MORE ON CHILD CLAIMANTS AND THE RECOVERY OF SUCCESS FEES: AN EXTREMELY HELPFUL NOTE FROM THE CLAIMANT’S SOLICITORS

The post yesterday on children and success fees got a lot of attention. I am grateful to Daniel Higgins head of costs at Gavin Edmonson Solicitors Ltd who was involved in that appeal. His note (reproduced with his permission below) puts the case into context.

THE NOTE FROM DANIEL

“I was the person involved in the appeal and have spoken to HHJ Halbert on a number of occasions in relation to the same.  I am emailing to clarify a few matters in relation to the note of HHJ Halbert.

I recite the facts, more for completeness than anything else.  We were involved in a routine Infant Approval Settlement hearing in Crewe County Court.  Following the hearing District Judge Wallace refused to order the payment of the success fee from the Childs damages.  As the rule changes were relatively new I emailed Crewe County Court with the relevant legislation along with the Law Society Guidance in the hope that District Judge Wallace would amend under the slip rule.  I did not receive a response to the email so I appealed the decision.

First telephone conversation (from my notes)

HHJ Halbert spoke with me regarding the appeal.  He agreed with me that DJ Wallace did not have a discretion regarding the payment of a success fee (in principle, given Parliament has set out this is to be paid by the Claimant) but did have a discretion with the approval of a settlement.  HHJ Halbert thought DJ Wallace may have thought the settlement was too low if the success fee was taken.  I said that given the Defendant does not pay the success fee the approval must be assessed on the basis of the gross damages and not net settlement taking into account the success fee reduction.  HHJ Halbert agreed and asked whether he might contact District Judge Wallace to see if the matter could be resolved (such a procedure he acknowledged was irregular).  I consented to this on the basis that it appeared to be the most proportionate method of resolving the matter.  Unfortunately the matter was not resolved at this juncture.

Second telephone conversation (from my notes)

HHJ Halbert called for a second time to discuss the appeal.  He informed me that he had spoken with the Senior Costs Judge Peter Hurst and he was also unsure about the success fee.  HHJ Halbert informed me that we did not have locus to appeal and that there was no other party to the appeal.  HHJ Halbert said he would send his notes over to explain his position and that he was recommending a change in the rules to clarify the matter.

Third telephone conversation (from my notes)

HHJ Halbert called for a third time to discuss the appeal.  He informed me that he had no choice but to strike out the appeal as no locus.  Senior Costs Judge Peter Hurst suggested the only remedy we had was to apply for taxation of the bill under Section 70 of the Solicitors Act.

My comments on the interpretation of the note

I believe the notes on the appeal, without the context of the telephone conversations, would seem to suggest that judges cannot award the success fee from childs damages.  This was not the case.  HHJ Halbert was of the mind that the success fee should be taken from the Child’s damages.  If it was not it would lead to an injustice as children would end up unrepresented.  What HHJ Halbert was driving at was that the rules were unclear.  They did not specifically allow the success fee to be taken from the damages and therefore it created the potential for an inconsistent approach.  This is why the rule change was recommended.  The payment of the success fee is ultimately left to the discretion of the Judge.  If the success fee was not to be considered as “costs” then the court has discretion to control the money recovered under CPR 21.11.  If the success fee was considered “costs” then, of course, CPR 46.4 would be engaged and a detailed assessment would be needed unless the Judge, in accordance with 46PD.2, thought there was no need to do so to protect the interests of the child.  Clearly it would be open to a judge to summarily assess the success fee payable by the child as there is no need to order a detailed assessment to protect the interests of the child as Parliament has legislated that success fee is payable by the Claimant and the Judge cannot act contrary to the intentions of parliament.  Also, ordering a detailed assessment would potentially expose the child to further assessment costs being payable from the damages.  This of course would not be in the child’s interests.

The Proposed changes to the Rules

Please find enclosed the email from Jane Wright (Secretary to the Civil Procedure Rule Committee).  Unfortunately the proposed amendments will not likely feature in the April updates to the rules.  The inconsistent approach by the Judges in respect of the success fee is likely to continue for some time.

