Abrew v Tesco Stores Ltd.

On 26 August 2000, the Saturday before the late summer Bank Holiday, Mary Abrew, a pensioner in her mid 60’s living in Thornton Heath, was shopping in the Thornton Heath Branch of Tesco, when, in aisle 23, she slipped on some dried spaghetti, which had apparently been spilt onto the floor near the shelves which she was approaching. She was helped to her feet by an employee of the Defendants, and taken by that employee to the first aid room, where she was treated with the utmost courtesy, and, I am informed, the incident was entered in the incident book in her presence. She was not however able to see her GP until the following Tuesday, because of the intervention of the Bank Holiday. To quote from a medical report prepared in October 2001:

According to the Claimant’s Solicitors’ files she first contacted her solicitors, Messrs Howe & Co, on 6 September 2000. Mr Howe arranged for her to enter into a CFA and took out insurance on her behalf. The CFA had a success fee of 100% and the insurance premium paid to Temple was £790 plus £39.50 making a total of £829.50 for cover of £100,000.

Thereafter the Claimant’s Solicitors entered into correspondence with the Defendants, who, admittedly 12 days outside the protocol period, stated that liability would not be in issue. Subsequently, Howe & Co were able to negotiate a settlement with the Defendants’ Solicitors, Messrs Morgan Cole, whereby the Claimant was paid £3,500 by way of agreed damages.

As costs could not be agreed, Messrs Howe & Co started Part 8 proceedings in respect of the costs only in Central London County Court, but that court transferred those proceedings to this office, where they were balloted to, and heard by, Costs Officer Worthy. Amongst the wealth of material that had been supplied within this appeal is a transcript of the hearing before Mr Worthy. Save for one of the three issues on this appeal it seems to me that, interesting though it is to peruse that transcript, the arguments and conclusions reached by the Costs Officer are not particularly relevant, since it is accepted by both sides that the appeal to me is by way of rehearing, and it is therefore for me to decide on the appropriate figures or percentages based on the material put to me. However, that is subject to the point made by Mr Ben Williams, Counsel for the Claimant at the hearing on 17 April, who objected to Mr Herlihy, the costs draftsman who represented the Defendants, putting in evidence which was not before the Costs Officer, and without prior permission being granted. I upheld that objection and refused to entertain evidence, direct or indirect, that was not before the Costs Officer.

The Claimant’s Solicitors’ bill was for £8,882, which might be thought to be disproportionate in relation to a recovery of only £3,500, but, as the Costs Officer pointed out in the reasons of his decision, a large proportion of that was accounted for by the 100% success fee claimed, and the £790 insurance premium paid. In the event the costs were reduced to £4,862.47, only some 54% of the costs as claimed. As there had been an offer which was beaten the Claimant was awarded her costs of the Part 8 proceedings, and it transpired, rather late in the hearing before me, that the argument about proportionality related not to the overall level of costs, but rather simply to the costs allowed by the Costs Officer in respect of the Part 8 proceedings.

The Defendants appeal to me on three matters, namely:

It appears from the transcript of the evidence that Mr Howe, the senior partner of the Claimants’ Solicitors, had delegated power to fix the level of cover which was to be obtained under the AEI policy. There is some doubt as to whether he also fixed the level of the actual premium itself, and unfortunately there is no witness statement from Mr Howe, who was on holiday at the time of the hearing before me, and therefore unable to assist on this relatively simple point.

It is however common ground that the cover effected was £100,000. Mr Herlihy suggested that this was far more than was necessary, and must therefore have had an effect on the premium.

Mr Williams however suggested that the effect would not be as great as might be suggested, and in that connection he referred me to Master O’Hare’s Report, annexed to Callery v Gray (No.2) [2001] 1 WLR 2142 (CA). I was referred to paragraphs 35 and 36 of that report, which read as follows:

The relevance, and the only relevance, of that paragraph is it was suggested to me that even if the cover to be effected by Mr Howe was reduced to say £25,000, it would not make very much difference to the premium payable.

