Steven Gandy (a patient suing by his litigation friend, Christine Chester) v Peter King
| Jurisdiction | England & Wales |
| Judge | Master Haworth |
| Judgment Date | 25 June 2010 |
| Neutral Citation | [2010] EWHC 90177 (Costs) |
| Court | Senior Court Costs Office |
| Docket Number | Case No: 4HB0905733 |
| Date | 25 June 2010 |
[2010] EWHC 90177 (Costs)
IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE
Clifford's Inn, Fetter Lane
London, EC4A 1DQ
Master Haworth, COSTS JUDGE
Case No: 4HB0905733
Mr S Chawatama ( Counsel instructed by Julie Reynolds) for the Claimant
Mr R Marven ( Counsel instructed by Cost Advocates Ltd) for the Defendant
Hearing date: 27 April 2010
ISSUE
The only matters in dispute between the parties are the success fees claimed by the Claimant's solicitor and Counsel in Part 3 of the Bill of Costs.
BACKGROUND
On 27 June 2000 the Claimant was travelling as one of five occupants in the Defendant's car. They had driven down a narrow single track lane in Eastbourne, East Sussex, which led directly to the cliff edge at Beachy Head. When they reached the end of the lane, the Defendant, who was a newly qualified driver, felt unable to reverse back up to the main road and chose to turn the car round. As he attempted to manoeuvre, he selected first gear instead of reverse and drove off the edge of the cliff. The vehicle plunged onto the beach below.
The Claimant, who was 17 years old, suffered very severe traumatic brain injuries, which have pervaded every aspect of his life and rendered him a patient within the meaning of the Mental Health Act 198The Claimant, through his litigation friend, alleged that the accident had been caused as a consequence of the Defendant's negligence and pursued a claim for damages.
The Defendant admitted liability in March 2001 in response to the Letter of Claim. The Claimant's present solicitor (Julie Reynolds) took over the case in March 2007, and a Conditional Fee Agreement (CFA) agreement was signed on 26 July 2007. The trial was listed to commence on 3rd November 2008 in relation to quantum only. A round-table meeting took place on 10 October 2008. Settlement was not possible, and full preparations for trial were made.
Settlement was reached, subject to approval by the Judge on the day fixed for the trial, in a sum of £5,900,000. An Approval hearing took place on the 7 th November 2008.
THE SOLICITOR'S CFA
The conditional fee agreement is dated 26 July 2007. The CFA provides for a two-stage success fee. Under "success fee" the CFA recites the following:
"The success fee is set at 100% of basic charges where the claim concludes at trial; or 52% where the claim concludes before the trial has commenced. In addition, 0% relates to the postponement of payment".
COUNSEL'S SUCCESS FEES
Leading Counsel, Gerard Martin QC, entered into a CFA on 10 September 2007. A success fee of 67% is claimed based on the risk assessment contained in the agreement, which included the apparent state of the proceedings and evidence.
Junior Counsel, Mr Napier Miles, entered into a conditional fee agreement with the Claimant's solicitors on 24 September 2007. His assessment of the risk resulted in success fees that mirror the fixed regime to be found in CPR Part 45, namely 100% at trial; 75% if the case were to settle less than 21 days before trial; and 20% if the case were to settle more than 21 days before trial.
COSTS PROCEEDINGS
The Claimant made a request for a detailed assessment hearing on 23 November 2009. The Points of Dispute and Reply state the following:
FACTS
| " Points in Dispute | Reply |
| Success Fees | Success Fees |
| The only items in dispute between the parties are the success fees claimed for the solicitor and Counsel in Part 3 of the bill. | It is correct that the only items in dispute between the parties are the success fees claimed for solicitor and Counsel in Part 3 of the bill, all other items having been agreed or set out by the Defendant. |
| Part 1 of the bill has been agreed with ASB Law in the sum of £112,500 to include a success fee of 12.5% | The solicitor claims a success fee of 100%. |
| Part 2 of the bill is agreed in the sum of £18,000. No success fees claimed in that part. | Leading Counsel claims a success fee of 67% This is inaccurately recorded in the bill. |
| Part 3 is agreed to the following extent | Junior Counsel claims a success fee of 100%. |
| Solicitor's base profit cost £120,000 | |
| Counsel's base fees: £60,000 | |
| Disbursements: £70,000 | |
| Both solicitor and Counsel claim success fees of 100% on all of their costs and fees. | |
| Solicitors success fee | Solicitor's success fee |
| The solicitor entered into a conditional fee agreement with the Claimant which provided for a two stage success fee, namely 100% where the case concludes at trial; or 52% where the claim concludes before a trial has commenced. | The CFA between solicitor and Claimant provide for a success fee of 100% where the claim "concludes at trial" or 52% where "the claim concludes before a trial has commenced". |
| By claiming a 100% success fee, the Claimant is therefore saying that the matter concluded at trial. | It is the Claimant's case that the claim concluded at trial and therefore a 100% success fee attaches as per the CFA." |
| The Defendant disputes that this matter concluded at a trial. Whilst the parties attended at Court on the day of the trial, the trial did not actually commence in that the Claimant's Counsel did not open the case. The parties attended before the trial Judge only for the approval of the agreed terms." | The claim settled on the day fixed for trial with parties and all the witnesses and experts attending Court on that day. All preparations had been made for the quantum trial." |
The solicitor's risk assessment reveals:
"Part 3: Case analysis (not a fixed success fee under CPR Part 45)
Following the decision of the Court of Appeal in Atack -v- Lee and KU -v- Liverpool CC we utilise a two-stage success fee.
