Collet v Smith & Anor

The Claimant, a professional footballer, sought damages for personal injuries sustained as a result of negligent tackle by the First Defendant for whom the Second Defendant was vicariously liable. Proceedings were issued and on the 7^th February 2007, judgment was entered by consent for the Claimant against the First and Second Defendants for an amount of damages to be assessed by the Court.

On 19 October 2009, the Claimant served Notice of Commencement of assessment of his bill of costs. The bill totals £1,609,517.44. The matter was listed for a four day hearing at the Manchester Civil Justice Centre, commencing on 17 January 2011. The Claimant’s solicitor and Counsel were retained on a conditional fee agreement basis (CFA) and in their Points of Dispute the Defendants objected to the level of success fees being claimed in the sums of £581,834.75 for the Claimant’s solicitors and £12,365.00 for Counsel exclusive of VAT.

On 19 January 2011, I heard oral argument from the representatives for the Claimant and Defendants as to the level of both the solicitors’ and counsel’s success fees and reserved judgment on that issue. On 16 February 2011, the Defendants’ solicitors requested that I allow further submissions on the success fee issue in the light of the case of MGN –v- UK [2011] ECtHR (Application No 39401/04). Written submissions were received from Jeremy Morgan QC (for the Claimant) and Mark Friston (for the Defendants) on 10 March 2011.

This judgment deals solely with the success fee issue relating to the Claimant’s solicitors’ and counsel’s CFAs.

The Claimant was injured whilst playing for Manchester United’s Reserve team in a football match against the Second Defendant on 1 May 2003. The Claimant initially consulted solicitors in or around October 2004, when it became apparent that he was unlikely to be able to return to play football at the level he had played prior to the injury.

Proceedings were issued on 21 April 2006. The matter was listed for a split trial on the issues of liability and quantum. The issue of liability was fully contested until 1 February 2007, three weeks before the liability trial was due to commence. The Defendants conceded liability and submitted to judgment with damages to be assessed.

The quantum trial took place over five days before Mrs Justice Swift DBE, judgment being handed down on 11 August 2008 with damages to the Claimant of £4,350,147.00. Outstanding issues including pension loss were determined at a further hearing on 3 October 2008. The Defendants were ordered to pay the Claimant’s costs of the action such costs to be the subject of detailed assessment if not agreed. The assessment was to be carried out on the following basis:

On the standard basis up until the 26^th June 2008

Thereafter on the indemnity basis

The Defendants appealed the final award which exceeded £4.5 million. The Court of Appeal heard the matter on 6 May 2009, and delivered judgment on 17 June 2009, when the appeal was dismissed in its entirety. The Defendants were ordered to pay the Claimant’s costs of the appeal such costs to be the subject of detailed assessment if not agreed. The assessment to be carried out on the following basis:

On the standard basis up until the 30^th April 2009 and

Thereafter on the indemnity basis

Notice of Commencement of assessment of the Claimant’s bill of costs was served on 19 October 2009, and deals with the costs of both the substantive action and the appeal. The Defendants served their Points of Dispute on 23 December 2009. Replies were served on 16 February 2010.

On 8 November 2005, the Claimant entered into a Conditional Fee Agreement (CFA) with his solicitors, Beachcroft Wansborough. Paragraph 4 of the agreement states:

The agreement is to be read in conjunction with the Law Society document “What you Need to Know about a CFA” which was appended to the agreement. In relation to the success fee, the document said this:

The CFA goes on to state:

You are liable to pay all our basic charges, our disbursements and success fee.

The CFA also made reference to Part 36 offers in the following terms:

On 19 July 2006, Beachcroft Wansboroughs assigned a benefit of the CFA to Beechcroft LLP.

