- On 26 August
2000, the Saturday before the late summer Bank Holiday, Mary Abrew, a
pensioner in her mid 60’s living in Thornton Heath, was shopping in the
Thornton Heath Branch of Tesco, when, in aisle 23, she slipped on some dried
spaghetti, which had apparently been spilt onto the floor near the shelves
which she was approaching. She was helped to her feet by an employee of the
Defendants, and taken by that employee to the first aid room, where she was
treated with the utmost courtesy, and, I am informed, the incident was entered
in the incident book in her presence. She was not however able to see her GP
until the following Tuesday, because of the intervention of the Bank Holiday.
To quote from a medical report prepared in October 2001:
"Immediately following the accident, Mrs Abrew was in considerable
discomfort relating to her shoulder, hip and ankle …
The
pain Mrs Abrew experienced was situated over her right shoulder, right hip and
right ankle. The right shoulder pain was situated over the top and side of her
shoulder. It was extremely painful for Mrs Abrew to move her right arm over
the first two to three weeks following the accident and it was impossible for
her to undertake any lifting, carrying or stretching of her right arm.
Symptoms gradually improved over the subsequent months, but residual symptoms
have continued through to the present time. No paresthesia or neck problems
have been reported.
In
regard to her right hip, Mrs Abrew reports that she suffered a significant
bruise over her right hip, which was present for a period of 2 weeks. During
this time it was uncomfortable for her to sit on her right side, lie on her
right side, walking and climbing stairs was also uncomfortable. These symptoms
took a period of 1 month before resolving.
In
regard to her ankle, this was swollen and painful over the first 2 to 4 weeks
following the accident and thereafter, a progressive recovery occurred, such
that she was able to walk with ease by 2 months following the
accident."
- According to the
Claimant’s Solicitors’ files she first contacted her solicitors, Messrs Howe
& Co, on 6 September 2000. Mr Howe arranged for her to enter into a CFA
and took out insurance on her behalf. The CFA had a success fee of 100% and
the insurance premium paid to Temple was £790 plus £39.50 making a total of
£829.50 for cover of £100,000.
- Thereafter the
Claimant’s Solicitors entered into correspondence with the Defendants, who,
admittedly 12 days outside the protocol period, stated that liability would
not be in issue. Subsequently, Howe & Co were able to negotiate a
settlement with the Defendants’ Solicitors, Messrs Morgan Cole, whereby the
Claimant was paid £3,500 by way of agreed damages.
THE PART 8
PROCEEDINGS
- As costs could
not be agreed, Messrs Howe & Co started Part 8 proceedings in respect of
the costs only in Central London County Court, but that court transferred
those proceedings to this office, where they were balloted to, and heard by,
Costs Officer Worthy. Amongst the wealth of material that had been supplied
within this appeal is a transcript of the hearing before Mr Worthy. Save for
one of the three issues on this appeal it seems to me that, interesting though
it is to peruse that transcript, the arguments and conclusions reached by the
Costs Officer are not particularly relevant, since it is accepted by both
sides that the appeal to me is by way of rehearing, and it is therefore for me
to decide on the appropriate figures or percentages based on the material put
to me. However, that is subject to the point made by Mr Ben Williams, Counsel
for the Claimant at the hearing on 17 April, who objected to Mr Herlihy, the
costs draftsman who represented the Defendants, putting in evidence which was
not before the Costs Officer, and without prior permission being granted. I
upheld that objection and refused to entertain evidence, direct or indirect,
that was not before the Costs Officer.
- The Claimant’s
Solicitors’ bill was for £8,882, which might be thought to be disproportionate
in relation to a recovery of only £3,500, but, as the Costs Officer pointed
out in the reasons of his decision, a large proportion of that was accounted
for by the 100% success fee claimed, and the £790 insurance premium paid. In
the event the costs were reduced to £4,862.47, only some 54% of the costs as
claimed. As there had been an offer which was beaten the Claimant was awarded
her costs of the Part 8 proceedings, and it transpired, rather late in the
hearing before me, that the argument about proportionality related not to the
overall level of costs, but rather simply to the costs allowed by the Costs
Officer in respect of the Part 8 proceedings.
THE DEFENDANTS’
APPEAL
- The Defendants
appeal to me on three matters, namely:
- the level of
the insurance premium;
- the success
fee;
- proportionality in respect of the costs of the detailed
assessment.
THE INSURANCE
PREMIUM
- It appears from
the transcript of the evidence that Mr Howe, the senior partner of the
Claimants’ Solicitors, had delegated power to fix the level of cover which was
to be obtained under the AEI policy. There is some doubt as to whether he also
fixed the level of the actual premium itself, and unfortunately there is no
witness statement from Mr Howe, who was on holiday at the time of the hearing
before me, and therefore unable to assist on this relatively simple
point.
- It is however
common ground that the cover effected was £100,000. Mr Herlihy suggested that
this was far more than was necessary, and must therefore have had an effect on
the premium.
- Mr Williams
however suggested that the effect would not be as great as might be suggested,
and in that connection he referred me to Master O’Hare’s Report, annexed to
Callery v Gray (No.2) [2001] 1 WLR 2142 (CA). I was referred to
paragraphs 35 and 36 of that report, which read as follows:
"35. Several ATE providers identify four main elements in the
calculation for premium: the burning cost, the risk/profit costs, the
administrative costs and the distribution commission.
36.
The burning cost is the frequency of loss (ie, the percentage of policies in
which a claim is made) multiplied by the average cost of each claim. If the
frequencies of loss is 10% and the average of each claim is £3,000, the
burning cost in each case is £300. These figures are given for illustration
only they are not intended to represent real figures. Their inclusion in my
draft report caused one interested party to describe them as overly optimistic
and another interested party to say that in its opinion the real figures are
30% and £2,000 (ie a burning cost of £400). £400 exceeds the cost of several
total premiums quoted to me."
- The relevance,
and the only relevance, of that paragraph is it was suggested to me that even
if the cover to be effected by Mr Howe was reduced to say £25,000, it would
not make very much difference to the premium payable.
- It is perhaps
however interesting to note how Mr Worthy approached the problem, and this is
his summary of how he arrived at the figure of £600 which he allowed:
"The insurance premium
This was £790 for a policy issued by Temple Legal Protection giving
cover up to £100,000. Mr Howe told me he had considered a number of policies
and thought this was the best. While I would accept £100,000 would more than
cover most PI cases where quantum is relatively small and may be lower than
comparable policy premiums it is well above the premium of Claims Direct of
£621.13. With quantum under £10,000 at most, cover of £100,000 is
unnecessarily high. Callery v Gray which related to a road traffic case
indicates a premium of £350 is appropriate. Claims Direct indicates £621.13. I
think the difference lies in a likelihood in small RTA cases issues are
usually fairly clear cut whereas in this case, a slightly unusual slipping
accident which occurred, as I was told, in a well run supermarket with proper
safeguards the premium should reflect the degree of protection and certainty.
On the basis simply of estimation between £719 and £350 I will split the
difference, eg £440 divided by 2 equals £220 plus £350 equals £570. Say £600
which is close to Claims Direct figure. To this must be added insurance
premium tax. I do not think that one can be more specific without greater
knowledge of AEI market premiums."
- It seems to me
that the key to this issue, and indeed to the second issue, lies in the date
when this insurance policy was effected and the premium paid. It was October
2000. CFAs with a success fee had only been in force for six months, and
neither Callery v Gray, Halloran v Delaney, nor Claims
Direct had been decided. The market, I was told by Mr Herlihy, was very
competitive and much lower premiums were available at that time. However, as
is well known, these rates appear now to have been too competitive, because
one at least of the companies effecting the cover has gone out of business,
finding that the level of premiums was simply too low for the business to be
viable.
- However the
point is that what I have to decide is what was the appropriate level for Mr
Howe to fix the premium (assuming as I do that he was the person who did it,
as opposed to Temple) at the time that he made his decision when there was
little, if any, authority, and he would therefore have to rely on market
research.
- Mr Worthy’s
summary suggests that Mr Howe had researched other policies, but there was
certainly no evidence of that in the file that was lodged with me, though it
is fair to say that that file was by no means complete, as it did not include
counsel’s opinion nor, unfortunately, did it include the marked copy of the
bill as assessed by the Costs Officer.
- With respect to
Mr Worthy I think he approached the matter in an over elaborate way.
Focussing, as I think is the appropriate approach, on what was known to Mr
Howe at the time, this was not as completely straightforward a case as was
Callery v Gray or Sarwar v Alam involving passengers in RTA
cases.
- There was some
risk that the Claimant would not succeed, though, as I analyse it in respect
of the next head of appeal, I do not think this was a very great risk. I do
think however it was sufficiently high to justify a slightly higher premium
than the standard policy of £250 or £350 suggested in some of the cases that
have subsequently found their way into the Law Reports. I think too that Mr
Howe did take out too much cover, and I am far from convinced that, unlike the
insurance industry, he took into account "the burning cost". I believe that in
those days, and possibly even today, most solicitors assess the risk and
calculate the premium (if they do that as well) on a case by case basis
without applying the insurance principles of the fact that not every case will
be won. There is certainly no evidence in this file that Mr Howe considered
this case in relation to any other cases that his firm might be carrying and
which they might lose.
- I conclude
therefore that the appropriate level of premium for Mr Howe to have paid or
fixed was £400, and to that extent I allow the Defendants’ appeal on this
head.
SUCCESS
FEE
- As Mr Williams
pointed out, the level of the insurance premium and the success fee are
closely bound up with each other, and it is interesting to note that the 100%
success fee claimed by Mr Howe was allowed at 50% by Mr Worthy, and there has
been no cross appeal against that finding.
- I consider that
this accurately reflects the reality of this case. I was referred to the case
of Ward v Tesco Stores Ltd, decided by the Court of Appeal in 1975 and
reported at [1976] 1 WLR 810. In that case the claimant slipped on some
yoghurt in the defendants’ supermarket in Liverpool. Unlike this case there
were no eye witnesses, and no evidence one way or the other on negligence,
apart from the fact that yoghurt should not be left lying on the floor after a
spillage. However there was evidence that some three weeks after the accident
the claimant/plaintiff went back to the same supermarket and found some orange
juice spilt on the floor, and watched and noted that it was a good 15 to 20
minutes before it was cleared up. On the basis of the totality of the evidence
the Judge in the court below had held that the claimant had made out a prima
facie case of negligence, was entitled to damages therefor, and by a majority
the Court of Appeal dismissed the defendant’s appeal. Thus, Mr Herlihy said,
this meant that effectively the burden of proof in the slipping case
transferred to the supermarket once the evidence of slipping was established.
On that basis a success fee of anything approaching 50%, let alone 100%, was
far too high.
- Again I was
referred to the level of success fees allowed in Callery v Gray, Sarwar v
Alam, Halloran v Delaney and Pirie v Ayling. It was suggested that
all these pointed to a success fee of no higher than 20%, the percentage which
Mr Herlihy was prepared to concede, though in fact he did say that he thought
the success fee should be lower following the decision in the Court of Appeal
decision of Halloran v Delaney.
- However, as I
have already indicated, none of the cases that I have cited had been decided
by the courts, or reported, at the time when Mr Howe was fixing the success
fee. It was said by Mr Williams that he was faced with a client who told him
that she had slipped, there was some supporting evidence, but it was by no
means certain that the Defendants would not have been able to put up a good
defence, on the basis that they regularly cleaned the floor, and therefore
discharged the burden of proof suggested in Ward v Tesco Stores Ltd.
Thus, he said, this case could not be equated with the cases cited above, all
of which were minor RTA type cases, or even with the Bensusan case
where the Senior Costs Judge allowed 20% in respect of a dental patient who
swallowed dental equipment accidentally dropped down her throat by the
dentist.
- I believe there
is a serious danger of trying retrospectively to apply decisions of Higher
Courts in relation to insurance premiums and success fees to situations to
which they are not appropriate. I have little doubt that if Mrs Abrew walked
into the offices of Howe & Co today then a very different exercise would
be conducted, especially in respect of the insurance premium and the success
fee, but what I have got to decide is what was a reasonable success fee for Mr
Howe to fix in October 2000.
- Mr Herlihy also
referred me to what he stated as the very unsatisfactory and sketchy nature of
the risk assessment, which was only disclosed to him the night before the
original hearing before Costs Officer Worthy. I have seen that document, and
it is indeed quite short, and is to be contrasted with the case which was
drawn to my attention by Mr Herlihy, namely Chalk v High Tower and
Praetorian Housing Association. This was a decision of District Judge
Presod at Cambridge County Court last October, and is to be found in APIL,
Volume 12, Issue 6. The Judge is reported as saying:
"In
this case I am assisted by the detailed risk assessment carried out by the
claimant’s solicitors. There has been considerable thought put into the risk
assessment process and the risk assessment document produced by the claimants
to his solicitors was impressive and well thought out."
- I however agree
with Mr Williams that that case is of no assistance to me, because I have to
come to a conclusion on the basis of the material before me. I also think Mr
Herlihy underestimates the difficulties that would be encountered by a busy
solicitor such as Mr Howe if he had to go into great detail in every single
case.
- The Costs
Officer concluded that a 50% success fee was appropriate. His summary
reads:
"Maybe 30% is reasonable but on the basis of the facts and
circumstances as they reasonably appeared to Messrs Howe & Co at the time
50% appeared reasonable. I did however emphasise to the parties my decision
applied only in this particular case."
- It seems to me
that in assessing the success fee every case has to be looked at on its own
facts, and this was not an RTA case with no risk.
- I have come to
the conclusion that the appropriate success fee was the 50% fixed by Mr
Worthy, but not for the reasons given by the Costs Officer. I think that in
the state of the then knowledge, and the uncertainty of the outcome of the
case, the Claimants Solicitor was entitled to a success fee of 50%, bearing in
mind the risks as then known by Mr Howe. On this head of appeal therefore the
Defendants fail, and their appeal is dismissed.
COSTS OF THE
DETAILED ASSESSMENT
- Mr Herlihy
argued strongly that it was quite wrong for the Costs Officer to award
£4,862.47 costs when the recovery in respect of the original proceedings was
only £4,089.87. He referred to the conduct of the parties, and the relevance
of CPR 47.18. He attacked individual items, as well as the overall total.
- In response Mr
Williams said that whilst the Costs Officer’s views about the success fee and
the insurance premium were of interest, but no more, I should pay much more
regard to his discretionary decision in relation to the costs of the detailed
assessment, not least because he had heard the full arguments and had had the
opportunity to go through the bill in detail.
- There is much
force in that argument it seems to me. I also agree with him that it would be
wrong to tinker with small items, simply to bring the bill down by a small
amount.
- The fact is that
the Defendants chose to attack this bill on almost every point, as is apparent
from their Points of Dispute, and sought to upset the validity of the CFA,
which would of course, if successful, would have meant they would not have had
to pay any costs at all.
- It seems to me
that the Defendants have failed to heed what Lord Justice Latham said in the
case of Bernstein v Times Newspapers [2002] EWCA Civ 1739, when he
condemned those who sought to make a cottage industry out of satellite
litigation. By the time this detailed assessment came before the Costs Officer
many of the contentious points which were not decided when Mr Howe had to make
his decisions about insurance premium and success fee, had been resolved. I
therefore conclude that much of the additional costs which on the face of it
seemed to be disproportionate were caused by the approach of the Defendants to
this assessment.
- Whilst I am not
completely convinced that I would have reached the same decisions as the Costs
Officer, he did have the great advantage over me of having been through the
bill on an item by item basis, and heard oral arguments over what was a
considerable length of time for such a small bill. I certainly agree that it
would be wrong to tinker with small items here and there, and overall I have
come to the conclusion that it would be wrong to interfere at all with the
Costs Officer’s assessment of the costs of the detailed assessment, and, on
this head too, the Defendants challenge fails and their appeal is
dismissed.
CONCLUSION
- I am conscious
that simply by reserving judgment I have increased the costs of what I have
condemned myself as a small piece of litigation. If therefore the parties can
agree on the appropriate costs order (and better still the amount payable as a
result thereof) for the appeal to me there will be no necessity for them to
attend when this judgment is formally handed down.
