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Fortune v Roe Master Campbell, Senior Courts Costs Office

22 December 2010
The issues

Success fee – Conditional Fee Agreement – meaning of “win”.

The facts

The Claimant had a car crash causing her catastrophic injuries. Her claim was initially covered by an insurance policy but when the limit of indemnity was reached she entered into a CFA with Irwin Mitchell. A Trial date was given for 30th March 2009 but the litigation settled on the 12th March when the Claimant accepted a Part 36 offer made in February in the sum of £600,000 plus costs.

Liability had been admitted on the 27th March 2003, before proceedings had been served. Proceedings were served in January 2005. A Defence was served admitting negligence in March 2005 and Judgment entered for damages to be assessed in April 2005. The CFA provided for a success fee a) “if you win your claim prior to 3 months before the date fixed for Trial or the first date of the Trial window” which was 25%, b) “if you win your claim at any later date or time 100%”. The definition of win was given as “your claim for damages against your opponent…is finally decided in your favour, whether by a Court decision or an agreement to pay your damages”. The Defendant accepted that the case had settled within 3 months before the date fixed for Trial and that the second stage of the provision for the two stage success fee had been reached. However, the Defendant said that the success fee should not be allowed at an unreasonable level and that in deciding what was reasonable regard needed to be given to the risk assessment in the CFA and in particular to two aspects – the risk of failing to establish liability ; and the risk of failing to beat a Part 36 offer. Since the Defendant argued the risk of losing on liability was nil (because the Claimant had already entered Judgment) there was no risk that the Claimant would not be liable to pay Irwin Mitchell’s basic charges and that therefore the 100% success fee was excessive. Moreover, contributory negligence was not in issue.

The decision

The sum of £88,000 inclusive of VAT plus interest turned on the decision whether the success fee should be 100% or 20%, as the Defendant had argued.

The Claimant had won her case, for the purposes of the CFA, when the Defendant admitted liability. In any event, and beyond pair adventure, the Claimant had won when Judgment was entered. It did not matter that the level of damages needed to be worked out at that stage, since the definition referred merely to “an agreement to pay you damages”.

In this light the 100% success fee (as if liability had been in doubt) was unreasonable.

The risk of failing to beat a Part 36 offer did not justify a success fee of 100% either. It did not matter that it was a substantial claim. It was not reasonable to add an element to the success fee to reflect that factor. The Court followed C v W and in particular the Judgment of Lord Justice More-Bick:-

“To add a further 20% success fee to reflect the size of the claim was, in my view, also wrong. It is probably true in general that high value claims tend to be more complex and to involve a greater amount of work than claims of lower value, but that does not of itself increase the risk of losing.”

It followed therefore that the fact of assessing quantum proved to be extremely difficult was not a factor that bore upon the prospect of the Claimant winning of losing the case. That win had already been achieved. The only risk was the risk of failing to beat the Part 36 offer, but even if that had happened, the costs up to the date of the offer would have been recoverable and only those incurred after that date would have become payable to the Defendant. That risk could be properly reflected in a 20% success fee.

The success fee would be allowed at 20%.

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