It is perhaps however interesting to note how Mr Worthy approached the problem, and this is his summary of how he arrived at the figure of £600 which he allowed:

It seems to me that the key to this issue, and indeed to the second issue, lies in the date when this insurance policy was effected and the premium paid. It was October 2000. CFAs with a success fee had only been in force for six months, and neither Callery v Gray, Halloran v Delaney, nor Claims Direct had been decided. The market, I was told by Mr Herlihy, was very competitive and much lower premiums were available at that time. However, as is well known, these rates appear now to have been too competitive, because one at least of the companies effecting the cover has gone out of business, finding that the level of premiums was simply too low for the business to be viable.

However the point is that what I have to decide is what was the appropriate level for Mr Howe to fix the premium (assuming as I do that he was the person who did it, as opposed to Temple) at the time that he made his decision when there was little, if any, authority, and he would therefore have to rely on market research.

Mr Worthy’s summary suggests that Mr Howe had researched other policies, but there was certainly no evidence of that in the file that was lodged with me, though it is fair to say that that file was by no means complete, as it did not include counsel’s opinion nor, unfortunately, did it include the marked copy of the bill as assessed by the Costs Officer.

With respect to Mr Worthy I think he approached the matter in an over elaborate way. Focussing, as I think is the appropriate approach, on what was known to Mr Howe at the time, this was not as completely straightforward a case as was Callery v Gray or Sarwar v Alam involving passengers in RTA cases.

There was some risk that the Claimant would not succeed, though, as I analyse it in respect of the next head of appeal, I do not think this was a very great risk. I do think however it was sufficiently high to justify a slightly higher premium than the standard policy of £250 or £350 suggested in some of the cases that have subsequently found their way into the Law Reports. I think too that Mr Howe did take out too much cover, and I am far from convinced that, unlike the insurance industry, he took into account "the burning cost". I believe that in those days, and possibly even today, most solicitors assess the risk and calculate the premium (if they do that as well) on a case by case basis without applying the insurance principles of the fact that not every case will be won. There is certainly no evidence in this file that Mr Howe considered this case in relation to any other cases that his firm might be carrying and which they might lose.

I conclude therefore that the appropriate level of premium for Mr Howe to have paid or fixed was £400, and to that extent I allow the Defendants’ appeal on this head.

As Mr Williams pointed out, the level of the insurance premium and the success fee are closely bound up with each other, and it is interesting to note that the 100% success fee claimed by Mr Howe was allowed at 50% by Mr Worthy, and there has been no cross appeal against that finding.

I consider that this accurately reflects the reality of this case. I was referred to the case of Ward v Tesco Stores Ltd, decided by the Court of Appeal in 1975 and reported at [1976] 1 WLR 810. In that case the claimant slipped on some yoghurt in the defendants’ supermarket in Liverpool. Unlike this case there were no eye witnesses, and no evidence one way or the other on negligence, apart from the fact that yoghurt should not be left lying on the floor after a spillage. However there was evidence that some three weeks after the accident the claimant/plaintiff went back to the same supermarket and found some orange juice spilt on the floor, and watched and noted that it was a good 15 to 20 minutes before it was cleared up. On the basis of the totality of the evidence the Judge in the court below had held that the claimant had made out a prima facie case of negligence, was entitled to damages therefor, and by a majority the Court of Appeal dismissed the defendant’s appeal. Thus, Mr Herlihy said, this meant that effectively the burden of proof in the slipping case transferred to the supermarket once the evidence of slipping was established. On that basis a success fee of anything approaching 50%, let alone 100%, was far too high.

Again I was referred to the level of success fees allowed in Callery v Gray, Sarwar v Alam, Halloran v Delaney and Pirie v Ayling. It was suggested that all these pointed to a success fee of no higher than 20%, the percentage which Mr Herlihy was prepared to concede, though in fact he did say that he thought the success fee should be lower following the decision in the Court of Appeal decision of Halloran v Delaney.

However, as I have already indicated, none of the cases that I have cited had been decided by the courts, or reported, at the time when Mr Howe was fixing the success fee. It was said by Mr Williams that he was faced with a client who told him that she had slipped, there was some supporting evidence, but it was by no means certain that the Defendants would not have been able to put up a good defence, on the basis that they regularly cleaned the floor, and therefore discharged the burden of proof suggested in Ward v Tesco Stores Ltd. Thus, he said, this case could not be equated with the cases cited above, all of which were minor RTA type cases, or even with the Bensusan case where the Senior Costs Judge allowed 20% in respect of a dental patient who swallowed dental equipment accidentally dropped down her throat by the dentist.

