COSTS MONKEY

Assessment of Additional Liabilities

 

The court will not assess additional liabilities until the conclusion of proceedings (or the part of the proceedings which the relevant funding arrangement relates to). The same goes for commencement of Detailed Assessment proceedings itself. Proceedings are only considered concluded when the court has finally determined the matters in issue. There are some exceptions such as where an award for provisional damages has been made. There are also occasions where, even though the case is continuing, parties can agree between themselves in writing, or the court can order, that the proceedings can be treated as concluded.

 

Costs Practice Direction (CPD) 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.

 

CPD 11.9: A percentage increase will not be reduced simply on the  ground that, when added to base costs which are reasonable and (where relevant) proportionate, the total appears disproportionate.

 

ATE  Premiums

 

CPD 11.7 - factors and circumstances when the agreement was  entered into will be taken into account.

 

"Subject to paragraph  17.8(2), 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 to the solicitor or counsel when the funding arrangement was entered into and at the time of any variation of  the arrangement."

 

CPD 11.10 - Level of the insurance premium:

 

In deciding whether the cost of insurance cover is reasonable, relevant factors to be taken into account include:

 

(1) where  the insurance cover is not purchased in support of a conditional fee  agreement with a success fee, how its cost compares with the likely cost of funding the case with a conditional fee agreement with a success fee and supporting insurance cover;

 

(2) the level and extent of the cover  provided;

 

(3) the availability of any pre-existing insurance cover;

 

(4)  whether any part of the premium would be rebated in the event of  early settlement;

 

(5) the amount of commission payable to the receiving  party or his legal representatives or other agents.

 

How much would you expect to pay for an insurance premium?

 

Callery -v- Gray (significant  points):

 

1. The premium was recoverable in costs-only proceedings

 

2. It was appropriate to have entered into the CFA when the solicitors  were instructed.

 

3. £350 plus IPT was allowed (when the market was still  in its early days).

 

4. The House of Lords dismissed a 'tranche 3' appealing  the above.

 

 Claims  Direct No. 1 [2003] :

 

1. £1312.50 premium was  reduced down to £621.13

 

2. Deferment of payment of the premium until the end of the case did not constitute a credit agreement.

 

Tilby -v- Perfect  Pizza [2002]

 

Deferment of payment of costs was not a credit agreement under the Consumer Credit Act 1974

 

TAG (Tranche 2) Premiums - 15th May  2003

 

2000 - £840 down to £450

 

2001 - £997.50 (Lloyds) down to £480 (swing)

 

2001 - £997.50 down to £425

 

Ashworth -v- Peterborough United Football Club - 10th June 2002 - Master Wright

 

1. Bespoke premium of  £45,937.50

 

2. Market forces considered. It was unlikely that the premium could  have been found any cheaper with another insurer.

 

3. The solicitors could  show that they had made efforts to find another insurer and to resolve the  matter.

 

4. The solicitors did not have to disclose the amount of the premium fee only that they would be seeking to recover it from the other side.

 

Veronica Pirie -v- Ayling - 18th February 2003

 

1. The fee for the premium to be paid had been expressed to be 20% of the damages awarded.

 

2. This approach was found to be unreasonable and £367.50 was  awarded.

 

 Success Fees

 

Abrew v Tesco Stores [2003] Master Rogers, SCCO

 

The Claimant had fallen on dried spaghetti left on the floor of one of the Defendants’ stores, sustaining injury and had brought a successful claim. The case is an example of how the courts approached assessment of insurance premiums and success fees in the ‘early days’ of CFA’s. The CFA in this case was entered into back in 2000 not long after solicitors had begun to recover a success fees and insurance premiums. The case has now been superseded by cases such as Rogers v Merthyr Tydfil. The case also look at proportionality in Detailed Assessment costs.

 

In terms of the proportionality point on Detailed Assessment costs, the court echoed the words of Lord Justice Latham in Berstein v The Times [2002] EWCA Civ 1739 who “condemned those who sought make a cottage industry out of satellite litigation”. Master Rogers decided that the costs of Detailed Assessment were indeed disproportionate but only because of the approach taken by the Defendants.

 

Atack –v- Lee

 

The court are not obliged to consider the solicitor’s risk assessment. The method of assessing the risk can be disregarded by the costs judge. The costs judge simply needs to consider the risks as they reasonably appeared to the acting solicitor at the time the CFA was entered into.

 

Callery -v- Gray (Tranche 1 & 2) [2002]

 

1. 60% success fee claimed in a straightforward RTA case. Reduced  to 20% maximum.