We set the success fee for case determined at trial at 100% on the basis that it must, by that stage, be viewed as a 50/50 case (following the same principles as the fixed success fees under CPR45). If both sides think that they can win the case, can be no better than 50/50 and thus a 100% success fee is required on each case won to pay for the costs of each lost case.
If the case settles before trial, we have agreed to rebate the success fee. As far as the amount of the rebated success fee is concerned, we assess this depending on the type and complexity of the case, and the statistical likelihood of success or failure.
Case Type
Assumed case type pre-trial success rate starting Point
Road accidents (not fixed success fees).
90%"
By using the ready reckoner approach, the Claimant's solicitors assessed that with prospects of success of 90%, the base success fee would be 12% rounded up to 15% in the risk assessment. They went on to assess Part 36 risks in the following way:
" Part 36 risk: optional "ring fenced damage" clause
The risk of failing to beat a payment into Court is not taken into account in our assessment of prospects of success. Absent a Part 36 payment, any payment of damages is a "win" and triggers entitlement to a success fee. However, if a Part 36 payment is made and not beaten we are not paid anything from that point onwards (base costs or success fee). This was the "ring fenced damages" clause contained in Ellerton (conjoined appeal with Atack -v- Lee) and the Court of Appeal held that this justified a 20% success fee in "the simplest of claims" (ie, presumably a case which would otherwise have justified a success fee of only 5%). It follows that in the additional risk that arise where the optional "ring fence" damages clause is used.
However, this risk is much greater in high value claims and in cases where there are serious issues, such as contributory fault or causation as to the likelihood of a well judged payment, is much greater."
The Claimant's solicitor then went on to assess the success fees as follows:
| " Base Level: | 15% |
| + /—% | |
| High quantum: | +5% |
| Causation: | +5% |
| Part 36 adjustment: | +20 |
| Success Fee Trial: | 100% |
| Pre-trial success fee (risk): | 12% |
| Plus pre-trial success fee (Part 36): | 45% |
| Pre-trial success fee: | 52%" |
This figure is inaccurate and should reflect a figure of 57%. In her witness statement dated 14 April 2010, Julie Reynolds explained the context in which the success fee in the solicitor's CFA was set. In paragraph 16 she said this:—
"(i) Although the Defendant had admitted liability, this had not been formalised and there were procedural irregularities that could have been capitalised upon by the Defendant. In my submission, the Claimant was, throughout these proceedings, a Protected Person, but a claim form had been issued on his behalf on 17 February 2004 in his own name/right and without a litigation friend. No RTA notice was given to the insurers and the claim form was never served upon the Defendant or the Defendant's solicitors. The parties had agreed to a consent order, providing that the proceedings be stayed until 31 December 2004, but no further steps at all were taken in the proceedings thereafter. There was, therefore, a risk, that the Defendants could raise these technical defects, and in particular could raise the point that the claim form was defective and that the Particulars of Claim had never been served in accordance with the rules, and hence the claim should be struck out. This was a significant risk which I had in my mind when the conditional fee agreement was entered into, and certainly justified at least a 12% risk on "liability", although I accept that this would have been better described as a procedural risk and specifically referred to in the risk section on the form.
(ii) Insofar as evidence in support of the claim was concerned, this was such that it was impossible to have any true grasp of the value of...
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