The appeal

Following the recommendation from Senior Costs Judge Peter Hurst I have applied in the High Court for the taxation of the bill under the Solicitors Act.  The matter is currently before Master O’Hare but we have requested an adjournment in light of the proposed rule changes.  The matter is currently listed for a directions hearing on 31st October 2014 but we have requested the directions hearing be vacated given the change in the rules have yet to take place.”

THE E-MAIL FROM THE CIVIL PROCEDURE RULES COMMITTEE

The e-mail referred to in Daniel’s note states:
“Thank you for your email.   HHJ Halbert is correct, the Civil Procedure Rule Committee is considering this issue and District Judge Michael Hovington is chairing a subcommittee looking at the issue.  I have forwarded your comments directly to Judge Hovington.

I should caution that although rule changes are being considered  if it agreed rule changes are required they are unlikely to be completed before the end of the year to be included in the December update which would usually come into force the following April.”

 

 

3 comments

  1. I personally find it offensive that this attempt to take money from a child’s damages is being pursued with such vigour. Would it really be too much to expect practitioners simply to waive success fees in infant cases?

    Success fees have always been an absurdity. Most volume PI firms only take on cases they know will be won, so they’re just an additional and unjustified profit. Indeed, I would be very interested to see some figures for a firm’s banked success fees as against costs written off in failed cases – I suspect the success fees would outweigh the written off costs by a substantial multiple.

    Everyone knows that PI has been massively overpaid for the skill and risk involved for many years. It’s the greedy attitude to costs demonstrated in this case that finally killed the goose that laid the golden egg, and as someone who left PI work some years ago, having refused to buy in work it was the best decision I ever made.

    1. Robert Pettitt · · Reply

      Clearly you don’t like the CFA regime. You left PI some years ago (seemingly on principle) and hold some bold unsupported opinions on it that mirror those of Neuberger.

      You seem to be under the impression that PI solicitors are raking it in because of success fees. You don’t get 100% uplifts in cases that settle early and even well into proceedings.

      You do not give thought to the new test of proportionality which arguably makes the recovery of uplifts ever more important. Success fees are now reduced in most cases because 25% damages is less than the uplift and the success fee not only pays for the losing cases but also the ever growing shortfalls on winning cases.

      And, of course, solicitors all know which cases are winners. Such an absurd statement.

      There is absolutely no logical reason why a child should not pay an uplift when an adult has to. You can say that it’s a child and that is enough of a reason, but why? Also remember that the recoverable uplift is limited to 25% of general damages and past specials. A child’s medical and care costs are ringfenced against uplift.

      The stark reality is that low value work may soon become unprofitable due to the current concept of proportionality and child cases more so because you have to incur necessary costs of settlement approval which may not be ‘proportionate’.

      Look down on CFA solicitors if you like, but they provide access to justice and they gamble their fees in the process.

      Typed from phone so expect typos.

  2. This is all very silly and we have been here before. When CFAs were first introduced, the success fees were not recoverable inter partes. Accordingly, a similar sort of situation started to arise, with courts disallowing the success fee as against the child, When the CPR were introduced in 1999 a specific provision was introduced, CPR r 48.9(6), to address this problem. That provided that, where the Claimant was a child or patient, the success fee under a CFA could not be varied by the court except in accordance with CPR 48.9(5) – a provision mirrored (now) by CPR 46.9(4) and sets out the standard test for assessment of reasonableness of a success fee.
    In other words, the court had to allow the success fee unless the quantum of the fee itself was unreasonable for reasons properly sustainable on assessment.
    That cured the problem.
    Ironically, of course, at the same time the inter partes recoverability of success fees was introduced. Because success fees were then generally recovered inter partes, the problem went away anyway, so much so that 48.9(5) was seen to be otiose and was deleted.
    The answer is simple – reintroduce 48.9(5). That makes clear that the success fee must be allowed but, that like any other item of costs on a solicitor-client basis its quantum can be assessed.

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