- On 10 April 2000
Julia Bensusan, the Claimant, an elderly lady of nervous disposition, visited
her dentist, the Defendant, to undergo root canal treatment on her lower left
wisdom tooth. During the course of that treatment a reamer being used by the
Defendant became detached and fell onto the back of the Claimant's tongue, who
involuntarily swallowed it. The Claimant was taken to the Accident and
Emergency Department of Whipps Cross Hospital where x-ray examination
confirmed that the implement had lodged in her intestine. Surgical
intervention was not attempted and a month later x-ray examination confirmed
that the reamer had been passed. The Claimant suffered shock and anxiety as a
result of this incident.
- The Claimant
consulted the Dental Law Partnership, a specialist dental negligence practice
in Nantwich. Both the partners are qualified dentists as well as being
solicitors. The Claimant entered into a conditional fee agreement with her
solicitors on 23 August 2000. The success fee was set at 50%. There was no
after the event insurance policy.
- The Claimants'
solicitors wrote a letter of claim on 7 September 2000, which incorporated a
Claimant's offer to settle in the sum of £2,000. That letter was acknowledged
on behalf of the Defendant on 11th September by fax, and on 2 October 2000 the
Defendant made an offer of £1,000 in full and final satisfaction together with
costs. That offer was rejected on behalf of the Claimant on 4 October and on
10 October the Defendant made an offer to settle of £2,000 in full and final
satisfaction plus costs to be assessed if not agreed. On 16 October that offer
was accepted on behalf of the Claimant.
- The claim had
lasted five weeks between claim letter and settlement.
THE
COSTS ISSUE
- In accepting the
offer of damages on behalf of the client the Claimant's solicitors also sought
payment of £2,000 costs on account pending the preparation of their bill. On
19 October 2000 the Defendant's insurers agreed to make a payment of £1,000 on
account of costs. That sum, together with the damages, was received from the
Defendant's insurers on 25th October.
- The Claimant's
solicitors initially instructed their costs draftsman to communicate direct
with the Defendant's insurers. However, as a result of queries raised by the
Defendant's insurers, the Claimant solicitors wrote to them on 13 November
2000 giving the requested information and stating:
"We
do not intend to engage in protracted correspondence regarding the Claimants
costs. We will allow 21 days to reach agreement in relation to costs, failing
which costs only proceedings pursuant to CPR rule 44.12A will be issued.
Please nominate solicitors to accept service on behalf of the Defendant in
default of agreement on costs."
- In an open
letter dated 16 November 2000 the Defendant's insurers offered to settle the
costs in the sum of £800 for profit costs and stated:
"We
do not consider the success fee should exceed 25% of the profit
costs."
- They indicated
that they were prepared to accept the disbursements and costs draftman's fees.
That offer was rejected by letter from the Claimant's solicitors dated 23
November 2000, who indicated that they would be commencing costs only
proceedings. Messrs Le Brasseur J Tickle Solicitors were nominated to accept
service.
- Having failed to
agree the costs, a Part 8 application was made to commence costs only
proceedings under CPR 44.12A in the Crewe County Court. For reasons which are
not relevant to this judgment, that application was at first dismissed (by
order dated 18 December 2000) and subsequently restored and transferred to the
Supreme Court Costs Office (by order dated 15 March 2001).
- The bill for
assessment totals £3,419.69 including £1,170 base fee and £864 (50%) success
fee. In addition to these figures there is a claim for £271.35 for work done
in connection with the detailed assessment, added to this is a claim for VAT
of £501.09, disbursements (in respect of x-rays) of £50 plus VAT of £5.25 -
making the total claim of £3419.69.
DETAILED ASSESSMENT
- The detailed
assessment came before me on 12 July 2001, the Claimant being represented by
Mr Corless-Smith, a partner in the Dental Law Partnership, and the Defendant
being represented by Mr Bassani, a partner in the firm of Le Brasseur J
Tickle, assisted by Mr Howcroft a costs draftsman. It should be pointed out
that all the parties to this action are well experienced in this type of
litigation and the firms representing the Claimant and the Defendant
frequently find themselves on opposite sides. Mr Howcroft has great experience
in the field of costs. I was told that this particular case was the tip of the
iceberg and that many other cases await such guidance as I am able to give.