Counsel instructed by the Claimant, also entered into conditional fee agreements, as follows:

Mr. NEIL BLOCK QC: this agreement is dated 24 April 2006. It is in the standard APIL/PIBA5(a); April/May 2001 format. In the Risk Assessment and Statement of Reasons, the agreement says this:

The effect of a Part 36 offer is set out in the following terms:

This agreement was entered into on 2 April 2008. The risk assessment annexed to the CFA contains the following:

His agreement was entered into on 20 June 2008, and claims a success fee of 15%. The Statement of Reasons is in the same form as in the agreement of Richard Hartley QC.

The Points of Dispute and Replies deal with the success fee issue at length and set out the competing submissions of both parties. The Defendants offered the following success fees.

On the 1st June 2005, the Claimant’s solicitor, Mr Levinson, reviewed a DVD of the match against Middlesbrough FC. In an attendance note of the same date he recorded the following:

On 12 July 2005, Mr Levinson and Mr Vickerstaff attended Manchester United’s Carrington training ground, interviewed and took statements in relation to the incident from Sir Alex Ferguson, Brian McClair and Ricky Spragia.

On 8 September 2006, a case management conference took place at Manchester Civil Justice before District Judge Gosnall (as he then was). On 13 September 2006, the Claimant’s solicitors wrote to the Defendants’ solicitors. In the letter they said this:

In response, the Defendants’ solicitors wrote on 15 September 2006, and stated:

The trial in relation to the issue of liability was listed for hearing on 19 February 2007. On 1 February 2007, the Defendants offered to concede liability and on 7 February 2007 a consent order was approved by the Court whereby judgment was entered for the Claimant against the First and Second Defendants for the amount of damages to be assessed by the Court, together with the Claimant’s costs of the action on the standard basis up to the date of that order to be the subject of detailed assessment if not agreed.

Section 11 of the Costs Practice Direction of the Civil Procedure Rules sets out the factors to be taken into account in deciding the amount of costs pursuant to Rule 44.5 CPR. The relevant provisions are:

The Claimant submitted that sporting injury cases are unique in the sense that injuries (even career ending ones) are part and parcel of the rough and tumble of competitive sport. Consequently the threshold for establishing liability in sporting injury cases is a high one. These cases are relatively rare and in many cases “volenti” can operate as a complete defence. The fact that the Defendants fought the issue of liability tooth and nail until three weeks prior to the liability hearing, demonstrates that the Defendants believed they had a serious and sustainable defence to the claim and that therefore this was a high risk case. It was argued that the determination of whether the challenge to Collett constituted a breach of duty was a sensitive issue requiring expert liability evidence. The liability experts were themselves in conflict on this issue. It was only after the Defendants’ liability expert appeared to change his opinion at the liability experts’ joint meeting, that the Defendants reconsidered their stance on liability. The Claimant also argued that the high value of the claim increased the risks in the case. This was borne out by the fact that the matter proceeded to trial which of itself justified the success fee claimed and a subsequent appeal of the judgment which would have been far less likely in a lower value matter. As such, quantum was highly contentious and could well have had an effect in terms of the order as to the costs obtained by the Claimant had the Defendants’ contentions been upheld.

For the Claimant, Mr Crawley submitted that enforceability was a real issue in this case. The Second Defendants had gone into administration twice, once in 1985 and again in 1988. Their insurance policy excluded an indemnity to individual players and there was a real risk that the Second Defendant would be unable to satisfy any judgment ordered by the Court. The Claimant himself was not in a position to meet his own costs in the event that he was successful in recovering damages, but failed to secure a favourable order as to costs between the parties.

It was also argued that in view of the comments of Mr. Neil Block QC contained in the Statement of Reasons in his own CFA, that “the merits are finely balanced and that there are also significant potential issues about quantum” demonstrate that from an early stage in the proceedings, the risks on liability were high. It was submitted that it is anomalous that on the one hand the Defendants had offered a success fee of 80% in respect of Leading Counsel’s CFA which was, entered into after the solicitor’s CFA, when only 40% had been offered to the Claimant’s solicitors. It was submitted that it was not unreasonable for the Claimant’s solicitors to draw a similar conclusion to Leading Counsel five months earlier, particularly given the increased risks assumed by their CFA, which covered any appeal. The CFA entered into by the solicitors was taken out within six months before the expiry of limitation when proceedings in the case were inevitable. The Defendants’ denial of liability made within one month of the expiry of the limitation demonstrated a clear intent to fight this case all the way, and thus it was reasonable to set the success fee of the solicitor’s CFA at 100%.

