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Cheshire County Council v Lea, Chester County Court, (on Appeal), 9 May 2003

16 July 2003
The issues

Costs – Conditional Fee Agreement – Success fee recoverable.

The facts

The Claimant was a passenger in a car which pulled on the side of the road. The Claimant got out and crossed a grass verge between the road and the pavement. The verge was part of the highway. She tripped and fell over what appeared to be a piece of brick or flagstone embedded in the surface and standing proud of it. On 15 May 2002 damages were agreed and it was agreed that the Defendant would pay the Claimant’s costs.

The first intimation of the claim was on 12 November 2001. Photographs were sent a month later. On 27 February 2002 liability was admitted.

The Claimant had entered into a CFA with her solicitors on 12 November 2001. The CFA provided for a success fee of 100% and that a came to Detailed Assessment before a Deputy District Judge who allowed the 100% success fee in full from the date of the Agreement until the date on when liability was admitted. From that date on 50% was allowed. The Council appealed the decision:

The decision

1. The Conditional Fee Agreement regulations 2000 provided that a success fee should cease to be payable under Agreement if “the level at which the increase was set was unreasonable in view of facts which were or should have been known to the legal representative at the time it was set”.

2. Paragraph 11.8 (2) of the Costs Practice Direction provided that the Court had the power when considering when a percentage increase was reasonable to allow different percentages for different items of costs or for different periods in which costs were incurred.

3. Paragraph 11.7 of the Costs Practice Direction provided that when considering the factors to be taken into account in assessing an additional liability the Court should have regard to the facts and circumstances as they reasonably appeared to the solicitor when the funding arrangement was entered into.

4. That paragraph was specifically expressed to be subject to paragraphs 17.8 (2) which provided that in costs only proceedings where an additional liability was claimed the Costs Judge should have regard to the time when and the extent to which the claim had been settled and to the fact that the claim had been settled without the need to commence proceedings.

5. In Halloran v Delaney the Court of Appeal had approved the comments of Master Hurst in Bensusan v Freedman in which Master Hurst had stated that the combined effect of paragraphs 11.7 and 17.8 (2) of the Costs Practice Direction was to prevent the Costs Officer from using hindsight in arriving at the appropriate success fee and to prevent excessive claims for success fees in cases which settled without the need for proceedings when it was clear or ought to have been clear from the outset that the risk of having to commence proceedings was minimal.

6. In the view of the Judge and in the limited circumstances which paragraph 17 applied, the Costs Judge should have regard to the matter specified in paragraph 17.8 (2) whether or not it was clear from the outset that it was unlikely that proceedings would have to be commenced i.e. with the benefit of hindsight. If that was correct then the fact that it was or was not clear from the outset that proceedings would be unnecessary would be a matter for the Costs Judge to take into account when exercising his overall discretion. The Judge with trepidation therefore found himself able to depart from the observations of the Court of Appeal in Halloran and the views of Master Hurst. He was encouraged to do so because paragraph 11.7 was expressly made subject to paragraph 17.8(2).

7. Although the complexity of a case was clearly a factor to be taken into account in assessing the success fee, the mere fact that it was complex did not in itself justify a greater rather than a smaller success fee. A case did not cease only to have a 50% chance of success merely because compared with other cases which may have 50% chances of success it was relatively simpler. Taking into account the financing principle (i.e. that there is an approximate equivalence between the costs of success and the costs of failure such that a success fee amounts to a means of financing those cases which are lost) this case which on the basis of the Judge’s own experience both at the bar and on the bench was reasonably a 50/50 case, was one where a 100% uplift was appropriate. Once the claim settled there was a significant alteration of the risk to the Claimant. There were however outstanding issues. The District Judge’s allowance of 50% was high but within the ambit of his discretion. If the Judge were to decide this case at first instance the allowance would be 25% from the admission of liability until settlement and 5% thereafter for the purposes of the costs only proceedings.

8. After the Court of Appeal in Callery were not attempting to lay down rigid framework for in respect of a two stage success fee. The solicitors should manifest more flexibility in setting success fees by adopting the general approach recommended in Callery and by providing for realistic changes in the uplift upon the occurrence of specified events. It is not reasonable for a legal representative to enter into a CFA which provides for a significant success but which does not provide for a reduction of that fee in the event of a subsequent admission of liability. Appeal dismissed

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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