The question of deducting success fees from the damages of a child remains a vexed one. I am grateful to
Gillian Shaw from Paul Rooney LLP Solicitors who sent me the following note in relation to the practice in Liverpool and Manchester. (After the initial posting I received a copy of the note of judgment of Judge Halbert and I have reproduced it below). Further it is important that you also read the (later) post of More on Child Claimants and Success fees – which puts the Note of Judge Halbert in context.
DETAILED ASSESSMENT NEEDED
“Liverpool & Manchester CC are now refusing to allow deduction of success fee on minor’s claims unless application for detailed assessment made and then they will look at each case on own merits – below is a note from an advocate following a recent infant approval hearing:
The Judge noted that an Appeal Note prepared by HHJ Halbert (which related to the appeal of DJ
Wallace’s first instance decision in KJN (by LF SN) v JG, where a request for the payment of a success
fee from an infant’s damages had not been granted) had recently been disseminated to judges in
Liverpool. She stated that the Note set out that the Civil Procedure Rules, as they currently stand, do
not allow a judge at an approval hearing to order the payment of a success fee out of an infant’s
damages. She stated that such a payment could only be ordered following a detailed assessment of
the success fee.
She therefore stated that, in light of that Note, judges in Liverpool had been informed not to consider
the payment of a success fee at an approval hearing but, instead, to inform any solicitors seeking
such a payment that it is necessary to make a separate application for detailed assessment.”
THE NOTE OF JUDGMENT OF JUDGE HALBERT
The Note of the judgment is below.
IN THE CHESTER COUNTY COURT
(BY HIS LITIGATION FRIEND, S N)
NOTE RE: APPEAL
- This case relates to a decision taken by District Judge Wallace in an infant settlement approval case and it raises points at issue which are likely to recur.
- The case began post April 2013 in circumstances where a success fee is no longer recoverable from the Defence. It is an action brought on behalf of a child by a Litigation Friend who agreed a success fee with the solicitors acting for the child which was capped at 25% of the child’s damages.
- A settlement was negotiated which involvement payment to the child of £2700 plus costs other than the success fee of £675.
- The child’s solicitors submitted the settlement for the approval of the Court on the express basis that of the £2700, £675 would be paid to the solicitors in respect of the success fee.
- District Judge Wallace approved the settlement but refused to allow the payment of the success fee out of the child’s damages.
- The solicitors first wrote to the Court asking for District Judge Wallace to reconsider the decision under the Slip Rule but when they had not had any reply shortly before the time for appeal expired, they lodged an appeal.
- There are major problems with this case. The first is the status of the appeal. The appeal has been lodged by the solicitors. Neither the Litigation Friend, nor the Defendant have any interest in the outcome of the appeal. In reality the parties in the appeal are the solicitors and the child. The solicitors are not parties to the action so they have no locus standi to appeal. To do so, they are acting in conflict with the interests of their own client, namely the child.
- In addition, there is no basis upon which the appeal could be funded. The money cannot come out of the child’s damages without the leave of the Court and there is no chance that this will be granted. The Defendants have no interest in the appeal so an order for costs against them is not feasible and the Litigation Friend acts only for the child, not in his personal capacity.
- I have raised the matter with the Supreme Court Costs Office and they take the same view that the appeal is not properly brought because the solicitors have no locus.
- CPR 48.5 (2)(a) provides that where money is to be paid by a child, the Court must order a detailed assessment of the costs payable by or out of money belonging to any party who is a child or protected party.
- There is an exception in CPR 48 PD paragraph 51.1 in that a detailed assessment need not be ordered where there is no need to do so to protect the interests of the child or protected party or his estate.
- Prior to the change of the rules in April 2013, this was always achieved by the solicitors for the child agreeing to waive any costs not recovered from the Defendants. Now that success fees cannot be recovered from Defendants, this would involve waiving the success fee altogether.
- The practical effect is to make it virtually impossible to agree a success fee payable out of the damages where the Claimant is a child or protected party. In my view, a change in the rules would be required.
Derek R Halbert
Designated Civil Judge, Cheshire
7th April 2014″