Mr Gibbs for the Defendant drew my attention to the solicitor’s CFA in the event of a Part 36 offer. He submitted that the terms of the CFA made it clear that the solicitor would be paid his base costs irrespective of whether a Part 36 offer was subsequently beaten at trial. He submitted that there was no quantum risk in this case. He argued that any quantum risk was transferred to the Claimant, and not to the Claimant’s solicitors, who stood to lose only their success fee, in the event of their client not beating a Part 36 offer at trial.

In relation to the issue of enforceability the CFA was in standard form. In the event of success, the Claimant remained liable for his solicitors’ costs. Accordingly it was submitted that the risk of enforceability of any judgment rested with the Claimant, and not with the Claimant’s solicitors. In relation to the actual risks on liability, at the time the CFAs were entered into, Mr Gibbs referred me to the comments of District Judge Gosnall at the CMC in September 2006, and the subsequent correspondence between the Claimants and Defendants, which demonstrated that the Claimants considered he had a good case on liability. Substantial work had been carried out prior to the CFA being entered into, a DVD had been obtained, witness statements had been taken from important lay witnesses, and that in the circumstances, the risks in relation to liability were low.

It was further submitted by Mr Gibbs that the staging for the success fee was unreasonably high in that the two stage success fee was set at 90% prior to the commencement of trial, and 100% if trial commenced. It was submitted that a staged success fee should give the paying party some incentive to settle. In this case, using the ready reckoner, it made a difference between the chances of success of 52/53% (90% success fee) and 50% (100% success fee).

In relation to the success fees of Richard Hartley QC and Jonathan Boyle, both these agreements were entered into after the admission of liability. Mr Gibbs submitted there was no quantum risk in this case. Both Counsel had agreed to Option A in their agreements, which meant that in the event of a Part 36 offer which was not beaten at the quantum trial, they would still recover their normal fees. At risk were simply their success fees. He submitted that there was little, if any, prospect of the Defendants resiling from their admission of liability, bearing in mind the consent order that had been entered into in February 2007.

Mr Morgan QC submitted that the case of MGN Ltd –v- The United Kingdom [2011] ECtHR (Application No 39401/04) (“MGN”) had recently been considered by the Court of Appeal in the case of Sousa –v- LB Waltham Forest [2011] EWCA Civ 194. He submitted that MGN was inconsistent with the decision of the House of Lords in Campbell –v- MGN (No 2) [2005] 1 WLR 3394, which was a decision reached in the same case. The conventional doctrine of precedent required me to follow the decision of the House of Lords. Any notion that decisions of the ECtHR can overrule a “decision” of the English Courts was misplaced.

Mr Friston submitted that in assessing the success fee, the Court should take into account, not only the reasonable needs of the Receiving Party, but the guaranteed rights of the Paying Party, and in particular the Article 6 right of access to the court with the likely effect that the success fee would have on that right. Furthermore, he submitted that in assessing the quantum of the success fee, I should take into account the following matters:

In relation to Counsel’s success fee, the risk that a Receiving Party may suffer adverse costs consequences as a result of having failed to beat a Part 36 offer when assessing the success fee: to do so would be a breach of the Defendants’ right of effective access to the Court. He argued that giving weight to the quantum risk places Defendants in a “Catch 22” situation in which the more reasonable they are, the more they have to pay to achieve access to the Court. He submitted that there can be a legitimate legislative objective in facilitating the right of claimants to have access to the Court in circumstances where the need for that access had been negated by the very offers that quantum risk purports to take into account. In the alternative, he submitted that I should give quantum risk marginal weight.

