharge the legal aid certificate. On 18 March 2013 the defendant made a Part 36 offer of £285,000. On 27 March 2013 the claimant entered into a CFA with the solicitors and took out ATE insurance. On 13 December 2013 the defendant made an increased Part 36 offer of £325,000 plus CRU of £26,409. That offer was accepted on 26 September 2013 and the settlement was approved by the court on 13 December 2013.
In the Yesil case a legal aid certificate was granted on 19 April 2007. Breach of duty was admitted on 30 April 2010. A letter of claim was sent on 10 November 2010. Causation was admitted in April 2011. The defendant had made no Part 36 offer. Legal aid was subsequently discharged at the claimant's request, and his litigation friend entered into a CFA with Irwin Mitchell, and took out ATE insurance on 25 March 2013. In July 2013 the claimant served a schedule of loss claiming over £7 million. On 19 February 2014 the defendant accepted the claimant's Part 36 offer of £2.5 million together with staged periodical payments for life of £89,000 rising to £205,000 per annum.
Thus in each of the three cases, by the time the legal aid certificate was discharged the defendant was in principle the paying party, although in the AH case there was still an important issue about causation to be resolved. Costs would be recoverable from the defendant at ordinary commercial rates, rather than the lower rates that Legal Services Commission (“the LSC”) would pay if the claim failed and Irwin Mitchell had to look to the LSC for remuneration. In each case the CFA provided that the success fee would be payable “if you Win your Claim”. It stated that “you win your Claim … when your claim is finally decided in your favour, whether by a Court decision or by an agreement to pay you Damages”. It also provided that if any costs were disallowed on an assessment, the client would not be liable to pay those costs. It was this that made the CFA what is known in the jargon as “a CFA-lite”. In terms of the definition in the CFA a success fee was assured.
The judge described the essential legal background succinctly at [2] to [3]:
“[2] The substantive litigation in each case had been proceeding for several years prior to 1 April 2013 and the claim of each claimant had been advanced with the benefit of legal aid. April 1, 2013 was the date from which it would no longer be possible for claimants proceeding under a conditional fee agreement (“CFA”) to recover success fees and after the event (“ATE”) premiums from the defendant if successful in the litigation. In the month or so prior to 1 April 2013 the solicitors acting for each claimant (Irwin Mitchell LLP), with the agreement of the litigation friend of each claimant, arranged for the legal aid certificates to be discharged in each case and for the funding for each claimant henceforth to be funded by a CFA. In fact, the CFA was what is known generally as a “CFA lite”—in other words, a CFA by virtue of which the client's liability to pay his lawyers' costs is limited to the amount of costs recoverable from the other party. Any shortfall is absorbed by the solicitors.
[3] Each case was finalised in a way that was successful from each claimant's point of view resulting in a liability upon each defendant for costs. However, in due course, recovery of the success fee and the ATE premium in each case was challenged by the defendant (in reality, by the National Health Service Litigation Authority — “the NHSLA”) and the costs judge upheld the challenge in each case, holding that the changed funding arrangements were not reasonable.”
Changes to the funding regime were made by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”). One of the changes accompanying the changes to the litigation funding regime that was due to come into effect on 1 April 2013 was an increase of 10 per cent in the level of general damages. This was one of Sir Rupert Jackson's recommendations to which effect was given by this court in Simmons v Castle [2012] EWCA Civ 1039, [2013] 1 WLR 1239 by two judgments given in September and October 2012. In that case the court stated:
“Accordingly, we take this opportunity to declare that, with effect from 1 April 2013, the proper level of general damages in all civil claims for (i) pain and suffering, (ii) loss of amenity, (iii) physical inconvenience and discomfort, (iv) social discredit, or (v) mental distress, will be 10% higher than previously, unless the claimant falls within section 44(6) of the 2012 Act.”
The effect of section 44 (6) of LASPO, to which the court referred, was that the abolition of recoverable success fees under CFAs would not prevent the recovery of a success fee under a CFA entered into before 1 April 2013. The increase in general damages has been referred to as “the Simmons v Castle uplift”. It follows that where a CFA was entered into before 1 April 2013, there was no possibility of recovering the Simmons v Castle uplift. In Surrey the Simmons v Castle uplift was worth between £16,695 and £20,970. In AH it was worth about £17,500; and in Yesil it was worth about £28,000.
It is of some significance to understand the reason for Sir Rupert's recommendation that the level of general damages be increased by 10 per cent. The recommendation itself was contained in para 5.1 of Chapter 10 of his Final Report, together with a recommendation that success fees be capped at 25 per cent of damages,...
To continue reading
Request your trial
-
JXA (by his Mother and Litigation Friend VLA) v Kettering General Hospital NHS Foundation Trust
...or its absence as being a relevant circumstance in paragraphs 23 and 26 of the judgement of the Court of Appeal in Surrey v. Barnet & Chase Farm House Hospitals NHS Trust [2018] EWCA Civ 451. 15 I am satisfied that the Master did not directly address the first question as he should and deci......
-
Fuseon Ltd v Senior Courts Costs Office
...Farm Hospitals NHS Trust; AH and Lewisham Healthcare NHS Trust; and Yesil and Doncaster and Bassetlaw Hospitals NHS Foundation Trust [2018] EWCA Civ 451, the Court of Appeal referred to Wraith/ Truscott and the statement of principle made at first instance by Potter J:- “16. That case illu......
-
Michael Briley v Leicester Partnership NHS Trust
...and from that had knowledge of Bhatt Murphy. 70 Mr Buckley referred me to Kai Surrey v Barnet and Chase Farm Hospitals NHS Trust [2018] EWCA Civ 451 in which it was specified that the choice does not have to be the ‘best’ choice, it just has to be a ‘reasonable’ choice. The choice facing t......
- Diriye v Bojaj and another