- A number of
general points of principle arise as well as specific points on the particular
bill. The points of principle are:
A.
The location of the Claimant's Solicitors and the appropriate hourly rate for
such Solicitors; and the linked issue of venue for issue of the
proceedings.
B.
The appropriate grade of fee earner.
C.
The success fee.
A. THE LOCATION OF THE SOLICITORS AND THE VENUE OF THE
PROCEEDINGS
- The Claimant
lives in Tunbridge Wells in Kent and the Defendant is in practice in Ilford,
Essex. The Defendant asserts that there was no justification for the Claimant
to consult solicitors in Nantwich. They suggest that the proceedings should
have been brought in Tunbridge Wells County Court. The Part 8 proceedings were
issued in Crewe County Court and the Claimants' Solicitors accepted that, had
it been necessary to start substantive proceedings, those too would have been
commenced in Crewe County Court. In those cases where substantive proceedings
are necessary I was told that Crewe County Court frequently transferred cases
of its own initiative to either the Claimant's home court or to the
Defendant's home court. In other cases the Defendant applied for transfer
which was invariably granted. In any event the court would arrange for the
hearing to take place at the venue which was most convenient for the parties
and their witnesses. It was not disputed by the Claimant's Solicitors that the
issuing of proceedings in Crewe County Court was anything other than a matter
of their own convenience.
- Dealing with the
question of the Claimant instructing distant solicitors, the test to be
applied is that laid down in Wraith v Sheffield Forgemasters Ltd [1998] 1 WLR
132 CA. Lord Justice Kennedy quoted the judgment of Potter J in the lower
court ([1996] 1 WLR 617 at 624-625):
"in
relation to the first question "were the costs reasonably incurred?" it is in
principle open to the paying party on a taxation of costs on the standard
basis to contend that the successful party's costs have not been "reasonably
incurred" to the extent that they have been augmented by employment of a
solicitor who, by reason of his calibre, normal area of practice, status or
location, amounts to an unsuitable or "luxury" choice, made on grounds other
than grounds which would be taken into account by an ordinary reasonable
litigant concerned to obtain skilful, competent and efficient representation
in the type of litigation concerned ... However, in deciding whether such an
objection is sustainable in practice, the focus is primarily upon the
reasonable interests of the plaintiff in the litigation so that, in relation
to broad categories of costs, such as those generated by the decision of a
plaintiff to employ a particular status or type of solicitor or counsel, or
one located in a particular area, one looks to see whether, having regard to
the extent and the importance of the litigation to a reasonably minded
plaintiff, a reasonable choice or decision has been made. If satisfied that
the choice or decision was reasonable, it is the second question "what is a
reasonable amount to be allowed?" which imports consideration of the
appropriate fee for a solicitor or counsel of the status and type retained. If
not satisfied that the choice or decision was reasonable then the question
"reasonable amount" will fall to be assessed on the notional basis of the
costs reasonably to be allowed in respect of a solicitor or counsel of the
status or type which should have been retained. In either case, solicitors'
hourly rates will be assessed, not on the basis of the solicitor's actual
charging rates, but (in a case where the decision to retain was reasonable) on
the basis of the broad costs of litigation in the area of the solicitor
retained or (in a case where the choice made was not reasonable) of the type
or class of solicitor who ought to have been retained."
- Lord Justice
Kennedy stated:
"That in my judgment is right."
He
did however take issue with the way in which the principle was applied to the
particular facts of Wraith.
- Lord Justice May
in Sullivan v the Co-operative Insurance Society [1999] 2 Costs LR 158 CA
stated (at page 165):
"Thus in determining whether it is objectively reasonable to instruct
lawyers who may be said to be out of the way or a luxury the court takes
account of and balances a wide range of relevant circumstances. The fact that
a union or other organisation no doubt for understandable reasons habitually
uses a particular firm of solicitors is a relevant factor but of limited
relevance on taxation in an individual case. Litigants are entitled to engage
any lawyer they choose, and from a subjective point of view the choice may be
entirely reasonable, but the question is to be judged objectively. The fact
that a case has no obvious connection with London is a relevant factor, the
more so if the case does not require expertise only to be found
there."