Also in relation to Counsel’s success fee on the facts of this case, I am permitted to allow different success fees for different periods during the litigation, and he argued to the extent that Ku –v- Liverpool City Council [2005] EWCA Civ 475 says otherwise, it can be distinguished or is wrongly decided.

He also submitted that I am permitted to look at the total fee claimed and to reduce the success fee (or the cost generally) by reason of the total being disproportionate and in this regard CPD Section 11.9 is “ultra vires”

I was told by the Claimant that sporting injuries are unique in the sense that injuries (even career-ending ones) are part and parcel of the rough and tumble of competitive sport. Volenti can operate as a complete defence. The law in this area is still developing. Judge LJ (as he then was) in the case of Caldwell –v- Maguire and others [2001] EWCA Civ 1054 at paragraph 37 said this:

At paragraph 39, he went on to state:

It was submitted by the Claimant that the legal uncertainties themselves increased the risks of litigating this case. This risk was noted in the risk assessment in the following way:

In Watson and Bradford City AFC v Gray and Huddersfield Town FC [1998] Times 26^th November Hooper J set out the following test for negligence in footballer actions:

Accordingly, to establish liability in footballer actions, there has to be a significant risk of serious injury. Carelessness, a lapse, oversight or error of judgment in a fast moving game does not amount to a breach of duty. This case was fully defended by the First and Second Defendants, and proceeded on the issue of liability until 1 February 2007, some three weeks before the liability trial was due to commence, when the Defendants, without warning, offered to concede liability.

The following facts are in my judgment relevant to the determination of the level of success fee in this case. The tackle, which caused the injuries to the Claimant, lasted no more than a couple of seconds in the view of the Claimant, and the Defendants, who in the defence set out the case as follows:

The determination of whether the tackle was made in error of judgment, or negligently, was a live issue until the admission of liability. It was one upon which the direct lay and expert evidence and expert witnesses in this case, could not agree.

The referee in this case, who saw the tackle, did not even give the First Defendant a caution as a result of his challenge. There was no yellow or red card. There was no crowd reaction nor reaction from the other players, nor an inquiry by the FA Disciplinary Committee following the match.

The solicitors’ CFA in this case was entered into at an early stage in proceedings on 8 November 2005. At the time of entering the CFA, Mr Levinson at the Claimant’s solicitors, had viewed the DVD of the incident. His note in my judgment demonstrates that the DVD was inconclusive. In addition, Mr Levinson had carried out a brief review of certain photographic stills. Other than that he had a draft unsigned statement from Ricky Spragia, who, at that point, was sole eye witness, supporting the Claimant’s case. He was the Claimant’s manager of the reserve team. In addition at the time of the entering of the CFA, the Claimant’s solicitors had statements from Sir Alex Ferguson and a draft statement from Brian McClair, supporting the Claimant’s case. These statements were based on the DVD footage and as such amounted to inadmissible opinion evidence. I accept the submission of the Claimant that the key evidence in these types of cases is invariably the liability experts’ assessment of the tackle to be deduced from all the available evidence. All the evidence upon which the Claimant sought to rely had not been obtained at the time the CFA was entered into. The first lengthy review of the Claimant’s case was not conducted until well after the CFA had been entered into.

In addition at the time that the CFA was entered into, the Claimant’s full medical records had not been obtained and there was no medical expert evidence on causation available to Mr Levinson.

The Defendants referred me to correspondence from the Claimant’s solicitors to the Defendants’ solicitors in September 2006 inviting them to admit liability. This correspondence followed a case management conference before District Judge Gosnall (as he then was) on 8 September 2006. The Judge’s view was that having viewed the photographic evidence annexed to the particulars of claim, he considered liability ought to be relatively straight forward. I remind myself that this was almost one year since the CFA was entered into in November 2005. Nevertheless, despite the comments of District Judge Gosnall, the Defendants refused to admit liability until February 2007 when their liability expert altered his position. I accept the Claimant’s submission that the invitation by the Claimant to the Defendant in their letter of 13 September 2006 to admit liability was one that any Claimant would make without expecting a positive response.

