U (A Child) v Liverpool City Council
| Jurisdiction | England & Wales |
| Judge | Lord Justice Brooke |
| Judgment Date | 27 April 2005 |
| Neutral Citation | [2005] EWCA Civ 475 |
| Docket Number | Case No: A2/2004/1437 |
| Court | Court of Appeal (Civil Division) |
| Date | 27 April 2005 |
[2005] EWCA Civ 475
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM LIVERPOOL COUNTY COURT
District Judge Humphreys-Roberts
His Honour Judge Stewart QC
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Brooke
Vice-President of the Court of Appeal (Civil Division)
Lord Justice Rix and
Lord Justice Dyson
Case No: A2/2004/1437
David Holland (instructed by the Solicitor to Liverpool City Council) for the Appellants
Benjamin Williams (instructed by Paul Crowley & Co) for the Respondent
INDEX
Paragraph
Part 1
Introduction ….. ……….. ….. ….. ….. ….. ….. ….. ….. 1
Part 2
Issue (i) Was a success fee of 100% appropriate on this CFA at the time
when it was made? ….. ….. ….. ….. ….. ….. ….. 4
Part 3
Issue (ii) Does the CFA allow contractually for the possibility of a
different success fee on the detailed assessment from the
success fee on the main claim? ….. ….. ….. ….. ….. 27
Part 4
Issue (iii) Given that differential rates are not permissible under the
contract, does the court have the power, through para
(2) of the Costs Practice Direction or otherwise, to
direct that a success fee is recoverable at different rates
for different periods of the proceedings (including a
detailed assessment of costs)? ….. ….. ….. ….. … 29
Part 5
Issue (iv): If the court does have such a power, when and in what
circumstances should it be exercised? ….. ….. ….. ….. 51
Part 6
Issue (v): What was the proper order in this case? ….. ….. ….. ….. 52
Part 7
Issue (vi): Given the matters argued before him, was the decision of
Judge Stewart QC wrong? ….. ….. ….. ….. ….. ….. 53
Part 8
Conclusion ….. ….. ….. ….. ……….. ….. ….. …. …. ….. 54
Lord Justice BrookeThis is the judgment of the court.
Part 1
Introduction
This is an appeal by the Liverpool City Council ("the council") against an order of Judge Stewart QC in the Liverpool County Court on 15 th June 2004 whereby he allowed an appeal by the claimant against an order of District Judge Humphreys-Roberts dated 4 th March 2004 on a detailed assessment of costs. The district judge recorded in his order that the costs of the action were agreed at £5,500 inclusive of disbursements and VAT, and he made no order for costs in the detailed assessment proceedings save for payment by the defendants of the issue fee. Judge Stewart substituted an order that the defendants pay the costs of the detailed assessment proceedings before the district judge and before him, for which sums of £3,000 and £5,700 (inclusive of VAT) were assessed by consent, subject to liability.
The appeal to this court has taken a curious course. The dispute between the parties relates to the reasonableness of the success fee in the conditional fee agreement ("CFA") agreed between the claimant's mother (and litigation friend) and the claimant's solicitors on 18 th October 2001. The district judge held that the CFA success fee of 100% was reasonable for the period until the council filed its defence in the action on 10 th April 2003, but that thereafter the success fee should be reduced to 5% both for the substantive proceedings and in the detailed assessment proceedings which followed. On the appeal to Judge Stewart the claimant challenged the reduction of the fee to 5%, and the defendants did not cross-appeal. The judge held that the district judge had no power to reduce the success fee, and he therefore permitted a success fee of 100% throughout.
