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Fortune v Rowe, High Court, 10 November 2011

27 January 2012
The issues

Road traffic – success fees – conditional fee agreements – two stage success fee.

The facts

On 8 December 2001 the claimant had a serious car accident. The defendant’s car veered onto the claimant’s side of the carriage way and collided head on with her vehicle. The claimant suffered very serious injuries. She went to solicitors. Her claim was initially covered by a before-the-event insurance policy but when the limit of indemnity was reached she entered into a CFS on 3 February 2006. The claim was settled shortly before trial when the claimant accepted a Part 36 offer made on 20 February 2009 in the sum of £600,000 plus CRU plus costs. Liability had been admitted on 27 March 2003. On 11 September 2003 an offer to settle had been made in the sum of £250,000 not by way of Part 36. In January 2005 proceedings were served. In February 2006 the CFA was signed. In September 2007, an offer of £475,000 was offered less CRU. In January 2008 an offer of £600,000 was made at around table meeting. In April 2008 a Part 36 Offer was made by the claimant in sum of £800,000 less CRU. The matter went to detailed assessment before costs Judge Master Campbell. The Master held the success fee claimed under CFA should be 20% rather than the 100% claimed by the claimant. The claimant appealed.

The decision

The case involved complex quantum issues but these were common in serious multiple injury cases.

The CFA provided for a two stage success fee. If the claim was won prior before the date fixed for the trial 25% of the basic charges would apply. If the claim was won at any later date 100% of the basic charges would apply. The reasons given for the level of the success fee were the potential risk of failing to establish one or more fundamental elements of the case and the risk that the claimant might fail to beat an offer or payment into court.

Whilst it was correct that two stage fees had been encourage by the courts and that a second higher stage success fee might well be treated more leniently by the courts, the actual determination would depend upon the nature and level of risk. The key issues were; what was the level of risk assessed by reference to the facts and circumstances as reasonably identified on the 3 February 2006, of the claimant’s solicitors being unable to recover some or all of their base costs; secondly what level of success fee was justified by that level of risk.

At the time of entering into the CFA one of the main risks of litigation, namely of losing the action completely had gone because judgment had already been entered. There were no allegations of contributory negligence. The case involved complex quantum issues but these were common in serious multiple injury cases. There was no material to suggest that the claimant likely to lose a specific quantum issue that would resolve in a separate costs order. The risk of the basic charges not being recovered would arise only if a Part 36 offer was made, rejected and the claimant failed to beat it. It was probable in substantial personal injury cases of this kind that a Part 36 offer would only be made in a period closer to trial when the expert evidence on the quantum issues had been resolved or closed to being resolved. Where, as was the case in this case, the risk was not great and a substantial proportions of the costs were already secured for the claimants solicitors, a success fee of 100% was unjustified. The Masters decision that the success of 100% was unreasonable was correct. His conclusion that a reasonable success fee whether single or second stage was 20% was also correct.

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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