The principles for governing the assessment of success fees were dealt with Mr Justice Akenhead in the case of Redwing Construction Ltd –v- Wishart [2011] EWHC 19 (TCC). At paragraph 15(c) he said:

In the case of Designers Guild –v- Russell Williams (Textiles) Ltd No 2 [2003] 2 Costs Law Reports, page 204, at paragraph 15, the Senior Costs Judge Master Hurst said this:

In relation to the success fee in the solicitors’ CFA, the Points of Dispute state:

I am required by the provisions of Section 11.7 of the Costs Practice Direction to have regard to the facts and circumstances as they reasonably appeared to the solicitor or counsel when the CFA was entered into. I cannot apply the test of hindsight to determine the appropriate level of success fee.

In this case the solicitors’ CFA is staged. The staging is as follows:

In relation to staged success fees, Lord Justice Brook on Ku –v- Liverpool City Council [2005] EWCA Civ 475 said this:

Master Campbell, in the case of Peacock –v- MGN Ltd [2010] EWHC 90174 (Costs) followed the decision in Ku and said at paragraph 25(i):

It is open to the Claimant to choose the date of staging. In Ku, the Court of Appeal contemplated a low success fee and in Peacock “perhaps until the service of the defence”. In other words to have the benefit of a high success fee in the cases that do not settle early. In this case, the staging affords the Defendants little discount for an early settlement. A discount of 10% is applied to the period before the trial has commenced. In my judgment, what Mr Levinson, the Claimant’s solicitor, was contemplating at the time that he entered into the CFA with the Claimant, accords with the decision in Designer Guild. In other words, if this case went to trial, a success fee of 100% is easily justified because both sides presumably believed that they had an arguable and winnable case. At worst, what Mr Levinson was contemplating had the case settled before trial, was that the prospects of success were in the order of between 50% and 55%, which on the ready reckoner approach would equate to a success fee of somewhere in the order of 90%.

In my judgment, the potential high value of this claim, which is a factor reflected in the risk assessment, is real. This case settled for in excess of £4.5 million. Lord Justice Moore-Bick in C –v- W [2008] EWCA Civ 1459 at paragraph 15, said:

Of the other factors reflected in the setting of the success fee percentage, I entirely accept “the specialist nature of the dispute”. I have already referred to the high threshold test to be adopted in relation to the issue of liability which was clearly a factor in the mind of Mr Levinson when the success fee was set. In addition a further factor is the “number of different experts required to be instructed”. Mr Leveinson holds himself out to be an expert in specialist sports injuries with the technical expertise to match. It is clear from his witness statement that he has had conduct of many winning and losing claims and was therefore fully aware when he entered into the CFA with the Claimant, the number of different experts and the disciplines required in connection with establishing liability, causation and quantum.

Mr Gibbs sought to persuade me that there was no quantum risk in this case. He referred me to the document “Conditional Fee Agreements: What You Need To Know” and the relevant conditions in the event of the solicitors terminating the CFA. In particular:

Pay the basic charges and our disbursements, including barristers’ fees;

Pay the success fee if you go on to win your claim for damages.”

He submitted that in all the circumstances, there was no quantum risk to the solicitors in this case. The Claimant’s solicitors were always to be paid their base fees, come what may even in respect of a successful Part 36 offer or payment into Court by the Defendants. Their only risk was that they may not recover a success fee. In that regard, I accept that there was little, if any, quantum risk on the Claimant’s solicitors’ part in their CFA.

I also accept his submissions with regard to risk factor (i) in the Claimant’s CFA, namely “the possibility of achieving success on liability/quantum but failure on enforceability”. There is no departure from the standard wording of the CFA in this case. If the Claimant wins his claim, he remains liable for his solicitors’ basic charges, disbursements and success fee. Consequently, the risk was on the Claimant of non-recovery or non-enforceability of a costs order against the Defendants. There was no risk to the Claimant’s solicitors in that regard.

