Kilby v Gawith
| Jurisdiction | England & Wales |
| Judge | Sir Anthony Clarke MR:,Lady Justice Arden DBE,ord Justice Dyson,L |
| Judgment Date | 19 May 2008 |
| Neutral Citation | [2008] EWCA Civ 812 |
| Docket Number | Case No: A2/2007/2073; A2/2007/2073(A); A2/2007/2073(B) |
| Court | Court of Appeal (Civil Division) |
| Date | 19 May 2008 |
[2008] EWCA Civ 812
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION
ON APPEAL FROM THE LIVERPOOL COUNTY COURT
(HIS HONOUR JUDGE STEWART QC)
Sir Anthony Clarke Mr
Lady Justice Arden DBE
Ord Justice Dyson and
Master Hurst (Senior Costs Judge)
Case No: A2/2007/2073; A2/2007/2073(A); A2/2007/2073(B)
Mr J Morgan QC (instructed by McCullagh & Co) appeared on behalf of the Appellant
r N Bacon (instructed by Camps Solicitors) appeared on behalf of the Respondent.
Introduction.
This is the hearing of an appeal against an order dated 14 August 2007 made by HHJ Stewart QC sitting in the Liverpool County Court in which he dismissed an appeal by the defendant from the order of District Judge Peake on a detailed assessment made in the Birkenhead County Court on 23 March 2007. The appeal to this court was brought with the permission of Sir Henry Brooke.
The appeal concerns the interpretation of the fixed recoverable costs regime under Section II of CPR Part 45. The issue is whether the court has a discretion under Rule 45.11(1) whether or not to award a claimant, who has entered into a conditional fee agreement (“CFA”) with his solicitor, the fixed success fee of 12.5%. The claimant had before-the-event (“BTE”) insurance. The defendant's case is that given that the claimant had BTE insurance it was unreasonable to order the defendant to pay any part of the success fee under a CFA. His point, which has been advanced with skill and persistence on his behalf by Mr Jeremy Morgan QC, is the point neatly summarised by Sir Henry Brooke in his written reasons for granting permission for a second appeal to this court. He said:
“This appeal raises a very important point of practice. If the judge is right, it means that a claimant's solicitor can recover a success fee as high as 12.5% as a matter of course on a very simple road traffic accident claim even though there is perfectly satisfactory BTE insurance in place.
The case therefore raises important points of policy fit for the Court of Appeal.”
The CPR.
Part 44 provides, as far as relevant:
“44.3(1). The court has discretion as to —
(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid
…
44.4(1). Where the court is to assess the amounts of costs (whether by summary or detailed assessment) it will assess those costs —
(a) on the standard basis; or
(b) on the indemnity basis
but the court will not in either case allow costs which have been unreasonably incurred or are unreasonable in amount.
…
44.12A. This Rule sets out a procedure which may be followed where —
(a) the parties to a dispute have reached an agreement on all issues (including which party is to pay the costs) which is made or confirmed in writing; but
(b) they have failed to agree the amount of those costs; and
(c) no proceedings have been started.”
Neither Rule 44.3 nor Rule 44.4 applies directly here because this case falls within Section II of Part 45 which introduced a fixed recoverable costs regime for claims arising out of some classes of road traffic accidents where the accident occurred on and after 6 October 2003. Section II was initially brought into force pursuant to the Civil Procedure (Amendment No 4) Rules. Rule 44.11(2) in those rules was substituted by Rule 45.11(2) in its present form with effect from 1 March 2004 by the Civil Procedure (Amendment No 5) Rules 2005. In its original form it contained a discretion. Section II of Part 45 thus provides, so far as relevant, as follows:
“ Scope and interpretation
45.7(1) This Section sets out the costs which are to be allowed in —
(a) costs-only proceedings under the procedure set out in rule 44.12A; or
(b) proceedings for approval of a settlement or compromise under rule 21.10(2),
in cases to which this Section applies.
(2) This Section applies where —
(a) the dispute arises from a road traffic accident;
(b) the agreed damages include damages in respect of personal injury, damage to property, or both;
(c) the total value of the agreed damages does not exceed £10,000; and
(d) if a claim had been issued for the amount of the agreed damages, the small claims track would not have been the normal track for that claim …
Application of fixed recoverable costs
45.8 Subject to rule 45.12, the only costs which are to be allowed are —
(a) fixed recoverable costs calculated in accordance with rule 45.9;
(b) disbursements allowed in accordance with rule 45.10; and
(c) a success fee allowed in accordance with rule 45.11.