- May LJ went on
to explain that the factors proper to the consideration had not been given
proper weight in the court below (page 166):
"Firstly although the Judge undoubtedly had well in mind that this was
a Manchester case with no obvious connection with London, this does not
feature in the balance of the stated reasons. In the light of Kennedy LJ's
judgment in Wraith, this is an important consideration. Secondly, I consider
that the Judge's reasons substantially overstate the scope and difficulty of
this case. This is not to diminish in any way the importance of the case to
the plaintiff himself. All cases are of the greatest importance indeed to
those involved in them. In particular this case concerned Mr Sullivan's health
and the future prognosis of a serious condition. However in objective terms
this was an asbestosis case without extraordinary legal complication and
similar with the regrettably large number of similar cases with which the
legal profession and the courts are unfortunately all too familiar. It had no
special feature or unusual complication. Thirdly, I consider that the Judge's
reasons substantially understate, by clear inference, the availability of
fully competent legal practitioners in the Manchester area. There is no doubt
whatever that there are in the Manchester area plenty of legal practitioners
fully able and qualified to conduct litigation of this kind with full
competence. There are in Manchester, and many other centres outside London,
many such practitioners who conduct cases of this kind and cases of
substantially greater weight and complexity every day of their working lives.
The shadowy possibility that this might be regarded as something of a test
case would not seem to me to diminish the availability of Manchester lawyers
to deal with it. In addition, it seems that it was, in so far as it may have
been a test case, a test case for the Manchester area. It is of some, but, in
my view, of limited significance that medical experts may generally be found
in London. That would not, however give the case a connection with
London."
- As stated by May
LJ it is of course open to the Claimant to instruct whichever solicitors she
chooses. I was told that the Claimant sought the comfort of having specialist
practitioners dealing with her case. The question which I have to decide is:
what reasonable and proportionate costs should the Defendant have to pay?
There may well be cases of dental negligence in which there would be no doubt
that it would be reasonable (as between the parties) to instruct a distant
specialist practice. I do not however regard this as a case in which it is
reasonable to instruct specialist solicitors, although the Claimant's
Solicitors argued to the contrary, and I will deal with those arguments in due
course.
- Having said
that, one has to have regard to the place where the work was actually carried
out, ie Nantwich. The Claimant's Solicitors claim for a grade 1 fee earner, Mr
Corless-Smith, at the rate of £180 per hour plus a 50% success fee. Leaving
aside for the moment the argument as to the appropriate grade of fee earner,
the guideline rate for the Chester area, which covers Nantwich, for grade 1
fee earners is £110 to £140. The rate for the Maidstone area, which covers
Tunbridge Wells, is £150. It is clear therefore that the Nantwich rate is
actually lower than the Tunbridge Wells rate and, following Re Ajanaku (28
October 1991 Eastham J, unreported. See Butterworths Costs Service N141
(extract)), it is appropriate to allow the rate for the area where the work
was done.
B.
THE GRADE OF FEE EARNER
- Mr
Corless-Smith, although admitted as a solicitor only in March 1998, had prior
to that qualified as a dentist and had practised at the Bar for two years
(1992 call). He had then worked as a non-practising barrister for 18 months
and I am satisfied, taking all that experience into account, that it is
appropriate to treat him as a grade 1 fee earner for the purpose of this
exercise.
- It is argued by
the Defendant that this case did not warrant a grade 1 fee earner. The
accident sustained by the Claimant, it is said, does not require a specialised
firm. It was a clear and straightforward negligence claim of the type
routinely dealt with by grade 2 fee earners especially legal executives.