Having reviewed all the material that was available to Mr Levinson and his colleagues, at the time that the CFA was entered into, I am satisfied that in respect of the issues of liability, this was far from a straight forward case. Equally, I am satisfied that Mr Levinson accurately assessed the risks of the Claimant’s case, at the time that the CFA was entered into as being no more than marginally above 50%. Taking into account the discount of 10% referred to in the CFA, Mr Levinson, in my judgment, accurately assessed the risks in this case, for the reasons set out above, as no more than between 50% and 53%. I adopt the reasoning of Master Campbell at paragraph 25(i) of Peacock, and entirely agree with his conclusion that a party who contends for a high success fee in a matter that has gone a long distance towards trial, (the situation here), stands a better prospect of having that fee approved if a lower success fee would have been payable had the claim settled earlier. Admittedly the staging in this case was later than in the case of Peacock. Furthermore, the discount for early settlement was relatively small, namely 10%. Nonetheless, in my judgment, this accurately reflects the Claimant’s case on liability as it was known at the time that the CFA was entered into. With hindsight, that assessment proved accurate, bearing in mind that the Defendants did not admit liability until very shortly before the trial. Accordingly, in view of the fact that I have found that there was no quantum risk to the solicitors in relation to their fees, I find that the appropriate level of success fee, bearing in mind the admission of liability prior to the commencement of the liability trial is 90%.

Mr Block’s CFA was entered into on 24 April 2006. The information upon which his written assessment was based were instructions dated 13 April 2006. He assessed the prospects of success at 50%, giving a basic uplift from the ready reckoner of 100%. In a statement of reasons he says this:

In his agreement, Mr Block opted for “option A” in the event that the amount of damages and interest awarded by a court was less than a Part 36 payment into Court or effective Part 36 offer. Paragraph 20.1 of his agreement reads as follows:

In other words, like the Claimant’s solicitors, leading counsel would recover his normal fees for work carried out on behalf of the Claimant after a successful payment into court or successful Part 36 offer by the Defendant. Consequently, in the light of my earlier findings in relation to the solicitors’ CFA, I find that there was little quantum risk on the part of leading counsel in this case. In my judgment any quantum risk was transferred from the Claimant’s solicitors and leading counsel to the Claimant on the basis that he remains liable for his solicitors’ and counsel’s base and/or normal fees.

So far as the risks on liability were concerned, Mr Block has specialist sporting injury experience. I accept that more evidence was available to him when he made his assessment of risk than was available to the Claimant’s solicitors. Mr Morgan QC in his written submissions to me, argues that the statement of Mr Block that “the merits are finely balanced and there are also potentially significant potential issues about quantum” is a statement of expert professional opinion for which counsel would be liable for disciplinary action if it were made without foundation. Accordingly, he submits it should be accorded considerable weight. I accept that proposition. Having reviewed the documentation available to leading counsel prior to the entry into the CFA by him, I am satisfied that his opinion was right. The merits of this case at the time the CFA was entered into, bearing in mind the denial of liability were finely balanced. The Defendants appear to recognise this fact, bearing in mind that they concede 80% in respect of Mr Block’s success fee, but only 40% for the Claimant’s solicitors. This reinforces my view that the Defendants accept that the case, on the issue of liability, was finely balanced. Accordingly, and allowing as I do a discount in respect of quantum risk, I allow 90% success fee in respect of Mr Block QC’s fees.

