Lamont v Burton
| Jurisdiction | England & Wales |
| Judge | Lord Justice Dyson |
| Judgment Date | 09 May 2007 |
| Neutral Citation | [2007] EWCA Civ 429 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2006/1695/CCRTF |
| Date | 09 May 2007 |
[2007] EWCA Civ 429
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE ALTRINCHAM COUNTY COURT
His Honour Judge Tetlow
(On appeal from Deputy District Judge Buckley)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice May
Lord Justice Dyson and
Lady Justice Smith
Case No: A2/2006/1695/CCRTF
Mr Jeremy Morgan QC & Mr William Poole (instructed by Messrs Cogent) for the Claimant/Respondent
Mr Cox (instructed by Messrs Colemans Ctts) for the Defendant/Appellant
Hearing dates: 24 April 2007
this is the judgment of the court.
Introduction
CPR 45.16 (a) provides that the percentage increase which is to be allowed in relation to solicitors' fees in road traffic accident claims to which Section III of Part 45 applies is “100% where the claim concludes at trial”. Section III applies to this case because the dispute arose from a road traffic claim and the claimant entered into a conditional fee agreement (“CFA”) of a type specified in rule 43.2(k)(i). It is common ground that the claim concluded at trial. The issue that arises on this appeal is whether the 100% increase is mandatory in all cases or whether, as the defendant submits, there is a discretion to vary it and, if so, whether the discretion should have been exercised on the facts of this case. The point is of some importance. This is not only because there are large numbers of road traffic claims which are concluded at trial every year, but also because the point has equal relevance to employers' liability claims which are the subject of Sections IV and V of Part 45.
The facts
The claimant was injured in a road traffic accident on 10 September 2004. He instructed solicitors under a CFA and took out ATE insurance. They wrote a letter of claim on 21 October 2004. The defendant admitted liability 7 days later. Proceedings were issued on 10 June 2005. No defence was filed. A Part 36 payment in the sum of £1800 was made on 16 August 2005, but this was not accepted. A “disposal hearing” within the meaning of CPR 36 PD para 12.4 was conducted by Deputy District Judge Buckley on 13 September 2005 at which the claimant was awarded damages of £1774.32.
The deputy district judge awarded the claimant his costs up to 7 September 2005 (the latest date on which the Part 36 payment could have been accepted without needing the permission of the court) and summarily assessed them at £4550.92. These comprised base costs (£1537.20), a success fee of 100% (£1537.20), disbursements (£938.50) and VAT. He also ordered the claimant to pay the defendant's costs incurred since 8 September 2005 which he assessed at £721.68.
The relevant rules
The material provisions of Part 44 of the CPR (“General rules about costs”) are:
“44.1 This Part contains general rules about costs and entitlement to costs.
…
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.
…
(4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including –
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and
(c) any payment into court or admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply.
(Part 36 contains further provisions about how the court's discretion is to be exercised where a payment into court or an offer to settle is made under that Part).
…
(6) The orders which the court may make under this rule include an order that a party must pay –
(a) a proportion of another party's costs;
(b) a stated amount in respect of another party's costs;
(c) costs from or until a certain date only;
…..
44.6 A party may recover the fixed costs specified in Part 45 in accordance with that Part.”
The material provisions of Section III of CPR Part 45 (“The Fixed Percentage Increase in Road Traffic Accident Claims”) are:
“45.15 (1) This Section sets out the percentage increase which is to be allowed in the cases to which this Section applies.
(Rule 43.2(1)(l) defines 'percentage increase' as the percentage by which the amount of a legal representative's fee can be increased in accordance with a conditional fee agreement which provides for a success fee)
(2) This Section applies where –
(a) the dispute arises from a road traffic accident; and
(b) the claimant has entered into a funding arrangement of a type specified in rule 43.2(k)(i).
(Rule 43.2(k)(i) defines a funding arrangement as including an arrangement where a person has entered into a conditional fee agreement or collective conditional fee agreement which provides for a success fee).