- It was argued by
Mr Corless-Smith that this argument ran contrary to a submission made by the
Defendant to the District Judge in Crewe, to the effect that this was a
clinical negligence claim warranting transfer to London. I do not think
anything turns on this point. The facts of this case are extremely simple and
straightforward and do not of themselves warrant instructing a distant
specialist practice. As I have said, the rates in Nantwich are lower than
those in Tunbridge Wells and to that extent there is therefore a saving to the
Defendant. Had the case gone further and involved travelling expenses to
conferences and the like, those expenses might not have been recoverable. On
the facts of the present case however there appears to be a positive benefit
to the Defendant in the Claimant instructing solicitors in Nantwich.
- The Claimant's
Solicitors put this case as a clinical negligence case of moderate complexity.
I do not accept that submission. It is possible that it could have become more
complicated had some allegation of contributory negligence been made, or had
the Defendant denied any fault on his part, but this never happened. The
Claimant's submission that the Defendant had instructed a partner in this case
and always used grade 1 fee earners in clinical negligence cases does not in
fact assist. The instruction of Mr Bassani was brought about because of the
difficulties which have arisen with the costs only proceedings and is nothing
to do with the actual claim. Had a substantive action been commenced it may
well be that the Defendant would have instructed a grade 1 fee earner to take
overall responsibility but that is not the situation here.
- Mr Corless-Smith
drew my attention to the provisions of CPR 44.5 and suggested that the
guideline rates were a starting point only, even though they incorporate a
basic charging rate and uplift (a notional 50%). Mr Corless-Smith submitted
that, although the claim was relatively low value, it was a claim of
importance to both the Claimant and the Defendant because it involved
professional negligence. The Claimant was an elderly lady of 75 years who had
been traumatised and very upset. It was submitted that the case was complex
because there were liability issues: liability had not been admitted; there
were issues of foreseeability; and as to the precautions which were or were
not taken by the Defendant. It was also suggested that there might be an
allegation of contributory negligence by the Claimant in that she moved her
head suddenly.
- It was submitted
that had the Claimant consulted any other solicitors they would have
instructed an independent expert at this stage with inevitable further expense
and delay. It was also said that the claim was difficult to quantify because
there is a dearth of reported cases of low value damages. It was submitted
that any other firm would have instructed counsel to advise on quantum.
- Having
considered the facts of the case as known to the Claimant's Solicitors at the
time they were dealing with it, I do not accept any of these submissions. The
facts were simple and straightforward, the Claimant was not severely damaged.
The solicitors put a value of £2,000 on the claim at the outset, which in my
view any competent litigator would have been able to do. The instruction of
experts or counsel at this stage would not have been reasonable. The liability
issues never actually crystallised and did not warrant more than the
recognition that these issues might arise.
- Taking these
factors into account I am of the view that this is a case which should be
treated as being suitable for a grade 2 fee earner. On that basis I allow £110
per hour as opposed to the £180 per hour claimed.
C.
THE SUCCESS FEE
- When I heard
this matter the judgment of the Court of Appeal in Callery v Gray was still
awaited and the parties agreed with my suggestion that they should put in
written submissions once the judgment had been handed down. The judgment of
the Court of Appeal relating to success fees is dated 17 July 2001 and on 8
August I received written submissions from both parties. The Lord Chief
Justice giving the judgment of the court on what was termed "the
reasonableness issue" said this:
"There has not yet been any authoritative guidance from the higher
courts as to the level of success fee which would be considered reasonable on
an assessment of costs in litigation supported by a CFA ...
102. It should be recognised that any general guidance that we provide
is given in the context of the type of claims which are the subject of this
appeal, that is to say, modest and straightforward claims for compensation for
personal injuries resulting from traffic accidents ...