The CFA for Mr Richard Hartley QC is dated 2 April 2008 and the CFA of Mr Jonathan Boyle was entered into on the 20 June 2008. Both agreements are in similar form and incorporate the standard terms agreed between APIL and PIBA on 31 October 2005, namely APIL/PIBA6 which were incorporated but not annexed to the agreement. Both counsels’ CFAs contain the same risk assessment and statement of reasons. The success fee claimed for both counsel is 15%. Their statements of reasons record the following:

The relevant standard terms and conditions in APIL/PIBA6 are:

Mr Hartley QC defines normal fees in his agreement in the following way:

In the case of Mr Boyle, normal fees are defined as:

The definition of “win” in the solicitors’ CFA is set out in the document marked “Conditional Fee Agreement: What You Need to Know”, is defined as follows:

The consent order in respect of the issue of liability in this case was signed by the Claimant’s and Defendants’ solicitors and approved by the Court on 12 February 2007. It records that “judgment be entered (by consent) for the Claimant against the First and Second Defendants (“the Defendants”) for an amount of damages to be assessed by the court.”

I was provided with a note on the success fees claimed by Mr Richard Hartley QC and Mr Jonathan Boyle. Paragraph 2 of that note states the following:

That is the conclusion that I have reached for the following reasons. In my judgment, the definition of “win” in the solicitors’ CFA which is the same as “success” in counsel’s CFAs, had already been triggered at the time that counsel’s CFA’s had been entered into. The consent order of 7 February 2007 dealt with the issue of liability with judgment being entered for the Claimant for an amount of damages to be assessed by the court. A consent order was signed by all the parties at least fourteen months before the CFA of Mr Richard Hartley QC was entered into, and that Order not been appealed. Counsels’ statements of reasons for setting their success fees at 15% refer to the possibility of an application to resile, and the fact that the case was “likely to be risky on quantum”. In my judgment, bearing in mind that counsel’s CFAs were not entered into until some 14-16 months after a judgment by consent had been entered, any application to resile from the admission from liability would have been unlikely to succeed. This must be the case even though the Claimant had offered to accept judgment for 95% of damages with the Defendants purporting to agree the Claimant’s proposal, but then conceding the issue of liability on a 100% basis. I find it inconceivable that a court, some fourteen to sixteen months after a consent order admitting 100% liability in this claim, would reopen the entire issue of liability. Even if an application to resile was successful to the extent of increasing contributory negligence on the part of the Claimant, it would, in my judgment still have been a “win” or “success” thus triggering a success fee. In my judgment paragraph 16 of the APIL/PIBA6 would never have been engaged in this case. The Claimant was successful on the issue of liability and accordingly in my judgment counsel was at no risk in relation to an application to resile.

So far as quantum risk is concerned, the terms of APIL/PIBA6 make it clear that if the amount of damages awarded by the court is less than a Part 36 offer or payment into Court and that counsel has advised its rejection he will still recover his normal fees for any subsequent work. If he advises on acceptance he is entitled to normal and success fees for all work done. This was the case with both the CFA’s of Mr Hartley QC and Mr Boyle and therefore in my judgment, they carried no quantum risk. Save to the extent that the claim is “lost” in accordance with paragraph 16 of the APIL/PIBA6 terms, counsel will always recover their normal fees.

Mr Hartley and Mr Boyle in their note on success fees, refer me to a number of other risks at paragraph 12. They crystallise these as the “ordinary risks of litigation”, and, for example, refer to the Claimant ceasing to co-operate or, alternatively, failing to provide instructions, leading to his claim being struck out. Or, by way of another example, some procedural breach or failure to comply with court orders. Even in these eventualities, the ABIL/PIBA6 terms at paragraph 17 provide that counsel can recover their normal fees from their instructing solicitor for work carried out. In those circumstances and in my judgment both Mr Richard Hartley QC and Mr Jonathan Boyle carried no risk in relation to the factors set out in their statement of reasons contained within their CFAs. Accordingly, their success fees will be assessed at nil.

