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Halloran v Delaney, Court of Appeal

17 September 2002
The issues

Costs. Success fee – uplift. Conditional Fee Agreement.

The facts

The Claimant’s Solicitors settled the personal injury claim for £1,500. Agreement was reached as to costs whereby the insurer agreed to pay base costs of £910 leaving a dispute only the success fee an ATE premium. The costs only proceedings were issued in July 2001 before the judgment in Callery v Gray. Before the hearing the parties reached agreement both as to the premium and the success fee in the “main” action. In dispute in the costs only proceedings therefore were the costs of those proceedings themselves. A success fee of 40% had been claimed under the CFA that the Claimant had signed up to. The CFA was in the Law Society’s standard model form. It provided for 10% of the success fee to relate to the costs of postponement of payment and the remaining 30% therefore as against the paying party. The District Judge found that the issuing of Part 8 Proceedings were reasonable and that the Claimant was entitled to the benefit of the CFA which covered the proceedings as “enforcement action”. She allowed an uplift of 20%. The Defendants argued that the Law Society model CFA did not cover costs only proceedings and secondly that no uplift should have been allowed at all because there was no risk to the Claimant of not recovering costs and thirdly that was wrong that the uplift of 20% was excessive

The decision

1. The CFA covered costs only proceedings. Following Master Hurst’s interpretation of the Law Society model in Tilby v Perfect Pizza. Although Part 8 proceedings were not “enforcement” they were a necessary preliminary to any enforcement proceedings because those could not take place until the Costs Liability Act was quantified. Therefore they were covered by the agreement.

2. There was risk to the Claimant which justified a success fee of some sort. At the time that the agreement was entered into there was considerable doubt as to what law and practice in this area was. That doubt had been largely clarified by the two judgments in Callery. But it was reasonable to claim an uplift prior to that date. Even now it was wrong to say that there was no risk in costs only proceedings for a Solicitor acting under a CFA.

3. The uplift of 20% was within the “wider discretion” of the District Judge and the Appeal would be dismissed.

4. However after Callery, it was now appropriate to look again at what was the appropriate level of success fee recoverable in a simple claim which settled without the need for Court proceedings. In respect of the CFA entered into after 1 August 2001, Judges should ordinarily allow an uplift of no more than 5% unless there were particular circumstances justifying a higher uplift.
Note

The Law Society were invited to intervene in the proceedings but declined but did provide a short written submission to the effect that the draftsman of the model agreement had taken the view that the resolution of costs formed an integral part of the claim. The Court of Appeal recommended that the further draft model agreement make this point “transparently clear”.

Comments

Another welcome costs decision. A side light – the Defendants had asked to see the CFA on which the claim to a success fee was based. The District Judge had seen it at first instance but had not allowed the Defendants to see it. Unfortunately perhaps before the Court of Appeal the parties and the Court had all had access to the agreement. The Court were invited to make a ruling on the question whether the CFA could be properly withheld from inspection but since it did not arise to a decision the Court “declined” the invitation.

17/09/02

Compiled by Mark Fowles, Head of the Insurance Department
Veitch Penny Solicitors, 1 Manor Court, Dix’s Field, Exeter, EX1 1UP

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