103. There is some statistical support for a success rate in respect of
claims of the type with which we are concerned of up to 98%. However, at this
stage of the court's experience of funding arrangements it is not possible to
be precise as to what is the correct percentage. We do not consider that it
can ever be said that a case is without risk. In this category of litigation,
the prospects of some success on liability is increased because of the ability
of a court to make a reduced award on account of contributory negligence. It
is, however, impossible to foresee all the circumstances in which a
straightforward claim can become one with a material degree of risk. In the
case of a claim by a passenger, for example, the risk will be small. However,
the fact that a Claimant contends that his or her driving was perfect whilst
that of the proposed Defendant was atrocious provides no guarantee that, if
the case is contested, this is what the Judge will decide. In the
circumstances we think that it is reasonable to proceed on the premise that at
least 90% of such claims will settle without the need for proceedings, or will
succeed after proceedings have been commenced.
104. After careful consideration and having reflected on the reasoning
in the judgments below in the two appeals, we have concluded that, where a CFA
is agreed at the outset in such cases, 20% is the maximum uplift that can
reasonably be agreed. In reaching this conclusion, we have been particularly
assisted by the reasoning placed before us by APIL. We wish to emphasise two
matters in respect of this conclusion. The first is that it assumes that there
is no special feature that raises apprehension that the claim may not prove to
be sound. Where there is such a feature, the appropriate uplift will be
higher, but it may not be reasonable to attempt to assess that uplift until
further information about the defendant's response is to hand.
105. The second matter is that our conclusion is based on very limited
data. In particular, it is too early to see what effect the new costs regime
is having on the rate of settlements, and this judgment may itself affect that
rate. It will be desirable to review our conclusion once sufficient data is
available to enable a fully informed assessment of the position."
- The court went
on to deal with the possibility of a two stage success fee and although this
particular case is not concerned with such a success fee I include the remarks
of the Court of Appeal on this subject because this judgment may affect a
number of other cases. The Court of Appeal said this:
"106. In concluding this portion of our judgment, we wish to draw
attention to an alternative type of success fee, which we consider that it is
open to the solicitor and the client to agree at the outset of proceedings. We
can describe this as a "two-stage" success fee.
107. A success fee can be agreed which assumes the case will not
settle, at least until after the end of the protocol period, if at all, but
which is subject to a rebate if it does in fact settle before the end of that
period. Thus, by way of example, the uplift might be agreed at 100%, subject
to a reduction to 5% should the claim settle before the end of the protocol
period.
108. The logic behind a two-stage success fee is that, in calculating
the success fee it can properly be assumed that if, notwithstanding the
compliance with the protocol the other party is not prepared to settle, or not
prepared to settle upon reasonable terms there is a serious defence. By the
end of the protocol period, both parties should have decided upon their
positions. If they are prepared to settle, they should make an offer setting
out their position clearly and providing the level of costs protection which
they determine is appropriate.
109. A further advantage of a two-stage success fee would be the
knowledge that if a claim was not settled, the full success fee would be
payable. This knowledge would encourage rigorous consideration of the merits
of the claim during the protocol period and therefore accord with the intent
of the CPR.
110. If a claim is settled before the end of the protocol period, it
would be reasonable that there should still be a success fee payable
since:
i)
the lawyers are entitled to be compensated for accepting a retainer on a
no-fee-no-win basis with the inevitable risk that this involves, however small
this risk may appear in many cases.
ii)
An appropriate success fee would contribute towards those cases where no fees
are payable because they end unsuccessfully.
111. A two-stage success fee would have the advantage that the uplift
would more nearly reflect the risks of the individual case, so that where a
claimant's solicitor had to pursue legal proceedings, this would be in the
knowledge that, although a significant risk of failure existed, the reward of
success would be that much the greater. Where, on the other hand, the claim
settled as a consequence of an offer by the defendant, he or his insurer would
have the satisfaction of knowing that he had ensured that the success fee
would be reduced to a modest proportion of the costs.
112. We have considered the risk that a two-stage success fee would
encourage claimant's solicitors to take claims past the protocol stage in
order to benefit from the higher uplift. Such conduct would, however, be
prevented by a defendant who was prepared to settle by making a formal
settlement offer, putting the claimant at risk as to costs.
...
...
