Summary of Recent Cases – Costs

A success fee of 100% was unreasonable when judgment on liability had already been entered in favour of the Claimant

Arlene Fortune v Jonathan Roe (2011), [2011], EWHC 2953 (QB), 10/11/11

A success fee of 100% was unreasonable where judgement had already been entered as the main risks to the litigation had gone. Non-recovery of charges would only have arisen if the C rejected a Part 36 offer and subsequently failed to beat that offer. The Master had originally decided that as the C was litigating in a risk free environment a success fee of 20% as opposed to 100% was appropriate following the C’s acceptance of the D’s Part 36 some 3 weeks before trial. There mere fact that a 2 stage success fee was in place did not mean that the 100% uplift could be justified. If there was no proper justification for the first stage fee it could not be used as a platform for the second stage fee, and it was difficult to see how the first stage fee of 25% cent was justified as there was no significant risk facing the C or her solicitors until a Part 36 offer was served. Where the risk was not great, and a substantial proportion of the costs were already secured for the Claimant’s solicitors, a success fee of 100 per cent was unjustified and a reasonable success fee was 20%.

A Disclosure Order was granted to enable successful Defendants in 2 PI claims to gain information on whether the impecunious had been funded by their solicitors for the purposes of a potential 3rd Party Costs Order

Gill Germany v Gavin Flatman: Barchester Healthcare Ltd v Richard Weddall [2011], EWHC 2945 (QB)

There was a power under the Senior Courts Act 1981 s.51 to determine by whom the costs of litigation should be paid. Such an order could be extended to non-parties, such as solicitors, in appropriate circumstances. What was required was evidence to show that the solicitor had gone beyond the scope of a solicitor’s ordinary role and had acted as a funder of litigation. A solicitor would become a funder if he paid out sums on the basis that they would be recovered from the other side in the event of success, or not at all in the event of failure. A disclosure order was necessary to establish what exactly had passed between a claimant and his solicitor. The judge had misdirected himself in over-estimating the consequences of the applications for the daily workings of the CFA regime as a whole and was unduly influenced by a public policy consideration that did not arise. The applicants were not seeking to establish that an order for third party costs should become the norm in CFA cases. They only sought to make the application if the Claimant’s solicitors were shown to have become a funder of litigation. There was sufficient material to justify ordering the disclosure.

December 27, 2011 · Editorial Team · Comments Closed
Posted in: Cases