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Kilby v Gawith, Court of Appeal, 19 May 2008

31 July 2008
The issues

Costs – fixed recoverable costs regime – whether Court has a discretion to order a Claimant, who has entered into a Conditional Fee Agreement, a fixed success fee of 12.5%.

The facts

The Claimant had before the event insurance. The Defendant argued that since the Claimant had BTE insurance it was unreasonable to order the Defendant to pay any part of a success fee under a CFA.

The Claimant had been injured in a road traffic accident on the 1st August 2004. Liability had been admitted. A CFA was entered into on the 16th August 2004 and the validity of the CFA was not in dispute. The claim was settled for £3,068.84 plus an agreement to pay the Claimant’s costs. It was agreed that this was a case to which Section 2 of Part 45 CPR agreed, ie the fixed recoverable costs regime. Costs were agreed in the sum of £1,718.18, except for 2 items which were disputed by the Defendant. The first was the success fee of £177.47 claimed under Rule 45.11, namely 12.5% of the fixed recoverable costs and secondly, £352.50 which was the amount claimed for the medical report. Costs only proceedings were brought by the Claimant. When the matter came before the District Judge, the amount claimed for the medical report was reduced to £250.00 and no appeal was made against that part of the decision. In respect of the success fee, the District Judge held that the recoverability and amount of the success fee were not discretionary and rejected to the Defendant’s argument. The matter was appealed to the Judge who dismissed the appeal. The Defendant appealed to the Court of Appeal.

The decision

The language of Rule 45.11(1) had a natural meaning to the effect that the Claimant was entitled to recover a success fee. As to the amount, Rule 45.12(2) provided that it “shall be 12.5%”. It had been conceded for the Defendant, and correctly, that where a success fee was recovered, it had to be 12.5%, neither more nor less.

The only authorities of relevance were the cases of Nizam v Butt and Lamont v Burton. The authorities most nearly in point supported the decision of the Judge and not the submissions made on behalf of the Defendant.

Whilst the Court recognised the importance of BTE insurance, it was not persuaded that its importance or the general approach to it led to the conclusion that the Rules should be construed any differently.

Appeal dismissed.

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