115. A two-stage success fee of the type we propose, agreed at the
outset, would be likely to be agreed before the merits of the individual claim
were apparent. Thus, the uplift would be unlikely to reflect precisely the
likelihood of failure of any individual claim that did not settle. The
determination of the reasonable figures for the full uplift and the rebated
uplift would have to be based on overall claims experience with the proportion
of contested cases which succeed, and the costs earned from such cases being
particularly significant. While the exercise involved in determining a
reasonable two-stage fee would be more complex, we suggest that, once the
necessary data is available, consideration will need to be given to the
question whether where fees are agreed at the outset, the requirement to act
reasonably mandates the agreement of a two-stage success fee."
- Although the
Claimants solicitors in this case did not have the benefit of the Court of
Appeal judgment at the time they were instructed by their client, it is clear
from that judgment that in future, the requirement to act reasonably will mean
that, the solicitors will have to consider using a two-stage success
fee.
The
Claimants Submissions
- The Claimant's
solicitors seek a success fee of 50%. The statement of reasons for the success
fee in the conditional fee agreement is as follows:
"The Success Fee
The
success fee is set at 50% of basic charges and cannot be more than 100% of the
basic charges.
The
percentage reflects the following:
(a)
The fact that if you win we will not be paid our basic charges until the end
of the claim;
(b)
our arrangements with you about paying disbursements;
(c)
the fact that if you lose we will not earn anything;
(d)
our assessment of the risks of your case.
These include the following:
Liability issues
(i)
the raising of an issue of contributory negligence, namely whether you
precipitated the mishap by moving suddenly;
(ii) the raising of a defence that Mr Freedman either attempted to
apply a rubber dam or attempted to use an instrument suitably attached to his
finger or alternatively considered that the use of rubber dam or other means
of protecting the airway were impossible.
(e)
any other appropriate matters.
The
matters set out at paragraphs (a) and (b) above together make up 0 % of the
increase on basic charges. Matters at paragraphs (c), (d) [and (e)] make up
100% of the increase on basic charges. So the total success fee is 50% as
stated above."
- The Claimant's
solicitors in assessing the risks identified two potential defences to the
allegation of negligence, namely the issues identified at paragraph (d)(i)
& (ii) in the conditional fee agreement quoted above. Mr Corless-Smith
points out that the Defendant's insurers did assert that the Claimant had
moved her head suddenly in their letter of 2 October 2000 (the letter in which
an offer of £1,000 damages was made). He also submits that at no time was
liability ever admitted, and the fact that the claim settled within the
protocol period is not a factor which can be taken into account in considering
the reasonableness of the risk assessment.
- Just as the
Court of Appeal had no evidence of success rates upon which to base its
decision, neither have I. In this regard Mr Corless-Smith states that clinical
negligence is generally acknowledged as carrying a higher level of litigation
risk compared to non clinical negligence personal injury litigation. He
identifies three features which add to this higher risk: (1) professional
judgments are less certain in the field of medicine and dentistry than in
other fields; (2) defences are more rigorously pursued by medical defence
organisations; (3) the costs of investigating clinical negligence claims can
be extremely high as liability, causation and quantum issues are usually
complicated and expert evidence is required in support of such issues.
- Whist I accepted
that these matters are factors which can contribute to higher risks in
litigation, none of them appear to apply in this particular case, the facts of
which were straightforward.
- Mr Corless-Smith
states in his written submission:
"Statistics on the success rate of clinical negligence actions are
scant but are generally acknowledged to be in the region of 50% compared to
the accepted 90% of personal injury cases. Therefore the ratio of winning to
losing cases will be 1:1 for clinical negligence actions compared to 9:1 for
personal injury actions making the risk of losing a clinical negligence case 9
times greater than losing a personal injury case. The costs of losing a
clinical negligence action are also significantly greater than losing a
personal injury action particularly in terms of disbursements."
- No source is
given for the figures relied on by Mr Corless-Smith but judicial notice can be
taken of the fact that, of clinical negligence cases which go to trial, the
success rate is modest and it may well be that, viewed across the whole
spectrum of clinical negligence cases, the success rate is 50%. I have
insufficient data to make such a funding. Mr Corless-Smith argues that the
success fee should be assessed by reference to the risk of losing the case and
to reflect the claims experience of this category of litigation and compensate
for those cases which lose and yield no fees. He also points out that dental
negligence claims have a further risk factor in that they tend to be of modest
quantum and are particularly vulnerable to the costs risks imposed by Part 36
offers.
