Amidst all the changes to Part 36 it is easy to miss the fact that changes in relation to children cases on the 6th April 2015. In essence this provides a mechanism for the court to consider the deduction of costs from damages but only after costs have been agreed with the defendant. The rule changes only apply to cases where settlement is for less than £25,000. (The links to the explanatory note, rule changes and new Practice Direction are in the headings in this post).
“Amendments are made to address the growing number of applications at approval hearings for payment out of the child\protected party’s damages to meet the success fee provided for in the conditional fee agreement or entered into between the litigation friend and the solicitor for the child\protected party. The rules are amended to reflect when and how a deduction from damages of a sum to meet any shortfall between the costs recoverable from the other party and the ‘solicitor and own client’ costs payable to the child’s\protected party’s solicitors applies. The amendments are confined to those cases where the award or ordered do not exceed £25,000. Consequential amendments are made to Part 47, PD 21 and PD46. The amendments come into effect on 6 April 2015.”
There is a new 21.12 (1A):
“(1A) Costs recoverable under this rule are limited to costs incurred by or on behalf of a child by way of success fee under a conditional fee agreement or sum payable under a damages-based agreement in a claim for damages for personal injury where the damages agreed or ordered to be paid do not exceed £25,000.”;
Then there are new 21.12(7) and (8).
(7) The amount which the litigation friend may recover under paragraph (1) in respect of costs must not (in proceedings at first instance) exceed 25% of the amount of the sum agreed or awarded in respect of—
(a)general damages for pain, suffering and loss of amenity; and
(b)damages for pecuniary loss other than future pecuniary loss,
net of any sums recoverable by the Compensation Recovery Unit of the Department for Work and Pensions.
(8) Except in a case in which the costs payable to a child or protected party are fixed by these rules, no application may be made under this rule for a payment out of the money recovered by the child or protected party until the costs payable to the child or protected party have been assessed or agreed.”.
9) For paragraph 11.2 substitute—
“11.2 In all circumstances, the litigation friend must support a claim for payment out in relation to costs or expenses by filing a witness statement setting out—
(1) the nature and amount of the costs or expense;
and (2) the reason the costs or expense were incurred. 11.3
Where the application is for payment out of the damages in respect of costs pursuant to rule 21.12(1A) the witness statement must also include (or be accompanied by)—
(1) a copy of the conditional fee agreement or damages based agreement;
(2) the risk assessment by reference to which the success fee was determined;
(3) the reasons why the particular funding model was selected;
(4) the advice given to the litigation friend in relation to funding arrangements;
(5) details of any costs agreed, recovered or fixed costs recoverable by the child;
and (6) confirmation of the amount of the sum agreed or awarded in respect of—
(a) general damages for pain, suffering and loss of amenity; and
(b) damages for pecuniary loss other than future pecuniary loss,5 net of any sums recoverable by the Compensation Recovery Unit of the Department for Work and Pensions.”.