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Atack v Lee & Grechan & Ellerton v Harris, Court of Appeal, 16 December 2004

22 December 2004
The issues

Costs – Success Fees – CFA – Appropriate Success Fee In A Contested Case – Whether Success Fee In Straightforward Road Traffic Claim Worth More Than £15,000.00 Should Be Greater Than 20%

The facts

The Claimant claimed for personal injuries after a road traffic accident on 16th July 1998. He was riding a motorcycle and as he crossed a roundabout passed a large quarry wagon on his right hand side. The lorry was owned by Mr Grechan and driven by Mr Lee. He pulled in front of it and the lorry continued around the roundabout unexpectedly and forced him to take evasive action. As he did so he touched the kerb of the central reservation and lost control of the motorcycle. He suffered orthopaedic and neurological injuries. He instructed solicitors on a conventional retainer in September 1998.

The Defendant insurers denied liability. On March 23rd 2001 the Claimant entered into a CFA with 100% success fee. Proceedings were issued and Judgment eventually given for the Claimant at the end of the first day on a two day Trial with Mr Lee being held 100% to blame.

On the second day the claim settled for £30,000.00. A substantial discount was taken by the Claimant on the basis that he had difficulty in proving his loss of earnings claim.

The Claimant’s solicitors said that Mr Atack was a difficult and awkward client who had become volatile and violent as a result of his injuries. There were therefore grave concerns about his ability as a witness. Another relevant factor from the Claimant’s perspective was that one independent witness was on the Defendant’s side.

In contrast, the Claimant’s two witnesses were not independent. The District Judge correctly stated that he would assess the reasonableness of the success fee against the perceived risk to the Claimant and his solicitors should they fail to win the case, at the time the CFA was entered into i.e. in March 2001. The District Judge took the view that neither the delay nor the fact that their silence on either side for two years particularly affected the assessment of the risk.

A statement of fact had been filed on behalf of the Claimant by the person who had carried out the risk assessment within the Claimant’s solicitors firm.

The Defendants argued that the Claimant was clearly an intelligent man and not a run of the motorcycle witness and therefore likely to prove a good witness. The Defendant also relied on the fact that an in-house retired police officer had carried out a detailed assessment of the roundabout for the Claimant’s solicitors.

The District Judge was not impressed by either of the points made by the Claimant’s solicitors about the risks associated with establishing the likely value of the claim. A volatile client’s failure to give instructions would result in a solicitor’s entitlement to recover wasted costs from him. He was also unimpressed by the fact that there was a leap to a 25% additional risk in the matrix produced by the Claimant’s solicitors because the claim went over £10,000.00.

Nor was he convinced that the length of the case was a significant factor nor why an actual denial in the usual opening flurry of correspondence increased the liability factors by 10 from an anticipated denial.

He looked at the case straightforwardly. The Claimant’s solicitors had concluded at an early stage that the Defendant was in the wrong and that on a balance of probability his client would succeed. Although he had met with a denial experienced solicitors knew that this was a regular feature and that it was a regular recurrence that cases settled after issue. A success fee of 50% in these circumstances was reasonable. The Judge dismissed the initial appeal. The Claimant appealed to the Court of Appeal.

The decision

The Court had to assess the reasonableness of the success fee on the basis of what was known or should have been known by the Claimant’s solicitor on 22nd March 2001. He had then his client’s version of events, accounts given by his client’s father and family friend, and a police report, which did not take matters much further, together with the independent witnesses version of events and the Defendant’s insurers denial of liability together with the assessment of the accident carried out by the in-house police officer.

Two matters which emerged from this clearly was the evidence that the lorry was not signalling and the fact that the island on the roundabout would have prevented the independent witness from witnessing anything but the last few seconds before the accident. The matrix produced by the Claimant’s solicitor which should have been useful was of no value at all and the District Judge was right to consider the matter from the stand point of a reasonable careful solicitor.

No two Judges will assess a matter like this in precisely the same way. The District Judge perhaps should have attached more weight to the insurer’s firm denial. The Court of Appeal would not have accepted as the District Judge did that the CFA in this case put the solicitors at any risk at all of not being paid if a Part 36 Payment was not beaten. Some Judges might reasonably have considered a single stage success fee of up to 67% reasonable on this material. Viewing the matter in the round however the Deputy District Judges figure of 50% was within the range reasonably available to him.

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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