The
Defendant's Submissions
- Mr Bassani on
behalf of the Defendant asserts that liability was never in dispute and he
points out that settlement was achieved within a week of the first substantive
open correspondence detailing the alleged negligence ie. the failure to
safeguard the patient's airway. The initial letter of claim of 7 September
2000 contained a Claimant's offer and was written on a without prejudice
basis. Mr Bassani takes the point that the Claimant had not provided the
information about funding arrangements required by CPR 44.3B(1)(c). Given that
no proceedings were commenced that rule does not apply. The Practice Direction
relating to Pre Action Protocols does however apply as follows:
"Information about Funding Arrangements
4A.1 Where a person enters a funding arrangement within the meaning of
rule 43.2(1)(k) he should inform other potential parties to the claim that he
has done so.
4A.2 Paragraph 4A.1 applies to all proceedings where the proceedings to
which a pre action protocol applies or otherwise.
(Rule 44.3B(1)(c) provides that a party may not recover any additional
liability for any period in the proceedings during which he failed to provide
information about a funding arrangement in accordance with a rule, practice
direction or court order).
- The Claimant's
solicitors stated in their letter of 7 September 2000:
"... we put you on notice that our client's claim is funded by way of a
conditional fee agreement."
It
does appear that the Claimant's solicitors have therefore complied with the
Protocol Practice Direction. For the future it would be helpful if the Form of
Notice of Funding were used.
- In relation to
the two potential liability issues identified by the Claimant's solicitors in
the CFA, the success fee was set at 50% before any issue was raised as to any
possible defence of the claim and before any investigation had been made of
the dental notes. Mr Bassani points out that protection of the patient's
airway is one of the most fundamental principles of dentistry. He suggests
that the Claimant's solicitor, being a former dentist, would have been aware
that allowing a dental instrument to be swallowed during treatment was
unlikely to be defensible.
- Whilst Mr
Bassani acknowledges that clinical negligence claims are generally afforded
special treatment, given what are often complex issues of negligence and
causation, he puts this claim at the very lowest end of the spectrum of
complexity with no special features which could have raised an apprehension
that the claim may have proved not to be sound. He suggests that this was "a
modest and straightforward claim for compensation".
- Mr Bassani
suggests that a reasonable success fee in relation to a CFA entered into at
the outset should have been limited to 20%. Mr Corless-Smith had referred to
an open letter of 30 November 2000 in which the Defendant had made an offer in
respect of the success fee of 30%, that offer was subsequently withdrawn and
at the hearing of the assessment on 12 July the Defendant (without having seen
the Callery judgment) put forward an offer of 10%. Having considered the
judgment Mr Bassani now submits that the success fee should be no more than
20%.
Conclusion
- In arriving at
the figure of 20% in the case of straightforward road traffic accidents, the
Court of Appeal was influenced by figures put forward by APIL which
demonstrated that even where there was a high level of success it was
necessary to recover success fees of 20% or above in order to break even.
Bearing in mind that the Court of Appeal decision was specifically limited to
straightforward claims in road traffic accident cases and the terms in which
it is couched, it can form no more than a starting point for deciding the
appropriate success fee in this case.
- Paragraph 11.7
of the Costs Practice Direction provides:
"Subject to paragraph 17.8(2), when the court is considering the
factors to be taken into account in assessing an additional liability, it will
have regard to the facts and circumstances as they reasonably appeared to the
solicitor or counsel when the funding arrangement was entered into and at the
time of any variation of the agreement."
- Paragraph
17.8(2) provides:
"In
cases in which an additional liability is claimed the Costs Judge or District
Judge should have regard to the time when and the extent to which the claim
has been settled and to the fact that the claim has been settled without the
need to commence proceedings."