The defendants sought permission to appeal to this court as a second appeal. They challenged not only the reasons why the judge had allowed the appeal but also the reasonableness of the success fee of 100% initially agreed. On 30 th July 2004 Dyson LJ granted permission to appeal, but when the claimant objected that the defendants could not raise an issue in a second appeal which they had not raised on the first appeal, on 15 th November 2004 the court (Brooke and Thomas LJJ) imposed conditions on the defendants' ability to proceed with the appeal. It also directed that the appeal should proceed by way of re-hearing, and gave directions that on the appeal the court would consider the following matters:
i) Whether a success fee of 100% was appropriate on this CFA at the time when it was made, and if not, what a reasonable success fee would have been from the outset;
ii) Whether on the proper construction of this CFA, it allows contractually for the possibility of a different success fee on the detailed assessment from the success fee on the main claim;
iii) Whether, if differential rates are not permissible as a matter of contract between the solicitor and his client, the court has the power, through para 11.8(2) of the Costs Practice Direction or otherwise, to direct that a success fee is recoverable at different rates for different periods of the proceedings (including a detailed assessment of costs);
iv) If the court does have such a power, when and in what circumstances it should be exercised;
v) What was the proper order in this case;
vi) Whether, given the matters argued before him, the decision of the judge was wrong.
At the hearing of this appeal we have benefited greatly from the advice of Master Hurst, the senior costs judge, who has acted as our assessor.
Part 2.
Issue (i) Was a success fee of 100% appropriate on this CFA at the time when it was made?
On this issue we admitted, without any sustained objection, more evidence than was before the district judge. So far as the facts are concerned, the claimant was four years old at the time of her accident on 6 th September 2001, and her mother saw her solicitor very soon afterwards. She told him that her daughter had cut her leg when she was coming home from school. She was walking across the grass verge which lay between a public car park and Boundary Lane South in the city of Liverpool. The accident happened when she stepped into a hole.
Part of the new evidence consists of the solicitor's site inspection report dated 11 th September 2001, to which are attached a rough sketch of the accident site and eight coloured photographs of the accident scene. The hole is hidden in the grass. It was about 7 inches square and 20 inches deep. The public car park was separated from the main road by a strip of land which included this grass verge and the Strawberry Public House.
The CFA was completed and signed about five weeks later, on 18 th October 2001. It was in the Law Society model form. The success fee was set at 100%, and Schedule 1 to the agreement contained a cross-reference to a risk assessment. This risk assessment measured the chance of success at 50%, and it contained a preliminary valuation of £750 for the value of the claim. It listed the following information or documents as matters taken into account in the risk assessment:
(a) Client's statement;
(b) Potential section 58 defence;
(c) Unclear as to who are the defendants;
(d) Likely dispute re contributory negligence;
(e) Likely dispute re quantum;
(f) Callery v Gray.
Before the district judge the claimant's solicitors relied on the contents of this risk assessment and the following other matters:
i) This was a public liability claim. According to research carried out by Association of Personal Injury Lawyers ("APIL") and reported in the August 2003 edition of the Law Society's publication Litigation Funding the success rate for public liability claims was generally 61%. This factor alone, using the matrix set out in Cook on Costs, produced a success fee of 64%.
ii) According to an article in The Daily Mail on 1 st November 2003 (which was shown to the district judge and to this court) only 20% of tripping cases against Liverpool City Council succeeded. This factor alone justified a success fee of 100% in any tripping case involving the council.
In a supplementary written submission to the district judge the claimant's solicitors identified the following matters as relevant to the risk in this case:
i) The claimant was a minor, thereby causing concern with regards to the reliability of her evidence;
ii) Because the accident occurred on a grass verge, this gave them concern as to who would be the registered proprietors of the land;
iii) If it transpired that the council were the registered owners, they would potentially have a "system of inspection" defence.
To some extent the issue of the reasonableness of the initial success fee of 100% was overshadowed in the argument before the district judge by two quite different matters. The first was that the parties had already agreed the costs of the substantive proceedings in a lump sum. The other was that the whole of the argument revolved around the defendants' contention that the district judge had power to reduce the allowable success fee after a stage in the proceedings had arrived when the risks inherent in the proceedings were greatly reduced. The defendants did not advance any argument about the reasonableness of the initial 100% success fee, and the district judge simply said:
"A tripper, an infant child and at the time they did not know who owned the property, what it was about (sic) [I am] satisfied 100% is the appropriate success fee until 10th April 2003. Thereafter I think it is appropriate to change the success fee …"
It was only when Judge Stewart held that the allowable success fee must remain the same throughout that the defendants' advisers turned their attention to the need to challenge the 100% fee approved by the district judge. We were told that the decision in this case, reached in...
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