 

2. The CFA covers costs-only proceedings.

 

3. Lord Woolf  suggested a 2-stage success fee approach might be suitable.

 

Eg. where  liability is admitted within the protocol period. CPD 11.8(2): "The court has the power, when considering whether a percentage increase is reasonable, to allow different percentages for different items of costs or for different periods during which costs were incurred.

 

Halloran -v- Delaney [2002]

 

1. Law Society model CFA covered costs-only  proceedings.

 

2. This case was very simple, settling at £1500 damages and  included costs-only proceedings.

 

3. 5% success fee awarded in respect of  the success fee in costs-only proceedings in accordance with 11.8(2) above.

 

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.

 

11.6  In deciding whether the base costs are reasonable and (if relevant) proportionate the court will consider the  factors set out in rule 44.5.

 

11.8 (1) In deciding whether a percentage increase is reasonable relevant factors to be taken into account  may include:(a) the risk that the circumstances in which the costs, fees or expenses would be payable might or might not occur;

 

(b) the legal  representative's liability for any disbursements;

 

(c) what other methods of  financing the costs were available to the receiving party.

 

(2) The  court has the power, when considering whether a percentage increase is  reasonable, to allow different percentages for different items of costs or  for different periods during which costs were incurred.

 

11.11  Where the court is considering  a provision made by a membership organisation, rule 44.3B(1) (b) provides  that any such provision which exceeds the likely cost to the receiving party  of the premium of an insurance policy against the risk of incurring a liability to pay the costs of other parties to the proceedings is not  recoverable. In such circumstances the court will, when assessing the  additional liability, have regard to the factors set out in paragraph 11.10 above, in addition to the factors set out in rule 44.5.

 

KU (a child by her mother and litigation friend PU) v Liverpool City Council [2005] EWCA Civ 475, 27th April 2005

 

Recovery of success fees at varying levels during different stages of proceedings. In original Detailed Assessment hearing a success fee of 100% allowed up to the point when Defence filed. 5% allowed thereafter on costs to also include costs of Detailed Assessment. On appeal neither two-stage nor 100% success fee considered appropriate. Brooke LJ thought 50% to reflect a 2:1 risk. The risk of the matter not being costs bearing because of it potentially being a Small Claims matter should not be recoverable between the parties. The CFA did not contractually allow for the success fee to be altered during the proceedings.

 

Andre Agassi -v- Robinson

 

C v W [2008] EWCA Civ 1459

 

A personal injury matter where liability had been admitted prior to the CFA being entered into. The question for the Court of Appeal to consider was what success fee would be appropriate where liability was not a relevant factor in assessing the risks for the purposes of a success fee.

 

During the initial assessment of costs a success fee of 70% was allowed. On appeal this was reduced to 50%. The thrust of the arguments were on the wording of the CFA giving rise to the success fee and the risks to the solicitors when the CFA was entered into. The CFA provided that if, on the advice  of the solicitors, the client were to reject a Defendant’s Part 36 offer but fail to beat that offer the Claimant’s solicitors would waive their costs and success fee from the date of the offer.

 

The Court of Appeal accepted their was a genuine risk to the solicitors but it was however a relatively remote risk and reduced the success fee to 20%.

 

Fixed Success Fees

 

Nizami v Butt [2006] EWHC 159 (QB)

 

Following a claim arising from an RTA it was suggested that the Claimants had failed to conduct adequate BTE enquiries breaching the old 2000 CFA Regulations, therefore suggesting that the CFA was invalid. The court decided that the retainer had no bearing on the recoverable costs as the costs recoverable were fixed under CPR 45.9. The fact that there was a funding arrangement meant that a success fee was recoverable in addition. The indemnity principle could effectively be overlooked in these cases.

 

Lamont v Burton

 

A Claimant who, at Trial, did not beat a Part 36 offer made previously by the Defendants was still entitled to a 100% success fee because the case had gone to Trial. CPR Part 44 could not be used to circumvent the provisions of the fixed success Rule in Part 45. Any amendment would be a matter for the Rules Committee to consider.

 

Kilby v Gawith [2008] EWCA Civ 812

 

A client involved in an RTA has BTE but that had no bearing on the success fee which was prescribed by CPR 45.11(2). There is no discretion on fixed success fees. A claimant may recover a success fee if he has entered into a funding arrangement. The Defendants had sought to argue that “may” under 45.11(1) gave the discretion but this interpretation was not agreed by the Court of Appeal or in the decisions in the courts below. The principles that had been decided in Nizami and Lamont stood.

 

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Content last updated: 12/02/10