28.4.05: K U (a child) v Liverpool City Council

Success Fees

Court of Appeal Judgment handed down on 27.4.05.

 

We prepared a Bill of costs in the above tripping accident case and included a 100% success fee in accordance with the CFA.

Points of dispute were served and we prepared a schedule of replies thereto.

 

At detailed assessment in Liverpool County Court, the District Judge allowed the 100% success fee for the period up to the time when the Defendant filed its defence and in view of the contents of the defence (a standard implied primary liability admission), for the period thereafter, the District Judge allowed a 5% success fee.

 

We presumed that the District Judge's adjudication was based upon judgments in the following cases:

• Lea v Cheshire County Council – In this case, the Court split the success fee into pre and post liability admission stages.
• Halloran v Delaney – In this case, the Court applied a nominal success fee of 5% for what the part of the case which, in hindsight, was not fraught with risk.However, the presiding Judge came under fire from various sources which resulted in him having to qualify his judgment by emphasising that his 5% allowance was peculiar to that case and should not be relied upon in future cases (which appears to be the Judiciary's (not so subtle) way of evading the doctrine of binding precedent!).

 

In the current case, we took the view that the method in which the District Judge had adjudicated was improper having regard to the nature of the CFA i.e this was not a staged CFA, it was a standard CFA wherein a success fee is calculated on day one having regard to the circumstances which are known to our instructing solicitors at that time.

 

In summary, we were of the opinion that it was unfair for the Court to apply a hindsight test as the CFA did not make provision for such a split. We should say that at the time, it was perfectly routine to use this type of CFA and it was very rare that we ever came across CFA's which provided for staged success fees. Our experience tells us that solicitors tended to avoid using the crystal ball type CFA for the following reasons:

 

• They could not predict every eventuality which should warrant a reduction (or increase) in the set success fee;
• They could not rely upon local authority's “liability admissions” as these are often not unequivocal and occasionally, local authorities have been known to withdraw liability admissions;
• Primarily, the success fee is the clients responsibility, therefore, it is unreasonable to have to advise a client that his liability for the success fee is totally unquantifiable until the outcome of his case.

 

For the above reasons, we believed that the District Judge had adjudged on the basis of rules which should not be applied in our particular case and our instructing solicitor, Terry Moran of Paul Crowley & Co shared our opinion. Therefore, he appealed and at the subsequent hearing in Liverpool before HHJ Stewart QC, it was adjudged that a hindsight test was inappropriate as a solicitor can only work on facts known to him at the time the CFA is incepted.

 

The Defendant appealed the decision of HHJ Stewart QC and at the Court of Appeal, the following decisions were made :

his was a single stage CFA and therefore, as a matter of contract, the Court had no power to transform the CFA into a multi-staged type CFA and no power to reduce the success fee on the basis of a hindsight test.