Hughes v George Major Skip Hire Ltd & Anor, Court of Appeal - Supreme Court Cost Office, July 03, 2009, [2009] EWHC 90147 (Costs)

Resolution Date:July 03, 2009
Issuing Organization:Supreme Court Cost Office
Actores:Hughes v George Major Skip Hire Ltd & Anor

Neutral Citation Number: [2009] EWHC 90147 (Costs)Case No: AGS/0900982IN THE HIGH COURT OF JUSTICESUPREME COURT COSTS OFFICEClifford's Inn, Fetter LaneLondon, EC4A 1DQDate: 3 July 2009Before :MASTER GORDON-SAKER- - - - - - - - - - - - - - - - - - - - -Between :- - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - -Mr Mark Friston (instructed by Express Solicitors) for the ClaimantMr Alexander Hutton (instructed by Hill Dickinson LLP & Weightmans LLP) for the First and Second DefendantsHearing date: 9th June 2009- - - - - - - - - - - - - - - - - - - - -JudgmentMaster Gordon-Saker : 1. This judgment relates principally to one issue that has arisen on the detailed assessment of the Claimant's bill of costs, namely: whether the conditional fee agreement entered into by the Claimant with Express Solicitors is unenforceable by reason of a failure to comply with regulation 3(1)(b) of the Conditional Fee Agreements Regulations 2000. The Defendants contend that the agreement failed to specify how much of the success fee related to the cost to the solicitors of the postponement of their fees and expenses. 2. The detailed assessment proceedings were commenced in Liverpool County Court but, by agreement between the parties, they were transferred to the Supreme Court Costs Office. The order transferring the proceedings did not however transfer them to the High Court. Accordingly at the start of the detailed assessment hearing in London I sat in my capacity as a Deputy District Judge of the Liverpool County Court. After inviting submissions I decided to transfer the proceedings to the High Court having regard to the issues that had been raised and the amount that was at stake. The background3. The Claimant suffered very serious injuries when a motorcycle upon which she was travelling as a pillion passenger collided with an unlit skip during the hours of darkness on 4th September 2001. The motorcycle was being ridden by her husband.4. Within a very short time of the accident and while still in hospital the Claimant, through her father-in-law, made contact with Express Solicitors who had been recommended to her by a former work colleague. On 18th September 2001 Mr Robin Patey, then a trainee solicitor at the firm, attended the Claimant in hospital to take her instructions. It is clear from Mr Patey's attendance note that the Claimant was very worried about the effect that the accident would have on her financial situation. She was then aged about 23 years, had married earlier that year and worked as a supply teacher. Her husband had also suffered serious injuries in the accident and had also been detained in hospital. 5. Two days later, on 20th September 2001, Mr Patey wrote letters of claim to George Major Skip Hire Limited, the owner of the skip (and which subsequently became the First Defendant), and to the Claimant's husband (who subsequently became the Second Defendant).6. On the same day he wrote to the Claimant, care of her father-in-law, enclosing two copies of a draft conditional fee agreement. In the covering letter he asked her to sign one copy and return it to him. He also telephoned the Claimant that day and in a conversation recorded as lasting one hour he explained the conditional fee agreement to her.7. The Claimant signed the agreement and returned it to Mr Patey while she was still in hospital. Indeed she remained in hospital until 23rd October 2001. 8. Proceedings were issued on 23rd August 2004 - shortly before the expiry of the limitation period. The Defendants admitted negligence but denied causation and loss. Eventually it was agreed that the First Defendant was 75% to blame for the accident and the Second Defendant 25% to blame. Judgment was entered for damages to be assessed. The assessment of damages was listed for 12th March 2008 with a time estimate of 4 days. However a few days before the hearing the parties agreed terms that the Defendants should pay the Claimant damages of £500,000 net of recoverable benefits together with her costs.The conditional fee agreement9. The agreement is expressed to cover only ``Your claim against Mr Philip Hughes for damages for personal injury suffered on 4th September 2001''. During the detailed assessment it was agreed between the parties that the Claimant would not be entitled as against the First Defendant to costs incurred under the conditional fee agreement. I am told that counsel will be preparing a note of the precise terms of the agreement reached. It was also conceded by the Claimant's solicitors during the hearing that the Claimant was not entitled to recover the costs claimed in Part 1 of the bill, which were incurred before the conditional fee agreement was entered into, because the agreement did not cover work that had already been carried out.10. Under the heading ``Paying us'' the agreement provided:If you win your claim, you pay our basic charges, our disbursements and a success fee. The amount of these is not based on or limited by the damages. You are entitled to seek recovery from your opponent of part or all of our basic charges, our disbursements, a success fee and insurance premium. 11. Under the heading ``Success fee'' the agreement provided:This is 50% of our basic charges.The reasons for calculating the success fee at this level are set out in Schedule 1 to this agreement.You cannot recover from your opponent the part of the success fee that relates to the cost to us of postponing receipt of our charges and disbursements (as set out in paragraphs (a) and (b) at Schedule 1). This part of the success fee remains payable by you.12. Schedule 1 provided:The Success FeeThe success fee is set at 50% of basic charges and cannot be more than 100% of the basic charges.The percentage reflects the following:(a) the fact that if you win we will not be paid our basic charges until the end of the claim;(b) our arrangements with you about paying disbursements;(c) the fact that if you lose, we will not earn anything;(d) our assessment of the risks of your case. These include the following:(i) need to obtain police report and speak with investigating officer;(ii) need to interview all appropriate witnesses;(iii) need full sketch plan and photographs of accident locus;(iv) allegation of negligence - public nuisance may be difficult to establish in view of relevant authorities;(e) any other appropriate matters.The matters set out at paragraphs (a) and (b) above together make up 50% of the increase on basic charges. The matters at paragraphs (c), (d) [and (e)] make up 50% of the increase on basic charges. So the total success fee is 50% as stated above.13. It is this last paragraph which forms the basis of the Defendants' challenge.14. The agreement incorporated the Law Society Conditions, which include in clause 4 under the heading What happens if you win?:If you and your opponent cannot agree the amount, the court will decide how much you can recover. If the amount agreed or allowed by the court does not cover all our basic charges and our disbursements, then you pay the difference. ...You remain ultimately responsible for paying our success fee.You agree to pay into a designated account any cheque received by you or by us from your opponent and made payable to you. Out of the money, you agree to let us take the balance of the basic charges; success fee; insurance premium; our remaining disbursements; and VAT. You take the rest.The evidence15. Although no directions were given either here or in Liverpool County Court as to the filing of evidence or the cross-examination of witnesses, the Claimant's solicitors filed witness statements of Mr Patey and of the Claimant. 16. While it was the Defendants' intention to cross-examine both the Claimant and Mr Patey (see Mr Hutton's skeleton argument at paragraph 8), I was told by counsel at the beginning of the hearing that it had been agreed that the Claimant should not attend for cross-examination. I was grateful for that, for at paragraph 9 of her statement dated 24th April 2009 the Claimant explains:I am pregnant at the present time and this ongoing dispute with the insurance companies is causing me further stress and anxiety at a time when I thought I was now able to put the whole thing behind me.17. Requiring the Claimant to come down to London to be cross-examined in a costs hearing about what she knew or did not know in 2001 as she lay in hospital with serious injuries would, to my mind, have been inappropriate in satellite litigation. Mr Patey alone...

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