Dealing with the submissions of the parties in relation to the issues arising out of MGN Ltd –v- The United Kingdom [2011] ECTHR (Application No 39401/04) and the Defendants’ submissions that in assessing the success fee, the court should take into account, not only the reasonable needs of the Receiving Party, but also the guaranteed rights of the Paying Party. In particular, the right of access to the court and the effect that the success fee is likely to have on that right. Mr Friston, in his written submissions to me, argues that the Defendants’ right of access to the court has been violated by the fact that a success fee is charged. In the alternative, it is argued that the right of access has been violated by the fact that counsel’s success fee is calculated in an irrational and unfair way and that both success fees ought to be limited to what is necessary in a democratic society for the purpose of achieving access to justice. The Defendants rely on Article 6 of the ECHR, namely the right to a fair trial, and submit that on the basis of the MGN decision; circumstances exist in which the Defendants’ human rights may be violated if the costs which are claimed against them are excessive. To the extent that this is to be taken into account, it is a necessary implication of this decision that the court is able to take the party’s human rights into account. He submits that the success fees claimed in the bill of costs amount to some £581,832 for the Claimant’s solicitors and £14,816 for counsel, giving a total of £596,648 exclusive of VAT. He submits that the overall sums which are awarded ought not to be allowed to reach such a high level that it bars access to the court. In that regard, he submits that I should look at absolute figures, and allow no more than is acceptable so as not to prevent access to justice, and that I should reduce globally the success fee to a level that is not a bar to access to the court. A practical approach to deal with this issue would be under the guise of proportionality which, it was argued, was positively encouraged by Lord Hope in the MGN House of Lords decision, where at paragraph 47 he said this:

The conditional fee agreement in the MGN case before the House of Lords was clearly unusual. It did not provide for a waiver of the shortfall of the success fee. The conditional fee agreement with the Claimant’s solicitors in this case does. As such, the Claimant will not have to bear the shortfall. For the Claimant, Mr Morgan QC submits the facts of MGN are distinguishable from this case for a number of reasons:

The Claimant is not wealthy and would have been excluded from access to justice for financial reasons if he had not some form of funding arrangement such as a CFA in place.

The damages in MGN were some £3,500. In the present case £4.5 million.

The present case does not concern freedom of expression namely Article 10 ECHR, which was the convention right engaged in the MGN case. Article 10 confers on the person an express right to freedom of expression subject to certain limitations. No comparable expressly stated right is engaged here.

MGN raises issues of proportionality. In this case, no general proportionality challenge under Lownds or proportionality challenge to the success fee was raised in the points of dispute. In any event, elements of the bill of costs are to be assessed on the indemnity basis where proportionality is not a factor.

MGN was considered by the Court of Appeal in the case of Sousa –v- LB Waltham Forest [2011] EWCA Civ at 194, where Lord Justice Ward said this:

At paragraph 54 of the judgment, Lord Justice Moore-Bick said this:

I am unable to accept that submission for two reasons. Firstly, because in MGN –v- The United Kingdom, the court was concerned with the question of whether the liability to pay a success fee involved the disproportionate interference with a newspaper’s right of free speech and was unreasonable on that account. The case is not, therefore, remotely comparable to the present. Second, because unless the liability to pay a success fee can be said to infringe the Defendant’s rights under the convention (which it is clearly not the case here) questions of proportionality and reasonableness do not arise. It is for Parliament to decide what arrangements viewed overall will best serve the general requirement for access to justice. Moreover, the submission is contrary to the decision of the House of Lords in Campbell –v- MGN (No 2), which remains binding on this court.”

Lord Hoffman in Campbell –v- MGN (No 2) dealt with the issue of proportionality in the following way:

I prefer the submissions of the Claimant in relation to this matter to those of the Defendants. I distinguish the MGN case on the facts and, in particular, for the reason that this is not an Article 10 case. I am not bound to follow the MGN decision, of the ECtHR which is inconsistent with the decision in the House of Lords in Campbell –v- MGN (No 2). In my mind, the conventional doctrine of precedent requires me to follow the decision of the House of Lords, and approval for that course of action is found at paragraph 37 of Sousa. Accordingly, the success fees allowed in this case are:

As far as the costs of this issue are concerned, these are reserved to the conclusion of the detailed assessment.