Mrs Carol Bright (Claimant/Appellant) v Motor Insurers' Bureau (Second Defendant/Respondent)
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Slade |
| Judgment Date | 15 May 2014 |
| Neutral Citation | [2014] EWHC 1557 (QB) |
| Docket Number | Appeal Ref: QB/2013/0458 |
| Court | Queen's Bench Division |
| Date | 15 May 2014 |
[2014] EWHC 1557 (QB)
The Honourable Mrs Justice Slade DBE
Sitting with Master Campbell (as assessor)
Appeal Ref: QB/2013/0458
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ON APPEAL FROM MASTER ROWLEY COSTS JUDGE
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Roger Mallalieu (instructed by Irwin Mitchell LLP) for the Claimant/Appellant
Mr Ben Williams (instructed by Weightmans LLP) for the Defendant/Respondent
Hearing date: 31 January 2014
Mrs Bright ('the Claimant') appeals from the Order of Master Rowley made on 6 August 2013 following his judgment handed down on 3 June 2013 by which the success fee of the Claimant/Appellant's solicitors' was reduced from the 75% sought to 30%. Permission to appeal was given on 9 October 2013 by Mr Justice Dingemans. The Conditional Fee Agreement ('CFA') was entered into on 20 October 2010. Inter partes recoverability of success fees has been abolished for agreements entered into after 1 April 2013.
At the hearing of this appeal I sat with and have been greatly assisted by Master Campbell, Costs Judge. However the determination of this appeal is mine alone.
The Order and judgment which are the subject of this appeal were made in determining a preliminary issue raised in the detailed assessment of costs following the settlement of proceedings for personal injury arising out of a road traffic accident. The Claimant suffered serious injury when on 26 September 2010 the First Defendant's, Mr Abimbola's vehicle reversed into the Claimant who was standing behind it. The Claimant suffered a severed spinal cord at C3/4 leaving her tetraplegic.
Mr Abimbola's insurance company avoided its obligations under the policy of motor insurance and the Claimant claimed against the Second Defendant, the Motor Insurers' Bureau ('MIB').
The Claimant signed a CFA with Irwin Mitchell LLP on 11 October 2010. It was finalised on 20 October 2010 when she was in hospital.
The CFA provided for a two-stage success fee. A success fee of 50% was payable if the claim settled before three months before the trial date or the opening of the trial window and 100% if it was settled or was determined in favour of the Claimant thereafter.
A letter of claim was served on 9 November 2010. At this stage the police and the Crown Prosecution Service were reviewing the case to decide whether to charge Mr Abimbola.
The acknowledgment of the claim by the insurer on 8 December 2010 contained no admission of liability.
In January 2011 the Claimant was informed that Mr Abimbola would be charged with dangerous driving. He did not respond to bail and absconded.
On 1 March 2011 the insurer served its formal letter of response in which it stated that it had obtained a declaration which entitled it to avoid its policy with Mr Abimbola.
Proceedings were issued on 28 March 2011 against Mr Abimbola and the MIB.
On 5 April 2011 the MIB filed an acknowledgment of service stating that the "entire claim" would be defended.
On 27 May 2011 the MIB filed a defence denying liability for the claim and asserting, in the alternative, contributory negligence.
A preliminary trial on liability was listed for a trial window which was fixed for 1 May 2012 with a time estimate of two to three days.
On 23 March 2012 a joint settlement meeting took place. Agreement was not reached and liability and contributory negligence remained in issue.
On 26 April 2012, five days before a liability trial, a second joint settlement meeting took place. At this meeting the claim settled for a lump sum payment (gross of CRU and interim payments) of £1.6 million with periodic payments of £230,000 per annum, together with costs on the standard basis to be assessed if not agreed. The Order was approved on 15 June 2012.
On 3 October 2012 the Claimant served a Notice of Commencement together with a Bill of Costs. The Bill included a success fee of 75% on the solicitors' charges. By their Points of Dispute, MIB challenged that claim and offered 30%.
The Conditional Fee Agreement
The CFA incorporated the following material definition provisions of the Law Society Conditions as modified by Irwin Mitchell LLP 'for Use in Accident Cases':
" 3. Explanation of words used:
…
(b) Basic Charges– Our charges for legal work we do on your Claim for damages.
…
(g) Full Legal Charges– The total of our Basic Charges, Success Fee, your Disbursements (including Barristers' fees) after the event insurance premium, VAT and any interest on costs.