(Rule 45.12 provides for where a party issues a claim for more than the fixed recoverable costs)
Amount of fixed recoverable costs
45.9 (1) Subject to paragraphs (2) and (3), the amount of fixed recoverable costs is the total of —
(a) £800;
(b) 20% of the damages agreed up to £5,000; and
(c) 15% of the damages agreed between £5,000 and £10,000.
(2) Where the claimant —
(a) lives or works in an area set out in the relevant practice direction; and
(b) instructs a solicitor or firm of solicitors who practise in that area,
the fixed recoverable costs shall include, in addition to the costs specified in paragraph (1), an amount equal to 12.5% of the costs allowable under that paragraph.
(3) Where appropriate, value added tax (VAT) may be recovered in addition to the amount of fixed recoverable costs and any reference in this Section to fixed recoverable costs is a reference to those costs net of any such VAT.
Disbursements
45.10 (1) The court —
(a) may allow a claim for a disbursement of a type mentioned in paragraph (2); but
(b) must not allow a claim for any other type of disbursement.
(2) The disbursements referred to in paragraph (1) are —
(a) the cost of obtaining —
(i) medical records;
(ii) a medical report;
(iii) a police report;
(iv) an engineer's report; or
(v) a search of the records of the Driver Vehicle Licensing Authority;
(b) the amount of an insurance premium; or, where a membership organisation undertakes to meet liabilities incurred to pay the costs of other parties to proceedings, a sum not exceeding such additional amount of costs as would be allowed under section 30 in respect of provision made against the risk of having to meet such liabilities;
('membership organisation' is defined in rule 43.2(1)(n))
(c) where they are necessarily incurred by reason of one or more of the claimants being a child or protected party as defined in Part 21 —
(i) fees payable for instructing counsel; or
(ii) court fees payable on an application to the court;
(d) any other disbursement that has arisen due to a particular feature of the dispute.
('insurance premium' is defined in rule 43.2)
Success fee
45.11 (1) A claimant may recover a success fee if he has entered into a funding arrangement of a type specified in rule 43.2(k)(i).
(2) The amount of the success fee shall be 12.5% of the fixed recoverable costs calculated in accordance with rule 45.9(1), disregarding any additional amount which may be included in the fixed recoverable costs by virtue of rule 45.9(2).”
….
“45.12(1). The court will entertain a claim for an amount of costs (excluding any success fee or disbursements) greater than the fixed recoverable costs but only if it considers that there are exceptional circumstances making it appropriate to do so.”
Section III of Part 45 was subsequently introduced with effect from 1 June 2004 under the Civil Procedure Amendment Rules 2004. I shall first consider the appeal without reference to Section III but will return to it at the end.
Common ground.
It is common ground (1) that these are costs-only proceedings within Rule 44.12(a); (2) that the dispute arises from a road traffic accident within Rule 45.7(2)(a); (3) that the total agreed damages include damages in respect of personal injury and do not exceed £10,000; (4) that the claimant entered into a funding agreement of a type specified in Rule 43.2(c)(i); (5) that if the claimant recovers a success fee it must be 12.5% of the fixed recoverable costs in accordance with Rule 45.11(2); and (6) that the sole issue in this appeal is whether the claimant is entitled to recover that success fee or whether the court has a discretion whether or not to permit him to do so.
The facts.
The facts are straightforward. The claimant was injured in a road traffic accident on 1 August 2004 for which the defendant admitted liability. The claimant entered into a CFA with his solicitor on 16 August 2004. The validity of the CFA is not in dispute. The parties reached agreement on quantum and the defendant paid the claimant £3068.84 in full and final settlement of the claim. The defendant also agreed to pay the claimant's costs. There is no dispute that this was a case to which Section II of Part 45 applied. Costs were agreed in the sum of £1718.18 save for two items which the defendant disputed. They were first the success fee of £177.47 claimed under Rule 45.11, namely 12.5% of the fixed recoverable costs calculated in accordance with Rule 45.9, and secondly £352.50, which was the amount claimed for the medical report. The claimant brought costs-only proceedings on 25 November 2005 under the procedures set out in Rule 44.12A.
The first instance decision.
The District Judge reduced the amounts claimed for the medical report to £250. There was no appeal against that aspect of his decision and we are not concerned with it. As to the success fee, the defendant contended that the court had a discretion whether or not to allow it and also at what level. The defendant's...
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