(3) This Section does not apply if the proceedings are costs only proceedings to which Section II of this Part applies.
…
(5) The definitions in rule 45.7(4) apply to this Section as they apply to Section II.
(6) In this Section –
(a) a reference to 'fees' is a reference to fees for work done under a conditional fee agreement or collective conditional fee agreement;
(b) a reference to 'trial' is a reference to the final contested hearing or to the contested hearing of any issue ordered to be tried separately;
(c) a reference to a claim concluding at trial is a reference to a claim concluding by settlement after the trial has commenced or by judgment; and
…
45.16 Subject to rule 45.18, the percentage increase which is to be allowed in relation to solicitors' fees is –
(a) 100% where the claim concludes at trial; or
(b) 12.5% where –
(i) the claim concludes before a trial has commenced; or
(ii) the dispute is settled before a claim is issued.
45.18 (1) This rule applies where the percentage increase to be allowed –
(a) in relation to solicitors' fees under the provisions of rule 45.16; or
(b) in relation to counsel's fees under rule 45.17,
is 12.5%.
(2) A party may apply for a percentage increase greater or less than that amount if –
(a) the parties agree damages of an amount greater than £500,000 or the court awards damages of an amount greater than £500,000; or
(b) the court awards damages of £500,000 or less but would have awarded damages greater than £500,000 if it had not made a finding of contributory negligence; or
(c) the parties agree damages of £500,000 or less and it is reasonable to expect that if the court had made an award of damages, it would have awarded damages greater than £500,000, disregarding any reduction the court may have made in respect of contributory negligence.
(3) In paragraph (2), a reference to a lump sum of damages includes a reference to periodical payments of equivalent value.
(4) If the court is satisfied that the circumstances set out in paragraph (2) apply it must –
(a) assess the percentage increase; or
(b) make an order for the percentage increase to be assessed.”
Background to Section III of Part 45
Although Sections II to V of Part 45 were recommended by the Civil Procedure Rule Committee and they subsequently received Parliamentary approval, their genesis lies in a series of negotiations which were conducted under the auspices of the Civil Justice Council. The parties to the negotiations were some liability insurers who promoted the interests of defendants, and a combination of claimants' solicitors (represented by Association of Personal Injury Lawyers and the Motor Accident Solicitors Society) and legal expenses' insurers who promoted the interests of claimants. The figures in Sections II to V were the product of those negotiations.
The negotiators had the benefit of a report entitled “Calculating “Reasonable” Success Fees for RTA Claims” by Paul Fenn and Neil Rickman. The report suggested that “one measure of reasonableness was to calculate success fees such that a CFA case yields the same revenue to the solicitor as an hourly fee counterpart (on average), that is a success fee which would make the choice between CFA cases and hourly fee cases revenue-neutral over a sufficiently large number of RTA cases”. The report recorded that the claimants' representatives had commented “that an important element of risk in CFA cases has been introduced by Part 36 offers. We have no means of estimating the impact of this factor.”
It is not necessary for the purposes of this appeal to examine the details of the report, not least because it is not clear to what extent its conclusions shaped the agreement which resulted from the negotiations. But it is of some relevance to note that in their conclusion the writers made it clear that their data had not been able to address some of the concerns raised by the various parties “for example, with respect to the role of Part 36 offers as they affect the balance of risk between claimant and defendant”.
The effect of the negotiations was summarised correctly by Simon J (sitting with assessors) in Nizami v Butt [2006] EWHC 159 (QB), [2006] 2 All ER 140:
“22 …Changes were made to the Rules of Court. Some of these changes, and in particular the provisions of Sections II to V of CPR45, were introduced following “industry wide” discussions under the aegis of the Civil Justice Council. Agreement was reached on the recoverable costs in the different situations covered by the various sections.
23. It seems to me clear that the intention underlying CPR 45.7–14 was to provide an agreed scheme of recovery which was certain and easily calculated. This was done by providing fixed levels of remuneration which...
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