Success fees not always reasonably incurred – Chris Boxall discusses recent costs decision from the Court of Appeal
Christopher BoxallKAI SURREY (A CHILD & PROTECTED PARTY, BY HIS LITIGATION FRIEND, AMY SURREY) v BARNET & CHASE FARM HOSPITALS NHS TRUST : AH (A PROTECTED PARTY, BY HER LITIGATION FRIEND, XXX) v LEWISHAM HEALTHCARE NHS TRUST : MEHMET YESIL (A CHILD & PROTECTED PARTY, BY HIS LITIGATION FRIEND, ALISAN YESIL) v DONCASTER & BASSETLAW HOSPITALS NHS FOUNDATION TRUST (2018) EWCA Civ 451
The above cases concerned appeals from three NHS trusts against a judge’s decision to reverse an earlier decision to disallow the recovery of insurance premiums incurred by successful Claimants in clinical negligence claims. In each case, claimants switched from legal aid funding to conditional fee agreements after liability had been admitted. The decision to switch followed advice from solicitors that legal aid would not protect their damages from the effect of failing to beat a Part 36 offer. However, the solicitors failed to advise that switching to a CFA would prevent the Claimants from recovering the 10% uplift on general damages (the Simmons v Castle uplift).
Initially, costs judges found that the switch had caused success fees and premiums to be unreasonably incurred, on the basis that had the solicitors advised about the Simmons uplift, that could have resulted in the switch not being made at all. On appeal, the judge found the costs judges to have erred on the basis that it had not been established that the Claimants would have made a different decision had they been advised properly of the Simmons uplift.
What is the correct approach?
HELD: Costs judges had been entitled to disallow the recovery of success fees and ATE premiums in these particular circumstances, where the switch to conditional fee agreements was based on unsound advice. The court provided further guidance on dealing with such issues:
- The correct approach is to ask whether costs had been unreasonably incurred, taking into account all the circumstances of the particular case, rather than relying on generalised descriptions of similar cases.
- Where a receiving party switches funding which is significantly more disadvantageous to the paying party, the paying party is entitled to seek reasons for that switch.
- If the reasons for the switch are taken from advice from that party’s representative, the Court was entitled to examine that advice;
- The correct question was to ask whether, had the advice been sound, that could (not would) have resulted in patients choosing not to switch. If so, it would be appropriate to find the switch (and consequent costs) to be unreasonable.
- The burden in relation to that question rests on the receiving party, and any doubt should be resolved in the paying party’s favour.
Christopher Boxall is a member of the Personal Injury and Costs teams at Park Square Barristers.