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.
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.”