I believe there is a serious danger of trying retrospectively to apply decisions of Higher Courts in relation to insurance premiums and success fees to situations to which they are not appropriate. I have little doubt that if Mrs Abrew walked into the offices of Howe & Co today then a very different exercise would be conducted, especially in respect of the insurance premium and the success fee, but what I have got to decide is what was a reasonable success fee for Mr Howe to fix in October 2000.

Mr Herlihy also referred me to what he stated as the very unsatisfactory and sketchy nature of the risk assessment, which was only disclosed to him the night before the original hearing before Costs Officer Worthy. I have seen that document, and it is indeed quite short, and is to be contrasted with the case which was drawn to my attention by Mr Herlihy, namely Chalk v High Tower and Praetorian Housing Association. This was a decision of District Judge Presod at Cambridge County Court last October, and is to be found in APIL, Volume 12, Issue 6. The Judge is reported as saying:

I however agree with Mr Williams that that case is of no assistance to me, because I have to come to a conclusion on the basis of the material before me. I also think Mr Herlihy underestimates the difficulties that would be encountered by a busy solicitor such as Mr Howe if he had to go into great detail in every single case.

The Costs Officer concluded that a 50% success fee was appropriate. His summary reads:

It seems to me that in assessing the success fee every case has to be looked at on its own facts, and this was not an RTA case with no risk.

I have come to the conclusion that the appropriate success fee was the 50% fixed by Mr Worthy, but not for the reasons given by the Costs Officer. I think that in the state of the then knowledge, and the uncertainty of the outcome of the case, the Claimants Solicitor was entitled to a success fee of 50%, bearing in mind the risks as then known by Mr Howe. On this head of appeal therefore the Defendants fail, and their appeal is dismissed.

Mr Herlihy argued strongly that it was quite wrong for the Costs Officer to award £4,862.47 costs when the recovery in respect of the original proceedings was only £4,089.87. He referred to the conduct of the parties, and the relevance of CPR 47.18. He attacked individual items, as well as the overall total.

In response Mr Williams said that whilst the Costs Officer’s views about the success fee and the insurance premium were of interest, but no more, I should pay much more regard to his discretionary decision in relation to the costs of the detailed assessment, not least because he had heard the full arguments and had had the opportunity to go through the bill in detail.

There is much force in that argument it seems to me. I also agree with him that it would be wrong to tinker with small items, simply to bring the bill down by a small amount.

The fact is that the Defendants chose to attack this bill on almost every point, as is apparent from their Points of Dispute, and sought to upset the validity of the CFA, which would of course, if successful, would have meant they would not have had to pay any costs at all.

It seems to me that the Defendants have failed to heed what Lord Justice Latham said in the case of Bernstein v Times Newspapers [2002] EWCA Civ 1739, when he condemned those who sought to make a cottage industry out of satellite litigation. By the time this detailed assessment came before the Costs Officer many of the contentious points which were not decided when Mr Howe had to make his decisions about insurance premium and success fee, had been resolved. I therefore conclude that much of the additional costs which on the face of it seemed to be disproportionate were caused by the approach of the Defendants to this assessment.

Whilst I am not completely convinced that I would have reached the same decisions as the Costs Officer, he did have the great advantage over me of having been through the bill on an item by item basis, and heard oral arguments over what was a considerable length of time for such a small bill. I certainly agree that it would be wrong to tinker with small items here and there, and overall I have come to the conclusion that it would be wrong to interfere at all with the Costs Officer’s assessment of the costs of the detailed assessment, and, on this head too, the Defendants challenge fails and their appeal is dismissed.

I am conscious that simply by reserving judgment I have increased the costs of what I have condemned myself as a small piece of litigation. If therefore the parties can agree on the appropriate costs order (and better still the amount payable as a result thereof) for the appeal to me there will be no necessity for them to attend when this judgment is formally handed down.