- The combined
effect of these two paragraphs is to prevent the costs officer from using
hindsight in arriving at the appropriate success fee, and to prevent excessive
claims for success fees in cases which settle without the need for proceedings
when it was clear, or ought to have been clear from the outset, that the risk
of having to commence proceedings was minimal.
- Taking all these
matters into account and bearing in mind that this is a claim at the lowest
level of complexity, I am of the view that in the light of the solicitor's
knowledge on 23 August 2000 when the CFA was entered into, the appropriate
success fee in this case is 20%.
- To sum up
therefore:
A.
Although it is open to the Claimant to instruct solicitors in Nantwich, the
test in Wraith is not met, but on the particular facts of this case the
instruction of distant solicitors resulted in a saving to the Defendant in
relation to the conduct of the claim itself, but it has also led to additional
cost in relation to the costs only proceedings, a matter which will have to be
addressed when the costs of those proceedings are dealt with. The commencement
of proceedings in Crewe County Court was purely for the benefit of the
Claimant's Solicitors. It appears that had substantive proceedings been issued
the court would, either on its own initiative or on application, have made an
appropriate order for transfer.
B.
On the particular facts of this case the appropriate grade of fee earner is
grade 2.
C.
For the reasons given at paragraphs 28 to 46, I allow a success fee of
20%.
SPECIFIC ITEMS
- I turn now to
deal with the specific items in the bill.
In-coming correspondence:
- The Claimant's
solicitors conceded that they were not entitled to an additional charge in
respect of these items which I have therefore deleted.
Correspondence: obtaining x-rays
- I have seen the
correspondence in question and am satisfied that it is reasonable.
Documents:
- The Defendant
challenges the 6½ hours claimed under this head and puts forward a figure of 3
¾ hours. Having considered the time spent and the work done I have reduced the
time allowed to 5 hours.
The
Success Fee
- The level of
success fee is reduced to 20% in accordance with the decision which I have set
out above (paragraphs 28 – 46).
Costs of Detailed Assessment
- I will hear
further argument from the parties on the subject of costs of detailed
assessment.
COSTS ONLY PROCEDURE
- I have been
asked if I could give general guidance in relation to costs only proceedings.
The procedure is entirely new and appears to have given rise to considerable
confusion. The procedure is dealt with in rule 44.12A and in the Costs
Practice Direction at Section 17.
- Rule 44.12A was
introduced with effect from 3 July 2000 to provide a procedure enabling
parties who have settled the substantive dispute between them to resolve any
outstanding question relating to costs. The new procedure appears to be being
misused by both claimants and defendants in breach of the overriding
objective. This misuse has given rise to difficulties for District
Judges.
- It appears that
some solicitors acting on behalf of claimants, having settled the amount of
damages, are saying to defendants' insurers: "Our costs are £x and if this
figure is not agreed/paid within 14 days costs only proceedings will be
commenced". Defendants' representatives for their part make unreasonably low
offers in respect of pre-proceedings costs and in some cases accompany the
offer with a statement that the offer is made for the purpose of negotiation
only and that they do not agree to the matter being resolved by use of the
costs only procedure.
- If a claimant is
forced to commence proceedings under Part 7, rather than costs only
proceedings under Part 8, defendants will find themselves having to pay, not
only the reasonable and proportionate costs of the claim itself, but also the
costs of the Part 7 proceedings and any related assessment proceedings. If the
defendant has acted unreasonably in compelling the comencement of Part 7
proceedings, the court will consider making an order for costs on the
indemnity basis.
- Two distinct
steps are required: firstly the Part 8 application seeking an order for costs;
and secondly detailed assessment of those costs. The intention is that the
proceedings should be brought with the consent of both parties as a simple and
convenient means of resolving the dispute over costs. The prescribed court fee
of £30 reflects this. If the acknowledgment of service indicates that the
application is not opposed the court may make an order for costs without a
hearing. Paragraph 17.9 sets out the circumstances in which the court may
dismiss the application without a hearing.
- The procedure
under rule 44.12A is intended to be cheap and straightforward. The steps are
as follows:
