Peter Birts,
QC and David Holland (instructed by Beachcroft Wansbroughs for Stephen Gray)
Geoffrey
Nice, QC and Nicholas Bacon (instructed by Amelans for Charles Callery)
Timothy King,
QC and Louis Browne (instructed by Davies Wallis Foyster for Pal Pak Corrugated
Ltd)
Allan Gore
(instructed by Pattinson & Brewer for the Association of Personal Injury
Lawyers)
Anna Guggenheim
QC (instructed by AE Wyeth & Co for the Forum of Insurance Lawyers)
John Leighton
Williams QC (instructed by Barlow, Lyde and Gilbert for the Association of British
Insurers)
Timothy Dutton
QC (instructed by Rowe Cohen on behalf of the After Event Insurers' Group Forum)
| |
JUDGMENT
: APPROVED BY THE COURT FOR HANDING DOWN (SUBJECT TO EDITORIAL CORRECTIONS)
SUMMARY
|
| |
|
| |
|
| |
Lord Woolf C.J:
|
| |
This is the judgment of the court to which all the members
of the Court have contributed.
|
| | 1. Background
|
| 1. |
The judgment relates
to two appeals which are confined to issues of costs. The Claimant in one
appeal is Stephen Callery and we will refer to the appeal in his case as the
"Callery appeal". The Claimant in the other appeal is Gregory Charles Russell
and we will refer to the appeal in his case as the "Russell appeal". Both
appeals are by the Defendants and arise out of modest claims for personal
injuries due to minor traffic accidents. The amounts of costs in issue are
small. However, the appeals are of very considerable importance to those members
of the public who are involved in civil disputes, the legal profession and
the insurance industry.
|
| 2. |
The appeals deal with
two new powers of the courts. The first is the power to make an award of costs
against a party to legal proceedings ("the paying party") in favour of a party
("the receiving party") which includes a sum paid by the receiving party for
an insurance premium obtained to cover costs which the receiving party would
have been liable to pay had he lost. This type of insurance is called after-the-event
insurance ("ATE"). The second is the power of the court to make a costs order
against the paying party which includes the amount of a success fee payable
by the receiving party under a conditional fee agreement ("CFA").
|
| 3. |
ATE is to be distinguished
from "before-the-event" ("BTE") legal expenses insurance (often provided as
part of a broad range of indemnity e.g. for house owners) which is taken out
prior to the event which gives rise to a possible claim.
|
| 4. |
Because of the importance
of the issues, we agreed to hear representations from a number of bodies who
have a direct interest in the matters we consider in this judgment. We received
written and oral submissions from the Law Society, the Association of Personal
Injury Lawyers ("APIL"), the Association of British Insurers ("ABI"), the
Forum of Insurance Lawyers ("FOIL") and a Group (the "ATE Grouping") which
consists of a large number of firms, organisations and insurers engaged in
ATE. We received written representations only from the Motor Accident Solicitors
Society ("MASS"). We were grateful for the assistance of these bodies. We
also had the great advantage of having the Chief Costs Judge as our assessor.
His advice was extremely helpful. Following the hearing, we received further
written representations from the parties, which we have taken into account
insofar as it was appropriate to do so.
|
| 5. |
Until Parliament intervened
by legislation, it was always considered to be contrary to public policy,
and therefore unlawful, in this jurisdiction for the financial reward which
a lawyer received for his services in connection with litigation to vary depending
upon the outcome of the litigation. The historic position and its development
is lucidly described by Schiemann LJ in his judgment in Awwad v Geraghty & Co[ [2000] 3 WLR 1041]. Schiemann LJ points out (at p.1044H) that
there are three varieties of fee which a lawyer and his client may agree should
be paid if, but only if, the claim succeeds:
|
| |
| (i) |
a share of the recovery
that the client makes in the litigation.
| | (ii) |
the normal fee together
with an uplift.
| | (iii) |
the normal fee without
any uplift.
|
|
| 6. |
The first type of fee
is known as "a contingency fee". While it is common in the USA it is not lawful
in this country and we are not concerned with it. It is now lawful to agree
that the second and third types of fee shall be payable conditional upon success,
subject to compliance with the requirements of the relevant statutory instrument.
Each type can, where such an agreement is made, be described as "a conditional
fee". Under modern CPR nomenclature an agreement for the second type of fee
(but not the third) may also be described as "a funding arrangement" (see
CPR 43.2(1)(i)) . These appeals are concerned with this type of CFA.
|
| 7. |
The introduction of the
legislation which made conditional fees lawful was motivated primarily by
two problems in relation to the provision of legal aid for civil litigation.
The first was that progressively fewer members of the public were eligible
for legal aid to bring civil proceedings. It was thought that the introduction
of CFAs would have the effect of enabling those who could not afford to bring
proceedings without the benefit of legal aid to do so. The second problem
was that the cost of providing legal aid was growing year on year. Accordingly
the Government decided to reduce the areas of litigation which were funded
by legal aid. It was considered that this would not reduce access to justice
since those affected could bring proceedings using CFAs. The reason for reducing
the areas of litigation eligible for legal aid was not, it was said, to reduce
expenditure overall but rather to use the funds saved thereby to meet the
need for publicly funded legal services to be provided in a different manner.
|
| | 2. Developments between
1988 and 2000 in outline
|
| 8. |
It was in 1988 that the
Report of the Review Body on Civil Justice (Cm 394, paras 384-389) opened
up the desirability of re-examining the prohibition on what it described as
"contingency fees and other forms of incentive scheme". In 1990 Parliament
legislated for the first time to permit CFAs in certain narrowly prescribed
circumstances. Section 58 of the Courts and Legal Services Act 1990Acts ("the
1990 Act") provided the enabling machinery. The Lord Chancellor's new enabling
powers were exercised for the first time with effect from 5th July 1995 when
the Conditional Fee Agreements Regulations 1995 and the Conditional Fee Agreements
Order 1995 both came into effect. The former prescribed the form which a CFA
had to take if it was to be legally enforceable, whilst the latter limited
its availability to the six types of proceedings mentioned in Article 2(1)
of the Order. These included, by Article 2(1)(a), personal injury proceedings.
Article 3 of the Order prescribed the maximum permitted percentage by which
fees might be increased (in the event of success) to be 100%. Schedule 17
of the 1990 Act added a new subsection 15(4A) to the Legal Aid Act 1988Acts to
the effect that a person might not be refused representation under that Act
for the purposes of any proceedings on the ground that it would be more appropriate
for him to enter into a CFA.
|
| 9. |
In 1998, a new Conditional
Fee Agreements Order revoked the 1995 Order. CFAs were now to be permissible
in all proceedings (other than those specified in section 58(10) of the 1990
Act (see also section 58(1)(a)), including those concluded without the commencement
of court proceedings. Article 4 of the new order retained 100% as the maximum
permitted percentage increase.
|
| 10. |
The Access to Justice
Act 1999 ("the 1999 Act") introduced major changes to the funding of civil
litigation. Part I of the Act created a new Legal Services Commission (in
place of the Legal Aid Board) with power to determine which types of litigation
should qualify for public funding. (The history of the many relevant changes
introduced by the Legal Aid Board before the 1999 Act came into effect on
1st April 2000 was described by the Divisional Court in R v Legal Aid Board ex parte Duncan & Mackintosh[ (unreported, COT 16th February 2000)]).
For present purposes, it is only necessary to record that from 1st April 2000
onwards, what used to be described as legal aid was no longer to be available
for personal injury cases (although clinical negligence cases were excluded
from this blanket ban).
|
| 11. |
The need to put alternative
funding arrangements in place was recognised by Parliament in Part II of the
1999 Act, entitled "Other Funding of Legal Services". In this appeal, we are
concerned only with the first five sections contained in this part (sections
27-31); the other three sections relate to legal aid in Scotland.
|
| 12. |
Sections 27 and 28 of
the 1999 Act are concerned with the circumstances in which CFAs, and what
are described as "litigation funding agreements", are to be enforceable. On
this appeal we are not concerned directly with the latter, for which section
28 (which introduces a new section 58B into the 1990 Act) makes provision.
So far as CFAs are concerned, the technique selected by Parliament was to
substitute two new sections, 58 and 58A, in place of section 58 of the 1990
Act as originally enacted. We will refer to the detailed provisions of these
sections later in this judgment.
|
| 13. |
The next two sections,
along with section 31, are headed "costs" and deal with different matters.
Section 29 is headed "Recovery of insurance premiums by way of costs" (for
its text, see para 44 below). Section 30 is headed "Recovery where body undertakes
to meet costs liabilities". Their evident purpose is to enlarge the scope
of the items of costs which a successful party to proceedings (to use a neutral
word) may recover from the paying party.
|
| | 3. The early years of
ATE insurance
|
| 14. |
In order to understand
the purpose of section 29, it is necessary to consider its historical development.
We have been greatly assisted in this regard by the submissions we have received
not only from the parties and the Law Society, but also from the lawyers'
groups and insurance interests that made written and oral representations
to us.
|
| 15. |
The introduction of CFAs
in 1995 still left a litigant at risk of having to pay the other side's costs.
The Law Society therefore developed the ATE policy, with the help of insurance
brokers, as a new form of insurance cover. Since about that time there have
also been forms of ATE insurance which provide cover against other risks,
but we are not concerned with such cover, whatever form it takes, in this
judgment.
|
| 16. |
Written evidence was
given by Mr Christopher Ward, the managing director of the specialist legal
expenses underwriting agency which has run the Law Society's Accident Line
Protect conditional fee insurance scheme since its inception in 1995. During
the last six years, this agency has issued over 85,000 ATE policies. The insurance
was always issued in conjunction with personal injury claims conducted under
a CFA.
|
| 17. |
This agency is not itself
the risk carrier in insurance terms. It manages the insurance on behalf of
the underwriter who carries the risk. For the first five years, this was an
American company. The Law Society told us that the ATE premiums for this type
of cover were originally very modest, because the success rate of personal
injury litigation was thought to be so high. Adverse claims experience, however,
drove the premium up sharply, and in 2000 the original underwriters withdrew
from the market after suffering major losses.
|
| 18. |
We have been shown the
different stages of the public consultation process which took place between
March 1998 and February 2000. This process started with the Government professing
its keenness to encourage the wider use of legal expenses insurance. Premiums
for BTE cover were now being paid by over 17 million people at a trivial annual
cost to themselves, and the Government said it wished to encourage a varied
market for insurance products which would enable people to go to law if the
need arose.
|
| 19. |
None of the respondents
to its first consultation paper appears to have suggested that an ATE premium
should be recoverable from the other side in the event of success, but the
Government eventually decided to introduce this provision by primary legislation.
The debates in each House of Parliament in the 1999 Access to Justice Bill
on this proposal, which we have seen, do not assist us in the task we have
before us.
|
| 20. |
In September 1999 the
Government initiated a further round of public consultation to address some
of the firmer details of its proposals. We have read its response, published
in February 2000 (and in particular paras 85 and 76(bis) of that response)
which shows that it was willing to monitor the development of the insurance
market and the level of premiums for legal expenses insurance quite closely.
In this response it evinced for the first time its approval of a practice
whereby claimants entered into an ATE insurance policy at an early stage,
before embarking on the procedures required by a pre-action protocol.
|
| 21. |
On 3rd July 2000, the
Civil Procedure (Amendment No. 3) Rules 2000 came into force, supplemented
by a new Practice Direction on Costs. We will discuss the salient features
of these two documents later in this judgment. It is sufficient for present
purposes to note that the additional rules numbered 44.3A and 44.3B made new
provision for costs orders relating to funding arrangements and the limits
on recovery under funding arrangements.
|
| 22. |
A novel procedure was
introduced by a new rule 44.12A (for its text, see para 30 below). It provided
for the initiation and scope of "costs-only proceedings" in those cases in
which the parties had made a written agreement settling all the issues in
dispute between them, including the incidence of liability for costs, without
the need to initiate court proceedings, and when all that remained in issue
was the amount of those costs. The relevant Practice Direction made it clear
that on an assessment of costs between the parties, the court had power to
reduce any ATE premium it considered unreasonable. It also identified some
of the factors it might take into account when determining what was reasonable
in this context (CPR PD 44 para 11.10: see para 33 below).
|
| 23. |
This then, was the regulatory
and legislative backcloth to the revival of the ATE market following the enactment
of the 1999 Act.
|
| | 4. The legislative framework
|
| 24. |
We will now turn to consider
in detail the new framework of primary and secondary legislation, buttressed
by practice directions and protocols, which marked the advent last year of
the new arrangements whose effect we have to consider on these appeals.
|
| 25. |
The starting point is
the effect of the changes the 1999 Act made to the conditions which must be
fulfilled before entering into a CFA. The material changes are contained in:
|
| |
| (i) |
Section
27 of the 1999 Act, which inserted the substitute section 58 (referred to
in (ii) and (iii) ) and a new section 58A into the 1990 Act.
| | (ii) |
Section
58(1), which requires a CFA to satisfy all the conditions of that section
for it to be enforceable.
| | (iii) |
Section
58(3) and (4), which set out the conditions applicable to every CFA with a
success fee. These conditions require, among other things, that such a CFA
must be in writing, must comply with any requirement prescribed by the Lord
Chancellor and must specify the success fee.
| | (iv) |
Section
58A(6), which states that:
"A costs
order made in any proceedings may, subject in the case of court proceedings
to the rules of court, include provision requiring the payment of any fees
payable under a conditional fee agreement which provides for a success fee."
| | (v) |
Section
58A(7), which includes an express power for the rules of court to make provision
for the assessment of any costs, including fees payable under a CFA.
|
|
| 26. |
Next came the Conditional
Fee Agreements Regulations 2000. They provide considerable protection for
a litigant entering into a CFA, by prescribing additional requirements with
which CFAs must comply and stating the consequences if they do not do so.
Regulations 3 and 4 provide:
|
| |
| "3(1) |
A
conditional fee agreement which provides for a success fee-
| | |
| (a) |
must
briefly specify the reasons for setting the percentage increase at the level
stated in the agreement, and
| | (b) |
must
specify how much of the percentage increase, if any, relates to the cost to
the legal representative of the postponement of the payment of his fees and
expenses.
|
| | (2) |
If
the agreement relates to court proceedings, it must provide that where the
percentage increase becomes payable as a result of those proceedings, then—
| | |
| (a) |
if—
| | |
| (i) |
any
fees subject to the increase are assessed, and
| | (ii) |
the
legal representative or the client is required by the court to disclose to
the court or any other person the reasons for setting the percentage increase
at the level stated in the agreement,
he may
do so,
|
| | (b) |
if—
| | |
| (i) |
any
such fees are assessed, and
| | (ii) |
any
amount in respect of the percentage increase is disallowed on the assessment
on the ground that the level at which the increase was set was unreasonable
in view of facts which were or should have been known to the legal representative
at the time it was set,
that amount
ceases to be payable under the agreement, unless the court is satisfied that
it should continue to be so payable, and
|
| | (c) |
if—
| | |
| (i) |
sub-paragraph
(b) does not apply, and
| | (ii) |
the
legal representative agrees with any person liable as a result of the proceedings
to pay fees subject to the percentage increase that a lower amount than the
amount payable in accordance with the conditional fee agreement is to be paid
instead,
the amount
payable under the conditional fee agreement in respect of those fees shall
be reduced accordingly, unless the court is satisfied that the full amount
should continue to be payable under it.
|
| | (3) |
In
this regulation "percentage increase" means the percentage by which the amount
of the fees which would be payable if the agreement were not a conditional
fee agreement is to be increased under the agreement.
|
| | 4(1) |
Before
a conditional fee agreement is made the legal representative must—
| | |
| (a) |
inform
the client about the following matters, and
| | (b) |
if
the client requires any further explanation, advice or other information about
any of those matters, provide such further explanation, advice or other information
about them as the client may reasonably require.
|
| | (2) |
Those
matters are—
| | |
| (a) |
the
circumstances in which the client may be liable to pay the costs of the legal
representative in accordance with the agreement,
| | (b) |
the
circumstances in which the client may seek assessment of the fees and expenses
of the legal representative and the procedure for doing so,
| | (c) |
whether
the legal representative considers that the client's risk of incurring liability
for costs in respect of the proceedings to which agreement relates is insured
against under an existing contract of insurance,
| | (d) |
whether
other methods of financing those costs are available, and, if so, how they
apply to the client and the proceedings in question,
| | (e) |
whether
the legal representative considers that any particular method or methods of
financing any or all of those costs is appropriate and, if he considers that
a contract of insurance is appropriate or recommends a particular such contract
| | |
| (i) |
his
reasons for doing so, and
| | (ii) |
whether
he has an interest in doing so.
|
|
| | (3) |
Before
a conditional fee agreement is made the legal representative must explain
its effect to the client."
|
|
| 27. |
The CPR contain specific
provisions as to success fees and premiums payable for ATE insurance. Rule
43.2 has the following relevant definitions which apply to Parts 44 - 48,
"unless the context otherwise requires":
|
| |
| "(a) |
'Costs'
include any additional liability incurred under a funding arrangement ...
| | (k) |
'funding
arrangement' means an arrangement where a person has -
| | |
| (i) |
entered
into a conditional fee agreement which provides for a success fee within the
meaning of section 58(2) of the 1990 Act;
| | (ii) |
taken
out a policy to which section 29 of the 1999 Act (recovery of insurance premiums
by way of costs) applies; or ...
|
| | (l) |
'percentage
increase' means the percentage by which the amount of a legal representative's
fee can be increased in accordance with a conditional fee agreement which
provides for a success fee;
| | |
| (m) |
'insurance
premium' means a sum of money paid or payable for insurance against the risk
of incurring a cost liability and the proceedings, taken out after the event
that is the subject matter of the claim;
| | (o) |
'additional
liability' means the percentage increase, the insurance premium, or ... , as
the case may be."
|
|
|
| 28. |
Rule 44.3A contains provisions
as to costs orders relating to funding arrangements. It requires the court
not to assess any additional liability until the conclusion of the proceedings,
or part of the proceedings, to which the funding arrangement relates, and
gives the court power to make the appropriate order summarily or on a detailed
assessment.
|
| 29. |
Rule 44.3B places limits
on what can be recovered under funding arrangements. Rule 44.3B(1) provides
that a party may not recover the following as an additional liability (although
this does not apply on an assessment of a solicitor's bill to his client):
|
| |
| "(a) |
any
proportion of the percentage increase relating to the cost to the legal representative
of the postponement of the payment of his fees and expenses;
| | (d) |
any
percentage increase where a party has failed to comply with –
| | |
| (i) |
a
requirement in the costs practice directionpdp-43; or
| | (ii) |
a
court order,
to disclose
in any assessment proceedings the reasons for setting the percentage increase
at the level stated in the conditional fee agreement."
|
|
|
| 30. |
Rule 44.12A introduces
a new concept which we will call "costs-only proceedings". It is in these
terms:
|
| |
| "(1) |
This
rule sets out a procedure which may be followed where-
| | |
| (a) |
the
parties to a dispute have reached an agreement on all issues (including which
party is to pay the costs) which is made or confirmed in writing; but
| | (b) |
they
have failed to agree the amount of those costs; and
| | (c) |
no
proceedings have been started.
|
| | (2) |
Either
party to the agreement may start proceedings under this rule by issuing a
claim form in accordance with Part 8.
| | (3) |
The
claim form must contain or be accompanied by the agreement or confirmation.
| | (4) |
In
proceedings to which this rule applies the court-
| | |
| (a) |
may
| | |
| (i) |
make
an order for costs; or
| | (i) |
dismiss
the claim; and
|
| | (b) |
must
dismiss the claim if it is opposed."
|
|
|
| 31. |
Rule 44.15 requires information
as to funding arrangements to be provided. In particular, Rule 44.15(1) provides
that a party seeking to recover an additional liability must provide to the
court and to the other parties information about the funding arrangement,
as required by a rule, practice direction or court order. If the information
changes, then a notice of change has to be filed and served on the other parties.
|
| 32. |
There is a Practice Direction
relating to funding arrangements. Section 9 of the Direction supplements Rule
44.3A. It states categorically that:
|
| |
| "9.1 |
Under
an order for payment of 'costs' the costs payable will include an additional
liability incurred under a funding arrangement."
|
|
| 33. |
Other relevant provisions
of the Practice Direction are in these terms:
|
| |
| "11.4 |
Where
a party has entered into a funding arrangement the costs claim may, subject
to rule 44.3B include an additional liability.
| | 11.5 |
In
deciding whether the costs claimed are reasonable and (on a standard basis
assessment) proportionate, the court will consider the amount of any additional
liability separately from the base costs.
| | 11.7 |
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 arrangement.
| | 11.8(1) |
In
deciding whether a percentage increase is reasonable relevant factors to be
taken into account may include--
| | |
| (a) |
the
risk that the circumstances in which the costs, fees or expenses would be
payable might or might not occur;
| | (b) |
the
legal representatives liability for any disbursements,
| | (c) |
what
other methods of financing costs were available to the receiving party.
|
| | (2) |
The
court has power, when considering whether a percentage increase is reasonable,
to allow different percentages for different items of costs or for differing
periods during which the costs were incurred.
| | 11.9 |
A
percentage increase will not be reduced simply on the grounds that, when added
to base costs which are reasonable and (where relevant) proportionate, the
total appears disproportionate.
| | 11.10 |
In
deciding whether the cost of insurance cover is reasonable, relevant factors
to be taken into account include:
| | |
| (1) |
where
the insurance cover is not purchased in support of a conditional fee agreement
with a success fee, how its cost compares with the likely costs of funding
the case with a conditional fee agreement with a success fee and supporting
insurance cover;
| | (2) |
the
level and extent of the cover provided;
| | (3) |
the
availability of any pre-existing insurance cover;
| | (4) |
whether
any part of the premium would be rebated in the event of early settlement;
| | (5) |
the
amount of commission payable to the receiving party or his legal representative
or other agents."
|
|
|
| 34. |
Subject to these provisions,
the approach of the courts in relation to funding arrangements should be the
same as on any other assessment of costs of proceedings.
|
| 35. |
We should finally refer
to the relevant protocols and the conditions which can appear in CFAs. The
parties are required to comply with the objectives and terms of relevant protocols.
Whether or not they have done so will be relevant when the court makes costs
orders. This is made clear by the Protocols Practice Direction which sets
out (at para 1.4) the objective of pre-action protocols as being
|
| |
| (a) |
to encourage the
exchange of early and full information about the prospective legal claim;
| | (b) |
to enable parties
to avoid litigation by agreeing a settlement of the claim before the commencement
of proceedings; and
| | (c) |
to support efficient
management of proceedings where litigation cannot be avoided.
|
|
| 36. |
Paragraph 2.1 of the
Practice Direction states that the compliance and non-compliance with an applicable
protocol should be taken into account by the court when making orders for
costs.
|
| 37. |
Paragraph 2.2 of the
Practice Direction states that the court will expect the parties to have complied
in substance with the terms of an approved protocol.
|
| 38. |
Paragraph 4 of the Practice
Direction provides that where there is no approved protocol, the parties are
expected to act reasonably by exchanging information and documents and generally
trying to avoid proceedings.
|
| 39. |
The protocol which relates
to personal injury claims ("Pre-action Protocol for Personal Injury Claims")
applies to all claims which include a claim for personal injuries. It is primarily
designed for those road traffic, tripping and slipping and accident at work
cases allocated to the fast track which could include an element of personal
injury with a value of less than £15,000. The protocol does, however, say
that the approach advocated by the protocol is equally appropriate to some
higher value claims.
|
| 40. |
The protocol is designed
to enable the parties to settle a dispute without litigation or, failing settlement,
to be in a position where they can dispose efficiently of any litigation which
becomes necessary. The protocol gives a timetable for the exchange of information
within 3 months. It is anticipated that as part of, or on completion of, the
protocol process the parties will, if necessary, make formal offers to settle
in order to benefit from the protection as to costs which such offers provide.
|
| | 5. The three main issues
|
| 41. |
We have identified three
main issues on these appeals:
|
| |
| (a) |
Whether an ATE premium
can be recovered in costs only proceedings ("the jurisdiction issue":
see paras 42-55 below);
| | (b) |
The stage of a dispute
at which it is appropriate to enter into (a) a CFA and (b) an ATE policy
("the prematurity issue": see paras 80-100 below);
| | (c) |
The reasonableness
of the Claimants' (a) percentage uplift and (b) ATE premium ("the reasonableness
issue": see paras 101-116 below).
|
|
| | 6. The jurisdiction issue
|
| 42. |
This issue (which only
affects the Callery appeal) differs from the other issues as it involves a
pure point of law. Due to the uncertainty created by this point, we announced
our decision on this issue during the course of the hearing. This part of
our judgment sets out our reasons for that decision.
|
| 43. |
The Callery claim was
settled on terms contained in a letter dated 7 August 2000 from Callery's
solicitor. The terms were that the appellant would pay £1,500 by way of damages,
together with the respondent's "reasonable costs and disbursements". This
left outstanding the issue of what was payable by way of "reasonable costs
and disbursements".
|
| 44. |
On 12th September 2000
the Respondent commenced costs-only proceedings pursuant to CPR 44.12A. No
challenge is made by the Appellant to the Respondent's entitlement to make
a claim for a costs order under that rule. It is submitted, however, that
a claimant who avails himself of this procedure has no right to include the
premium paid for ATE insurance in the costs claimed. This argument is based
on the terms of section 29 of the Access to Justice Act 1999 headed "Recovery
of insurance premiums by way of costs". The section states:
"Where
in any proceedings a costs order is made in favour of any party who has taken
out an insurance policy against the risk of incurring a liability in those
proceedings, the costs payable to him may, subject in the case of court proceedings
to rules of court, include costs in respect of the premium of the policy."
|
| 45. |
The Appellant's argument,
as advanced by Mr Birts QC, can be summarised as follows:
|
| |
| (i) |
Prior
to section 29 of the Access to Justice Act 1999 there was no right to recover
by way of costs a premium paid for ATE insurance.
| | (ii) |
It
follows that unless a Claimant can bring himself within the wording of section
29, he cannot recover the premium.
| | (iii) |
Section
29 only permits recovery of an ATE insurance premium where:
| | |
| (a) |
there
are or have been proceedings in which a costs order has been made in the Claimant's
favour and
| | (b) |
those
proceedings are proceedings in which the Claimant has taken out an insurance
policy against the risk of incurring liability for costs in those proceedings.
|
| | (iv) |
The
only proceedings that the Claimant has commenced are the "costs only proceedings".
| | (v) |
The
Claimant has not taken out an insurance policy against the risk of incurring
liability in those (i.e. the costs-only) proceedings.
| | (vi) |
It
follows that the costs order made by the Court in the costs-only proceedings
cannot include the ATE insurance premium.
|
|
| 46. |
Mr Birts accepted that
where proceedings for substantive relief have been commenced, a costs order
in those proceedings can include a premium in respect of ATE insurance against
the risk of incurring liability in those proceedings, albeit that such insurance
was taken out before such proceedings were commenced. He submitted, however,
that the only way in which the ATE insurance premium can be recovered is by
first commencing proceedings claiming substantive relief and then claiming
costs in relation to those proceedings.
|
| 47. |
This submission is unattractive
on its face for, if it is correct, those who have taken out ATE insurance
will be disinclined to settle their claims before substantive proceedings
have been commenced. Mr Birts submitted, however, that the wording of section
29 reflected a determination by Parliament to approach new funding arrangements
cautiously and incrementally, and to discourage claimants from taking out
insurance before it was plain that substantive proceedings would have to be
commenced and that insurance cover was therefore really necessary.
|
| 48. |
Mr Birts was not able
to support this submission by reference to any Parliamentary material admissible
as an aid to interpretation under the principle in Pepper v Hart [[1993]
AC 593].
|
| 49. |
Mr Nice QC advanced an
argument on behalf of the Respondent which required the introduction of a
number of additional words into section 29 in order to provide clarity to
a clause which he submitted was unsatisfactorily drafted. He submitted that
section 29 should be read as follows:
"Where
in [respect of] any proceedings, [whether commenced or contemplated,]
a costs order is made in favour of any party who has taken out an insurance
policy against the risk of incurring a liability in [connection with]
those proceedings, [whether commenced or contemplated], the costs payable
to him may, subject in the case of court proceedings to rules of court, include
costs in respect of the premium of the policy."
|
| 50. |
This suggested interpretation
involves implying words into section 29 in order to alter its natural meaning.
More significantly, in our view, it requires a degree of clairvoyance on the
part of the draftsman. The section, as interpreted by Mr Nice, contemplates
a costs order being made in respect of 'proceedings' which were only contemplated.
But when the 1999 Act was introduced, there was no procedure under which such
an order could be made. A costs order could only be made in the action in
which substantive relief was claimed. It was to meet this procedural shortcoming
that CPR 44.12A was added to the Rules on 14 July 2000, the purpose of which
was to enable inevitable disputes as to the amount of costs to be resolved
without interfering with the general settlement of a dispute.
|
| 51. |
In addition, the wording
of section 29 can be explained much more simply: Parliament was seeking to
restrict the recovery of premiums to those relating to ATE, as opposed to
BTE, insurance. The wording of the section achieves this end.
|
| 52. |
For these reasons, we
are unable to accept the interpretation of section 29 advanced by Mr Nice.
Judge Edwards dealt with this issue of interpretation as follows:
"I must
look at the Act itself and I think that what this section means is that when
a costs order is made in favour of the party who has taken out an insurance
policy against the risk of incurring a liability in those proceedings, that
must mean that if he has taken out an insurance policy against incurring a
liability for costs of the other side, in due course should he be compelled
actually to pursue the matter in that way, then when it comes to assessment
of costs simply under Part 8 that must be regarded as part and parcel of the
contemplated proceedings against which the insurance policy was taken out,
and that therefore such a premium is in fact recoverable under the wording
of section 29. I think that gives a sensible purposive construction to the
section, but I would not presume to try to give a purposive construction to
a section if its plain meaning, to my mind, was to the contrary, but I do
not believe that the plain meaning is to the contrary. It is clearly to be
anticipated that insurance will be taken out before proceedings have started.
It is always possible for the matter then to be compromised before the proceedings
actually are started, and it would be quite wrong to interpret this section
as shutting out a Claimant from recovering that premium in such circumstances."
|
| 53. |
This analysis treats
the Part 8 costs-only proceedings as being included within the phrase "in
any proceedings" in section 29. It does not, however, provide a satisfactory
answer to Mr Birts's point that the only proceedings before the Court at that
stage are the Part 8 costs-only proceedings, and that the insurance premium
claimed does not relate to an insurance policy taken out against the risk
of liability in those costs proceedings.
|
| 54. |
Our conclusions in respect
of this issue of interpretation have been assisted by the argument advanced
by Mr Drabble QC, on behalf of the Law Society. The conclusions are as follows:
|
| |
| (i) |
When
the 1999 Act was enacted the only circumstances in which a Claimant could
obtain a costs order from the Court was by seeking such an order in the substantive
action in relation to which the costs had been incurred.
| | (ii) |
Where
an action is commenced and a costs order is then obtained, the costs awarded
will include costs reasonably incurred before the action started, such as
costs incurred in complying with a pre-action protocol.
| | (iii) |
Section
29 of the Access to Justice Act enables the Claimant to include in such costs
the premium for an insurance policy against liability for costs in the substantive
proceedings, even where that policy was taken out in contemplation of those
proceedings before they were commenced.
| | (iv) |
The
"proceedings" referred to in section 29 are therefore proceedings advancing
a claim for substantive relief.
| | (v) |
CPR
44.12A is a new procedure introduced to enable 'pre-action' costs to be recovered
where an action has been settled before substantive proceedings have been
commenced. One object of this Rule is to facilitate the settlement of proceedings
where there is agreement upon all issues save the assessment of the pre-action
costs incurred.
| | (vi) |
CPR
44.12A states that it sets out a procedure under which the Court can make
a costs order where:
| | |
| "(a) |
the
parties to a dispute have reached an agreement on all issues (including which
party is to pay the costs) which is made or confirmed in writing; but
| | (b) |
they
have failed to agree the amount of those costs";
|
| | (vii) |
The
meaning to be accorded to "the costs" and "those costs" in the Rule is 'the
costs which would have been recoverable in the proceedings had the proceedings
been commenced'. There is no other meaning that can sensibly be given to these
words.
| | (viii) |
By
reason of section 29 of the 1999 Act, such costs may include the costs of
an ATE insurance premium taken out in contemplation of the commencement of
substantive proceedings.
|
|
| 55. |
It follows that Judge
Edwards had jurisdiction to include the ATE insurance premium in his award
of costs by virtue of:
|
| |
| (i) |
the
agreement between the parties that the Appellant would pay the Respondent's
reasonable costs and disbursements.
| | (ii) |
section
29 of the 1999 Act which permits costs recoverable in proceedings to include
an ATE insurance premium.
| | (iii) |
CPR
44.12A which provides a simple procedure facilitating the assessment and recovery
of the costs that would be recoverable if substantive proceedings were commenced,
without the need to initiate such proceedings.
|
|
| 56. |
Before turning to deal
with the remaining issues we propose to refer to some of the evidence that
we received.
|
| | 7. The CFAs in these two
cases
|
| 57. |
In both the Callery and
the Russell appeals, the claims were in fact settled during the protocol period,
but after the CFA had been entered into and ATE insurance obtained. We refer
to both CFAs as examples of the terms such agreements are likely to contain.
In the Callery case, the CFA was dated 28th April 2000. In the Russell case,
it was dated 11th August 2000. In both cases the CFAs referred to the Law
Society conditions, and they also both covered claims for damages for personal
injuries suffered on the respective dates, any appeal by an opponent, any
appeal made against an interim order during the proceedings and any proceedings
taken to enforce a judgment order or agreement. The CFAs did not cover counter-claims
or an appeal made against a final judgment or order.
|
| 58. |
In the Callery case,
the Claimant had to pay disbursements "whatever happens". The Russell agreement
provided that "if you lose, you do not pay our charges, but we may require
you to pay our disbursements". Both CFAs provided that if the agreement was
terminated before the Claimant won or lost, the Claimant would have to pay
basic charges.
|
| 59. |
The Law Society conditions
gave the Claimants the right to end the agreement at any time. They also allowed
the solicitors to terminate the CFA if they believed the Claimant was unlikely
to win, in which case only disbursements would be payable, or if the Claimants
rejected their opinion about settling with their opponent. In both cases there
were some conflicts between the terms of the CFA and the Law Society conditions.
These are not significant for present purposes.
|
| | 8. The development of
success fees in CFAs
|
| 60. |
Before turning to the
two main issues, we must first say something about the development of success
fees in CFAs and ATE insurance policies in recent years. So far as success
fees are concerned, the Law Society told us that following the enactment of
section 58 of the Courts and Legal Services Act 1990Acts, the then Lord Chancellor
had originally proposed that the maximum permitted level of success fee should
be 10% or 20%. He was in due course persuaded to change his mind, and in the
1995 Order the maximum permitted fee was prescribed to be 100%.
|
| 61. |
Apparently the Law Society
successfully argued that, even if it was accepted that the public interest
did not favour facilitating litigation where the prospects of success were
less than 50%, it should surely be possible for litigation to be conducted
on a CFA when the prospects of success were 50% or a little better. This,
it said, required provision for a maximum uplift of 100%, in order to enable
lawyers to earn enough in successful cases to compensate for the fact that
they would receive no fees at all in unsuccessful cases. The maximum permitted
fee level of 100% was retained in both the Conditional Fees Agreements Order
1998 and in Article 4 of the Conditional Fee Agreements Order 2000, which
replaced the 1998 order with effect from 1st April 2000.
|
| 62. |
The percentage by which
the ordinary fee is enhanced to reflect the fact that payment is conditional
upon success is commonly referred to as "the uplift". It has hitherto been
generally understood that a CFA must provide for a single uplift that will
be payable regardless of the circumstances in which the success is achieved.
Thus, in the case of the type of claim with which these appeals are concerned,
the uplift has to reflect the fact that (i) it is likely that the claim will
be settled swiftly without the need for litigation but (ii) the possibility
must exist that the claim will result in contested litigation with no certainty
of a successful outcome.
|
| 63. |
It was on this understanding
of the need for a single all-purpose uplift that APIL provided a series of
worked examples designed to demonstrate that uplifts should be set at a relatively
high level from the outset. They took an imaginary cohort of 150 personal
injury cases, and postulated that 50 of these would be rejected after the
solicitor had devoted time on each which would ordinarily be chargeable at
£150. 92 of the remainder would be settled, two abandoned, and six fought
out at trial. The tables show variations within this scenario (more of the
six cases lost than won, and varying stages at which the claim was settled).
It was suggested on these figures that if three of the contested cases in
this scenario were won, the "standard" success fee based on a 95% success
rate would have to be 28.88% if the lawyer was to receive the same total fees
for his work on all these cases as he would have received under the previous
regime. If some of the 92 cases settled late, so that more work would be done
on these successful cases, the level of success fee needed to "break even"
would be reduced to 22.64%. This illustration is necessarily stylised, and
the figures do not allow any increment to cover the risk that the particular
"book" of the particular lawyer deviates from the overall statistical norm.
|
| 64. |
We were also shown research
studies whose authors had endeavoured to create a larger database of information
about what is actually happening in the personal injuries market. It was common
ground, however, that not enough is yet known about the likely effect of different
levels of success fees. APIL, for instance, told us that they:
" ... have
been concerned about the lack of hard research and knowledge as to success
rates. Acquiring such knowledge has proved difficult and we are far from confident
that the patterns of success achieved thus far are not distorted by: (1) research
into the performance of CFAs run alongside publicly funded cases; (2)
defendants and insurers' attitudes to personal injury litigation carried over
from a publicly funded era; (3) an initial over-caution on the part of some
and over-adventurousness on the part of other personal injury lawyers as they
come to terms with CFAs as the dominant funding mechanism."
|
| | 9. ATE insurance
|
| 65. |
We have already observed
(see para 15 above) that ATE insurance can take a number of quite distinct
forms. The major distinction is between the ATE insurers who provide litigation
costs insurance cover for personal injury related claims directly through
solicitors or through claims management companies and those who insure non-personal
injury or commercial claims. There is also a distinction between ATE cover
that is provided only in respect of the "other side's costs" and that provided
"for both sides' costs". ATE cover can also be provided for an individual
claimant or in standard form by solicitors under delegated authority. As we
stated in paragraph 15, the only form of ATE insurance to which this judgment
relates is insurance providing cover against the other side's costs. We do
not deal with the question whether ATE cover against other risks falls within
section 29.
|
| 66. |
Mr Ward (see para 16
above) explained to us the problems his agency had faced in the past as a
result of what it described as "adverse selection". It has always operated
the Law Society's scheme on a delegated authority basis. This allows solicitors,
within the limits of their authority, to decide whether to offer ATE cover
to their clients and to run the personal injury case as they think fit, once
they have agreed to take a case under a CFA. This is believed to be attractive
to solicitors because it enables them to retain their independence of judgment.
It also allows clients to know that the insurer is not controlling their litigation.
In addition, delegated authority arrangements minimise cost in a volume market
by avoiding individual risk assessment by the insurer, or by some third party
on its behalf, in every case.
|
| 67. |
It is hardly surprising
that delegated authority arrangements will only work successfully if the solicitor
does not "cherry pick" by taking out ATE insurance only in risky cases. It
is a basic principle of insurance that the many pay for the few, and we can
well understand academic comment to the effect that:
"For
a firm to cherry-pick dead certs and run them without paying for insurance
must alter the underwriting assumptions of the insurer and increase premiums."
(See the
Law Society Gazette publication "Litigation Funding" (Issue 2, 1999) by Professor
John Peysner.)
|
| 68. |
In 2000 a Lloyds' syndicate
took over the provision of cover under the Accident Line Protect scheme. We
were told that this syndicate was only willing to participate in providing
this cover because the recoverability of premiums permitted by section 29
of the 1999 Act obviated the incentive to indulge in adverse selection. Mr
Ward explained to us how the situation had developed.
|
| 69. |
In order to preserve
the principle of the "many paying for the few", his agency had made it obligatory
from the outset for solicitors to issue an ATE policy at the same time as
a client signed a CFA. In practice, many firms delayed taking either of these
steps until after proceedings had been started and after their client had
decided not to accept a payment made into court.
|
| 70. |
As a consequence the
benefits of Accident Protect cover was then restricted for the most part to
those cases where proceedings had not been commenced when the insurance was
taken out. Solicitors, however, still delayed taking out the cover until proceedings
were about to be commenced. This limited the cover to the riskier cases, and
the whole system of delegated authority was therefore put in jeopardy. For
this reason the advent of the pre-action protocol was very welcome. It enabled
a new principle to be adopted, whereby the ATE insurance had to be taken out
in conjunction with a CFA before the letter of claim was despatched.
|
| 71. |
All these changes were
predicated by the insurers' desire to spread the risk as much as possible,
so that the cost of the cover could be kept within reasonable limits.
|
| 72. |
We were also told that
different insurance schemes offered different coverage, and that the coverage
in a particular case might depend on the process by which an insurer selected
the risks it was willing to cover. Mr Ward's experience, however, had led
him to the belief that it was in everybody's interests that cover in appropriate
cases should be taken out at the earliest opportunity if the level of premiums
was to be affordable. The adoption of this approach has enabled cover to be
offered to clients for pre-proceedings disbursements, such as the cost of
medical and other expert reports, in the event that there are no subsequent
proceedings and the claim has to be abandoned.
|
| 73. |
This evidence was supplemented
by the evidence of Mr Christopher Wait, the underwriting director of another
company which provides underwriting and claims management functions for certain
Lloyd's syndicates in relation to both types of legal expenses insurance.
They sell BTE insurance through insurance brokers and ATE insurance mainly
through solicitors. Their two directors have a long history of experience
in legal expenses underwriting and claims management.
|
| 74. |
Mr Wait told us that
most of the ATE insurance schemes available on the market today can only provide
insurance if cover is in place before the initial letter of claim is sent.
Again, this practice follows the basic insurance principle that "the many
pay for the few". He is of the clear opinion that if premiums are not recoverable
from the losing party when cases are settled before proceedings are issued,
the result will be that many individuals and businesses will find it difficult
to seek a legal remedy with effective insurance cover in place, and that their
access to justice will be frustrated.
|
| 75. |
Much of his evidence
was devoted to explaining the problems that would arise if it were obligatory
to delay taking out ATE insurance until after proceedings were issued. Mr
Birts made it clear that it was not part of his clients' case to say that
the inception of cover had to be delayed in this way.
|
| 76. |
We were provided with
worked examples of the manner in which the premium was bound to rise in the
event that recovery of the premium was only permissible in those cases in
which proceedings were issued. We were told by representatives of claimants
that liability insurers had raised what they accepted were legitimate concerns
regarding the nature and price of some of the premiums charged for ATE insurance.
APIL, a body of about 5,000 members whose interest in personal injury work
is largely claimant-orientated, stated that it accepted that if premiums were
inflated to include fees to claims managers disguised as commissions for the
sale of insurance or to cover costs of advertising their services, they should
be recoverable exclusive of such objectionable elements.
|
| 77. |
We also received submissions
both orally and in writing from the ATE Grouping, which includes the companies
whose directors had provided individual witness statements. These bodies are
all involved with the provision of ATE insurance. They are currently involved
in a negotiation process sponsored by the Law Society and the ABI in which
the parties are seeking to reach an agreed industry standard as to the recoverability
of ATE premiums and success fees in the new costs regime.
|
| 78. |
They told us that the
ATE market was mainly divided between those who were in the business of providing
litigation costs insurance cover for personal injury related claims through
solicitors or claims managers and those who provided cover for non-personal
injury or commercial claims. On this appeal we are concerned only with the
first of these categories. Similarly, we are concerned with ATE cover linked
to a CFA, as opposed to such cover provided on a "stand alone" basis. This
grouping supported the points made by Mr Wait and Mr Ward in their witness
statements.
|
| 79. |
We now turn to deal with
the remaining issues.
|
| | 10. The
prematurity issue
|
| 80. |
The information placed
before us shows that, in cases such as those with which these appeals are
concerned, many solicitors adopt a similar approach to insurers when deciding
on what terms to act for clients under CFAs. The uplift in their fees which
they demand in respect of this category of business is set at a level designed
to produce additional income on the cases which succeed which is adequate
to compensate them for the cases which lose and thus earn them no fee. The
cases which win have to subsidise the cases which lose. However, while this
may be true of many, it is not clear how many. Lawyers are accustomed to assessing
a risk without the need to carry out the actuarial calculations which insurers
would consider appropriate.
|
| 81. |
A different approach
was adopted in the submissions made by FOIL. FOIL did not consider that the
need to provide a fund to compensate a Claimant's lawyer for the cases he/she
lost on a CFA should play any part in the process of setting a success fee
in any given case. It robustly argued that:
"To be
consistent with the public interest in reducing the cost of dispute resolution
and with the objectives of the CPR, the level of success fee recoverable
against the Defendant in any particular case should be assessed by
reference to the risks of losing that case."
|
| 82. |
Different circumstances
will call for different approaches. Insurers set premium rates designed to
balance their books and achieve a reasonable profit. There are some classes
of risk which are so remote that a uniform approach may be adopted to the
assessment of premium - e.g. household insurance. In other classes, premiums
may vary according to specific features of the risk - e.g. age of driver or
power of car in the case of motor insurance - but again the premiums will
reflect claims experience and be designed to produce a positive return overall.
In some cases risks will have peculiar features which require individual assessment,
but again the approach is the same: to achieve a balanced book and a reasonable
return overall.
|
| 83. |
The solicitor carrying
on litigation business on a large scale may have regard to similar considerations.
He may seek to ensure that the uplifts agreed result in a reasonable return
overall, having regard to his experience of the work done and the likelihood
of success or failure of the particular class of litigation. This will not
mean that he does not consider the merits of the particular case, where he
is aware of facts which call for individual assessment. But there may be categories
of claim that have, so far as he is aware, sufficient common characteristics
to justify a standard approach to determining uplift.
|
| 84. |
We are in this case concerned
with such a category of claim: claims for the consequences of a motor accident
where, on the claimant's account of the accident, the solicitor reasonably
concludes that the claim has every prospect of an early settlement as to both
liability and quantum. At that stage the risk assessment that results in the
determination of the uplift is likely to turn, not on peculiar features of
the instant case - for there will be none - but on his experience that in
a small minority of such cases, when the claim is pursued some unforeseen
circumstance results in the ultimate failure or abandonment of the claim.
|
| 85. |
These comments are not,
of course, directed to solicitors who choose, as they reasonably may, to defer
agreeing a CFA until they know more about the claim than they have learned
from the claimant. Nor are they apposite in the case of a solicitor who does
not specialise in litigation, but who on occasion conducts a piece of litigation
for a client. Such a solicitor is likely to decide on the uplift by asking
himself what reward he requires to induce him to take the risk that he may
not recover his fees from the case in question.
|
| 86. |
The vital issue in relation
to uplift that is raised on these appeals is whether the courts should allow
recovery of uplift where this is agreed at the initial stage on the basis
described above, or whether it should require all solicitors to defer agreeing
uplift until the defendant's response to the claim is known, so that the risk
of failure can be assessed on an individual basis. The latter approach would
result in a high uplift being justified in a minority of cases, but a small,
if any, uplift in the majority where those acting for defendants will make
it plain that liability will not be contested.
|
| 87. |
It is the Appellants'
argument that the cost of (i) taking out an ATE insurance policy and (ii)
the uplift of a success fee should only be recoverable where sufficient information
is available to form a reasonable prognosis of what will be the risk involved
in a claim. The appellants further argue that a claimant cannot reasonably
incur these liabilities until the reaction of the defendant to a claim is
known and the merits of any defence raised considered. At that point, so the
appellants argue, it will be apparent whether there is a risk that the claim
may fail which makes it reasonable to enter into a CFA and take out ATE insurance.
|
| 88. |
If it is reasonable to
take these steps, the Appellants argue that the claimant will then be in a
position to do what the law requires, namely to assess the appropriate uplift
and insurance premium having regard to an informed appraisal of the extent
of the risk that the claim may fail.
|
| 89. |
Thus Mr Birts, on behalf
of the Appellant in the Callery appeal understandably urges that the time
to enter into an ATE insurance policy is at the end of the protocol period,
i.e. three months from the notification of the claim; and for his part Mr
King, on behalf of the Appellant in the Russell appeal argues that no CFA
should be entered into before that time. Entering into funding arrangements
at this stage has obvious advantages for a defendant. It gives him the opportunity
to settle the case without incurring liability for additional costs. This
is a matter of importance, bearing in mind that over 90 percent of cases can
be expected to settle and may well settle in the protocol period. In addition,
the exchange of information which is central to the protocol will enable the
claimants and their lawyers to assess the risk more accurately.
|
| 90. |
The Respondents contend
that, in cases such as those before the Court, i.e. modest claims in respect
of a road traffic accident, where liability is unlikely to be in issue and
the question of damages is unlikely to create complexities, it is reasonable
for a claimant to take out ATE insurance and enter into a CFA at the stage
that the claimant first instructs a solicitor to pursue his claim. At that
stage the claimant will be concerned that, by giving instructions to the solicitor,
he is not exposing himself to liability for costs. The solicitor for his part
will be anxious to offer the claimant services on terms that, whatever the
outcome, he will not find himself liable for costs.
|
| 91. |
In these circumstances,
we consider that, from the viewpoint of both the claimant and his solicitor,
it will normally be reasonable for a CFA to be concluded and ATE cover taken
out on the occasion that the claimant first instructs his solicitors. What
we have to decide is whether, having regard to the statutory provisions, (i)
the cost of the success fee and (ii) the ATE premium, when incurred at that
early stage, can be recovered.
|
| 92. |
In considering this issue
we think it right to bear in mind the purposes of the new regime. The first
purpose is to facilitate access to justice on the part of those who cannot
afford the costs of litigation. The second purpose is to reduce the burden
of legal aid in relation to certain categories of case where it was previously
available.
|
| 93. |
Including success fees
in recoverable costs has the general effect of shifting from the legal aid
fund to defendants, or their insurers, the costs incurred by litigants whose
claims fail. In the first instance the claimants' solicitors shoulder the
risks in relation to these costs, in exchange for uplift. But the fact that
the uplift in successful cases is transferred to the unsuccessful defendants
results, if one takes a global view, in the burden of unsuccessful claimants'
costs being born by unsuccessful defendants.
|
| 94. |
Permitting ATE insurance
premiums to be recovered as costs has the effect of shifting to unsuccessful
defendants the costs which the insurers will have to pay to successful defendants.
Under the old regime successful defendants would not normally recover their
costs where claims were legally aided. Thus, in bearing the burden of meeting
ATE insurance premiums, defendants in general are paying for cover that will
ensure that their costs are paid if they succeed.
|
| 95. |
When seeking to do justice
between the parties we have to accept that it is an inevitable consequence
of Government policy that unsuccessful defendants should be subjected to an
additional costs burden. We also have to bear in mind that the new regime
tends to remove from claimants the incentive to control costs. The shelter
afforded to the claimant by a CFA and by ATE cover means that he will not
be over-concerned at the costs that are being incurred, or even at the size
of the ATE premium. In these circumstances, the role of the Court in administering
the new regime is particularly important.
|
| 96. |
The scheme of the legislation
and the regulations contemplates that both the ATE insurance premium and the
amount of uplift will reflect an assessment of the risk that the claim may
fail, having regard to the circumstances that are known, or should reasonably
be known, to the legal representative at the time that the relevant agreements
are entered into. We do not consider, however, that this makes it mandatory
for the claimant to delay entering into a CFA or taking out ATE insurance
in order to enable his legal representative to acquire a greater knowledge
of the circumstances of the case than that provided to him by the claimant.
|
| 97. |
In the type of claim
with which these appeals are concerned, the circumstances of the case will
often lead the legal representative to assess the risk of failure, not only
on the basis of particular features of the case, but on his general experience
that claims which appear to have every prospect of success nonetheless occasionally
founder as a result of matters which are unforeseen. We consider that this
approach is in principle compatible with the legislative scheme.
|
| 98. |
The Appellants contend,
however, that it is unjust to saddle defendants with the costs of the ATE
insurance premiums and success fees without giving them a fair chance to identify
those cases where liability and quantum is not disputed so that success is
assured.
|
| 99. |
We see the force of this
submission, but we have concluded that, at least in the circumstances of the
two appeals, the prejudice to defendants is not as clear as is suggested and
that it is outweighed by the legislative policy and by a number of practical
considerations. Thus:
|
| |
| (i) |
If the new regime is
to achieve its object, the legal costs of claimants whose claims fail should
fall to be borne by unsuccessful defendants in the manner described in para
93 above. On these appeals the Court has to decide whether to permit liability
for success fees to be apportioned in relatively small amounts among many
unsuccessful defendants, or to insist on an approach under which they will
be borne in much larger amounts by those unsuccessful defendants who persist
in contesting liability.
| | (ii) |
If the latter alternative
is adopted, the defendants who contest liability will not share liability
for costs in a manner which is equitable. Where there is a strong defence
which it is reasonable to advance, a larger uplift will be appropriate than
where a defendant unreasonably persists in contesting liability despite
the fact that the defence is weak. Thus the more reasonable the conduct
of the defendant, the larger the uplift that he will have to pay if his
defence fails.
| | (iii) |
In relation to claims
arising out of road accidents, where defendants will be insured, the same
insurers will often be sharing the costs involved, whether in the form of
many uniform small uplifts or fewer large uplifts.
| | (iv) |
So far as insurance
premiums are concerned, these will produce cover which benefits the defendants,
for they will ensure that costs are awarded against unsuccessful claimants
and that such awards are satisfied.
| | (v) |
Defendant interests,
with the assistance of the Court, should be able to restrict uplifts and
insurance premiums to amounts which are reasonable having regard to overall
requirements of the scheme. In saying this we are contemplating a position
where there will be adequate data to enable informed judgment of the amount
of uplift and the size of insurance premium that are reasonable in circumstances
such as those before the Court. We are well aware that that position has
not yet been reached and that, on these appeals, we are faced with doing
our best on very sketchy data. We have had particular regard to the fact
that the representations and evidence submitted after the hearing have not
been tested or analysed in the course of oral argument.
| | (vi) |
Claimants naturally
want to know at the outset that a satisfactory arrangement to cover the
costs of litigation has been made which provides sufficient protection for
them, no matter what the outcome.
| | (vii) |
Claimants incur liabilities
for costs to their legal advisers as soon as they give them instructions.
Once a defendant starts to incur costs in complying with a protocol, the
claimant will be exposed to liability for those costs if proceedings are
commenced.
| | (viii) |
Solicitors and claims
managers are anxious to be able to offer legal services on terms that the
claimant will not be required to pay costs in any circumstances. This will
assist access to justice.
| | (ix) |
There is the overwhelming
evidence from those engaged in the provision of ATE insurance that unless
the policy is taken out before it is known whether a defendant is going
to contest liability, the premium is going to rise substantially. Indeed
the evidence suggests that cover may not be available in such circumstances.
|
|
| 100. |
For these reasons we
have concluded that where, at the outset, a reasonable uplift is agreed and
ATE insurance at a reasonable premium is taken out, the costs of each are
recoverable from the defendant in the event that the claim succeeds, or is
settled on terms that the defendant pay the claimant's costs.
|
| | 11. The reasonableness
issue
|
| 101. |
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. The editors of the current edition of Cook on Costs
have endeavoured at pp 467-468 to give some help to the profession, based
on the propositions that there will be a single success fee throughout the
life of a CFA, and that a solicitor is entitled to cover his/her prospective
losses in unsuccessful cases by the success fee income earned in successful
cases. The Claimant's solicitors in the Calleryappeal, for their part,
created an in-house matrix, with points being awarded for different features
of a case on a sliding scale. This matrix produced what seemed to us to be
a surprisingly high success fee for a fairly straightforward passenger claim,
but the matrix provides a useful illustration of what some claimants' solicitors
are doing at the moment in the absence of guidance from the higher courts.
|
| 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 (see also paragraph 85 above). However, even within this
limited area, as APIL recognises,
"the
Court is faced with a difficult balancing exercise in setting guidelines for
a new regime where there is little experience or published data to rely upon.
Allowing success fees to be set too high compared to the risk being run will
lead to inflation of fees paid to lawyers by the public who pay insurance
premiums. But allowing them to be fixed too low compared to the risk being
run will lead to lawyers only being able to take on the most certain cases
and a denial of access to justice to some of the most vulnerable people in
society".
|
| 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.
|
| 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.
|
| 113. |
In its second written
representations the Law Society points out that it considered the possibility
of providing for variations in success fees when first developing its standard
letters. It decided not to do so, however, because of the complications that
these would create for clients.
|
| 114. |
In the Callery appeal,
the Appellants provided useful submissions on this subject. They put forward
a choice of models. They also dealt with the legality of two-stage success
fees. We consider there is no need to consider the question of the legality
of a two-stage success fee as we see no difficulty in having a single success
fee calculated by reference to an upper level and a reduced level in specified
circumstances.
|
| 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.
|
| 116. |
Whilst as a result of
the evidence put before us we have felt able to form an assessment as to the
reasonableness of success fees, we do not feel able to form any conclusion
as to the reasonableness of premiums charged for ATE insurance. For that reason,
we have directed an enquiry before Master O'Hare, Costs Judge, and we will
provide a separate judgment on this question when we have received his report.
|
| 117. |
We now turn to the facts
of the two appeals.
|
| | 12. The Callery appeal:
(i) The facts
|
| 118. |
On 29 January 2001, His
Hon. Judge Edwards at the Chester County Court dismissed an appeal by the
Defendant against an order of District Judge Wallace made in the Macclesfield
County Court on 7 November 2000. The District Judge gave his judgment in costs
only proceedings instituted by the Claimant.
|
| 119. |
On the 2 April 2000,
the Claimant had been a passenger in a vehicle which was struck side-on by
a vehicle driven by the Defendant. He consulted Messrs Amelans and instructed
them to claim damages under a conditional fee agreement. A success fee of
60% was agreed. Amelans deal with a large number of similar cases. In calculating
the success fee, Amelans had included 20% for the delays which they were likely
to incur in recovering their fees. This element was appropriately conceded
before the District Judge not to be recoverable (see Rule 44.3B(1), for which
see para 29 above).
|
| 120. |
On 4 May 2000, an ATE
insurance premium of £350 plus insurance premium tax was paid. On the same
day, Amelans sent a letter before action to the Defendant personally, claiming
damages and asking him to pass a copy of the letter to his insurers.
|
| 121. |
On 19 May 2000, the CGU
Insurance Company responded to Amelans in the following terms:
"We are
able to admit liability as to negligence but not as to causation ... please note
that we would have no objection to yourselves instructing one of three proposed
medical experts. We look forward to receiving confirmation as to whom has
been appointed and request sight of the instruction letter sent to them."
|
| 122. |
A medical expert was
agreed and a report obtained in July. On 12 July Messrs Amelans, on behalf
of the Claimant, made a formal offer of £3,010, together with costs and disbursements,
in full and final settlement. On 24 July, a counter offer of £1,200 was made
by the Defendant's insurers. On 7 August, the Claimant's solicitors wrote
to the Defendant's insurers confirming an agreed settlement of £1,500 plus
payment of reasonable costs and disbursements. Subsequently there was a claim
for costs of £4,709.35 (which included the 60% success fee and the insurance
premium). The Defendant's insurers suggested that the amount claimed was unreasonable
and offered a total of £1,877.87.
|
| 123. |
Costs-only proceedings
pursuant to CPR 44.12A were issued. The sum of £4,709.35 was claimed.
|
| 124. |
The District Judge summarily
assessed the costs at £1,008 +VAT and the disbursements at £617.50, making
a total of £1,940.83. He accepted that the insurance premium was payable and
that a success fee of 40% was reasonable.
|
| | 13. The Callery appeal:
(ii) The judgment appealed
|
| 125. |
We have already seen
(see para 52 above) that on the appeal to HHJ Edwards, the Judge rejected
the argument of the Defendant under section 29 of the 1999 Act. The Judge
also considered that it was entirely reasonable to have taken out insurance
at a very early stage and before it was known whether the matter would be
contested because:
|
| |
| (i) |
This would lead to
substantial reduction in the costs of the insurance.
| | (ii) |
There was a potential
argument that there could have been a tacit agreement relating to the costs
of the pre-action protocol itself. It was conceivable that insurance cover
could be needed against these costs. As soon as the claimant needed to be
covered he had to take out insurance and needed to notify the other side
to ensure that the premium was recoverable.
| | (iii) |
He could see nothing
wrong with insurance being taken out before there was an exchange of letters.
|
|
| 126. |
The Judge accepted that
the Appellant's insurers' letter of 19 May 2000 was a denial of liability,
on the ground that a breach of duty alone is not sufficient to establish liability
for negligence, and the consequences of sending out a letter that had not
been checked by solicitors fell upon the insurers. In view of this finding,
the Judge felt the Appellant could not complain. He regarded the letter of
the 19 May as validating the decision to make a funding arrangement. He did,
however, suggest that in the future, it might be more prudent to wait for
the result of the initial exchange of letters. If there was a denial of liability
or no reply, then insurance ought to be taken out.
|
| 127. |
As to the reasonableness
of the success fee, the Judge noted that the statutory regime clearly envisaged
a connection between the size of the fee and the risk of failure presented
by a particular case. A further factor could be the need to incur substantial
costs up front in an appropriate case, such as a medical negligence claim.
He expressed substantial agreement with the analysis contained in Cook
On Costs. His conclusions can be summarised as follows:
|
| |
| (i) |
Assuming the chances
of success in a given case are 50%, the solicitors will wish to ensure that
they recover sufficient costs from a defendant in the event of success to
fund another "50% case" which fails.
| | (ii) |
Accordingly the statutory
maximum 100% uplift was appropriate. It followed from this that a solicitor
ought not to enter into conditional fee agreements where he considered that
the prospect of success was less than 50%.
| | (iii) |
He had reservations
as to whether there could be a personal injury case where there was no risk
at all. Even where there was an admission of liability at the outset, he
thought that this could subsequently be revoked or put in a different context.
There were also the procedural dangers in connection with a Part 36 Offer.
| | (iv) |
He accepted the Claimant's
contentions that there was no case which was entirely risk free and that
a Judge should only interfere with the assessment of a District Judge if
this was grossly out of place.
|
|
| 128. |
The Judge concluded that
the Respondent had a 75% chance of success. His reasoning for coming to that
figure appears to be the underlying litigation risk of 10%, on top of which
he made a small additional allowance. Using the Cook approach, the
Judge found he would have arrived at a success fee of 331/3%
taking into account that the vast majority of costs would be incurred against
the background of a denial of liability until a settlement was reached. Having
regard to these conclusions, the District Judge had not been manifestly wrong
and the appeal failed.
|
| 129. |
The Judge, in addition,
made the following points which are worth repeating:
|
| |
| (i) |
Parties should try
to avoid litigating costs which require detailed assessment. Where a case
was settled, claimants should limit their costs to a reasonable sum and
defendants should not try to insist on unjustifiably low amounts.
| | (ii) |
Claimants in these
types of personal injury cases who claimed unreasonable costs placed a great
strain on the resources of the courts as this led to a series of detailed
assessments. In this connection, the Judge noted that the court below had
approximately halved the figure claimed by the Claimant's solicitors already.
| | (iii) |
As to insurance premiums,
the Judge noted that it would be wiser to await the results of the first
round of correspondence in a matter before taking out a policy. As this
was a discretionary area, the Judge could not guarantee that the premium
for every policy taken out prior to a denial of liability would be recoverable.
| | (iv) |
The CFA was made at
a time when the risk was first assessed. This should have an influence on
what was recoverable at the end of the proceedings. The Judge did, however,
acknowledge that an alteration of the success fee might be warranted after
certain stages of the proceedings.
|
|
| 130. |
In view of his conclusions,
he dismissed the appeal, but he indicated that he would have given permission
to appeal to the Court of Appeal if he had had power to do so.
|
| | 14. The Callery appeal:
(iii) Our conclusions
|
| 131. |
We have already made
it clear that we agree with the Judge's conclusions as to the issue of jurisdiction.
We also agree with a substantial amount of the Judge's reasoning and his general
remarks. In particular, we agree that on a costs assessment, the assessing
Judge has a broad discretion with which an appeal court should only interfere
if it is satisfied that the Judge is clearly wrong. However, we would make
the following comments in relation to the Judge's approach:
|
| |
| (i) |
While the letter of
19 May is technically a denial of liability, whether this is the case is
a red herring in relation to the present appeal. In view of that letter,
the Claimant's solicitors would not be justified in continuing to investigate
and prepare the case on liability. Their sole concern after the letter was
to establish the extent of the damages. Therefore all that was required
of the Claimant's solicitors was that they should proceed in accordance
with the protocol to obtain a medical report and investigate the question
of damages. From a practical point of view, this was, as Mr Birts contends
on behalf of the Appellant, a very, very low risk case.
| | (ii) |
We note the Judge's
comment that it would be a wise precaution to await the first round of correspondence
before taking out a policy or entering into a CFA. However, we would not
categorise it as unreasonable not to do so for reasons we have explained.
It is only necessary to look at the relationship between the overall costs
in this case and the amount recovered to see what are the consequences of
adopting the Claimant's approach. Regrettable though this may be, if the
uplift is reasonable, the scale of costs are a consequence of the present
method of funding the costs of litigation.
| | (iii) |
On an assessment, the
court is not concerned with the question of the effect on proportionality
of the uplift and the insurance premium (para 11.9 of the Practice Direction
on Costs: see para 33 above) nor can the assessment be made with the benefit
of hindsight (para 11.7 of the Practice Direction: ibid). However,
subject to this, the approach of the Claimant must accord with the general
principles set out in Part 1 of the CPR.
|
|
| 132. |
On the information then
available to the party, it must act reasonably. If a CFA in a very straightforward
case is entered into at the outset, it is going to be, and should be, scrutinised
critically by the court on an assessment if the uplift is other than modest.
|
| 133. |
For the reasons that
we have given earlier in this judgment, we consider that a success fee involving
a 40% uplift for a case of this type was too high. We would allow the appeal
to the extent of reducing the uplift to 20%. The parties will have to calculate
the exact amount. We note, however, that the costs of this claim, which was
readily settled, will still exceed the agreed damages.
|
| | 15. The Russell appeal:
(i) The facts
|
| 134. |
This appeal is an appeal
against the decision of His Honour Judge Marshall Evans made on 25 January
2001 at the Liverpool County Court in costs-only proceedings. A success fee
of 30% was claimed, and in the exercise of his discretion, the Judge reduced
it to 20%. The Claimant was involved in a road traffic accident on 5 July
2000. His case was that the Appellant's vehicle reversed into his car when
it was stationary.
|
| 135. |
He consulted E. Rex Makin
& Company ("Makin") in order to claim damages for personal injuries. That
firm deals with a substantial number of personal injury claims arising out
of road traffic accidents in the course of its practice. A letter of claim
was sent on 20 July 2000. On 31 July 2000, the Appellant's insurers, the Royal
and Sun Alliance, replied stating that the matter had been referred to a claims
handler who would be in contact shortly. It was the practice of these insurers
to send a claims handler to visit this firm of solicitors to discuss cases.
It was said that this led to cases settling swiftly and efficiently.
|
| 136. |
On 2 August 2000, notice
was given to the insurers that the matter was proceeding by way of a CFA incorporating
a success fee and that an insurance policy was pending. Contrary to the terms
of that letter, the CFA was not in fact signed until 11 August 2000. The uplift
was fixed at 30%. A medical report, dated 7 August 2000, was obtained by Makin
which indicated that the Claimant had suffered whiplash injuries typical of
this type of accident. The report indicated that he was in good health apart
from another whiplash injury he had suffered a year earlier.
|
| 137. |
On 7 September 2000,
the meeting with the claims handler took place. An offer was made of £1,450
plus reasonable costs. This offer was subsequently accepted. Costs were quantified
at £420 +VAT, to which were added £70 in respect of the medical report, a
30% uplift and an insurance premium in the sum of £495. The costs were not
paid. Costs-only proceedings were issued. The District Judge referred the
proceedings to the Circuit Judge for determination because of the importance
of the issue it raised. The claim for the insurance premium was abandoned
prior to the hearing before the Judge.
|
| | 16. The Russell appeal:
(ii) The decision of the Judge and our conclusion
|
| 138. |
The argument before the
Judge on behalf of the Appellant was similar to the argument that Mr King
advanced before us, namely, that a CFA should not in the circumstances have
been issued at the stage that it was. The Judge found this a difficult question,
but he concluded that it was not so obvious that a CFA was patently unnecessary.
There were very few "no-risk" cases in litigation. The Judge decided that
there was nothing objectionable to a CFA being entered into at the outset,
with the uplift being fixed at that time. He rejected a submission that it
was far too early to assess what success fee was appropriate. He concluded
that as at 11 August, 20% was a more appropriate uplift.
|
| 139. |
In view of our earlier
conclusions, this is an appeal which on the facts of the case cannot succeed
unless it is established that, as a matter of principle, a CFA could not have
been entered into when it was. In our judgment, as we have made clear, there
is no such principle. It is also clear from what we said in relation to the
previous appeal that we should not interfere with the figure of 20% which
the Judge decided was reasonable. We therefore dismiss this appeal.
|