…
(n) Success Fee– The additional percentage of Basic Charges that we are entitled to charge you if you win your Claim for damages.
(o) Win– Your Claim for damages against your opponent or if your Claim is against two or more opponents against any of them, is finally decided in your favour, whether by a court decision or an agreement to pay your damages. This applies even if your Claim has not succeeded against one or more of your opponent(s). 'Finally' means that your opponent(s):
• is not allowed to appeal against the Court decision; or
• has not appealed in time; or
• has lost any appeal."
The CFA provided:
" Paying us
If you win your claim:
• You are primarily liable to pay our Full Legal Charges.
• You will normally be able to recover all of our Full Legal Charges from your opponent provided that these are reasonable. Please see Condition 4 of the attached Conditions.
…
• We will waive any part of our Full Legal Charges which we fail to recover from your opponent and will not make any further charge to you.
Part 36 Offers and payments:-
If your opponent makes a Part 36 offer or payment in an attempt to settle your Claim then providing that you have complied with your obligations under Condition 2 of the attached conditions the following will apply:-
…
• If you decide to reject the offer or payment and, on our advice, continue to pursue your Claim and you recover damages (whether by a Court decision or by way of an agreement with your opponent) which are either less than the offer or payment or less advantageous to you than the offer or payment then the net effect is that you have won your Claim against that opponent but the legal costs we will charge will be limited as described below:-
(i). You will be liable to pay our Full Legal Charges for the work done before the date on which the time for accepting the offer or payment expired which you should be entitled to recover from your opponent.
(ii). We will not charge you any Basic Charges or Success Fee from the date on which the time for accepting the offer or payment expired. You will, however, remain liable to pay your Disbursements which will normally be recovered from your insurers under your after the event insurance policy.
(iii). We will not make any charge to you over and above the legal costs which we are able to recover on your behalf from your opponent or your insurers."
By the inclusion of provision (iii), the CFA is known as a "CFA Lite":
" If you lose after taking Court proceedings:-
• You do not pay any legal costs in relation to your Claim to us.
• You will have a liability for Disbursements incurred after commencement of Court proceedings but these will normally be recovered from your insurers under your after the event insurance policy. In any event, we will waive payment of any disbursements (before or after commencement of proceedings) which are not recovered from your insurers.
…"
Schedule I of the CFA provides that:
" The Success Fee
The success fee is set at:
(a) 50% of the basic charges, assuming the case settles at any time prior to three months before the date fixed for the trial or the first date of the trial window (whichever is the earlier); or
(b) 100% if the case settles at any time thereafter; or
(c) such percentage as is fixed by the Rules of Court to be recoverable from your opponent.
The Risk Assessment:
The percentage success fee shown at (a) above reflects our assessment of the risks of your case, based purely on the information available to us at the time of entering into this agreement. This includes those specific issues which we regard as relevant and appropriate to take into account and which are set out in the table below.
The percentage success fee shown at (b) above reflects all of the risks in the table below which would be enhanced considerably should your case not settle prior to three months before trial. The enhanced risks at trial are due to the potential risk of failing to establish one or more fundamental elements of your case in respect of which the Judge prefers the opponent's evidence, and also the significant risk that you may fail to beat an offer or Payment into Court made by your opponent (see Condition 3(k) – Part 36 Offers or Payments of your Agreement)."
The risks assessed as high were lack of independent witnesses, contributory negligence, quantum, expert evidence and risk of a well placed Part 36 offer.
The Relevant Provisions of the Civil Procedure Rules ('CPR') and the Costs Practice Direction ('CPD')
At the relevant time, CPR 45 section III provided in CPR 45.16 for fixed success fees. CPR 45.18 allowed a party to apply for a success fee higher than the fixed success fee where the claim is one with a value on a full liability basis in excess of £500,000.
The CPD provides:
"11.5. In deciding whether the costs claimed are reasonable and (on a standard basis assessment) proportionate, the court will consider the amount of any additional liability separately from the base costs…
…
11.7. …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...
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...was the risk when the CFA was signed and what would be a reasonable fee in such circumstances. 24 In Bright v Motor Insurers Bureau [2014] EWHC 1557 (QB); [2014] 4 Costs LR 643 the claimant suffered serious injury in a road traffic accident. The Master reduced the staged success fee from 7......