Begum v Klarit

J U D G M E N T

1. LORD JUSTICE BROOKE: We heard an appeal earlier today against an order of HHJ Kirkham and, for all practical purposes, we dismissed the appeal, although we made an order in favour of the appellant in one respect. It was a case in which Chadwick LJ, on 30th July 2004, had granted limited permission to appeal, but when the appeal started today, counsel for the appellant frankly accepted that, unless he could persuade us to grant a wider permission to appeal than Chadwick LJ had granted (and the question of a wider grant of permission had been referred to the full court at the hearing of the appeal), any success that he achieved would not be worth the paper it was written on, because of underlying findings of the fact which would not be challengeable on the appeal. It follows that anybody assessing in a careful and thoughtful manner the prospects of the appeal from the point of view of the respondents would have been likely to appreciate, as counsel for the appellant appreciated, that they were pretty close to a stone-cold certainty of successfully resisting the appeal. Of course, there are always some risks in litigation, but there were very few on the particular facts of this case, considering the very strong findings of fact the judge had made after seeing the witnesses.

2. This court has given guidance from time to time in cases involving an additional liability which have come to us on appeal from the lower courts. Most recently, in the case of Atack v Lee[2004] EWCA Civ 1712, the court gave guidance in relation to a case which ultimately went to trial. In the field of road traffic accidents, of course, the different parties to litigation in that particular litigation industry eventually succeeded in reaching agreement, which is now embodied in amendments to the Civil Procedure Rules, but no such agreements apply in the case of a dispute about the sale of land.

3. Mr McGuire, who inherited the brief from another counsel at the weekend, observed that the theory of success fees is that you are remunerated in respect of the cases in which you lose by the additional remuneration you achieve in respect of the cases which you win. He has drawn our attention to the percentages which are set out in successive editions of Cook on Costs, which represent that philosophy (always assuming that the costs are the same). A 100 per cent success fee on that basis represents a 50:50 chance of success in the litigation, and a 70 per cent success fee represents a 59 per cent chance.

4. This is the first occasion upon which the Court of Appeal has been asked to give its own view on an appropriate additional liability, because we have been asked to make a summary assessment of costs on an appeal involving a success fee. As I have said, any responsible lawyer acting for the respondent in these appeals, reading Chadwick LJ's order, would have appreciated for all practical purposes that they were on a stone-cold certainty of resisting the appeal and recovering costs. Of course, there are always some risks in litigation.

5. We find it hard to understand how responsible counsel could have agreed with responsible solicitors a success fee of 100 per cent in respect of this appeal, or how responsible solicitors could have agreed with their client a success fee of 70 per cent. Success fees negotiated, if that is the right word, at that level, discredit and devalue the whole of the arrangements for conditional fee agreements. In Callery v Gray, the various members of the House of Lords expressed great concern about the new regime where success fees were, in effect, being negotiated between the parties to the agreement and there was no direct financial incentive to drive the level of the success fee down.

6. I hope that this is the last occasion on which this court will have to express itself quite so strongly about the level of success fees proffered for approval. In our judgment, there was a small amount of risk in this litigation, which would properly have been provided for by a success fee of 15 per cent. Accordingly, both in relation to counsel and in relation to solicitors' fees, we reduce the success fee to 15 per cent in each case.

Order: Success fees reduced to 15 per cent.