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	English and Welsh Courts - Miscellaneous
You are here: BAILII >> Databases >> English and Welsh Courts - Miscellaneous >> Barham v Athreya & Anor [2007] EW Misc 6 (EWCC) (15 June 2007) URL: http://www.bailii.org/ew/cases/Misc/2007/6.html Cite as: [2007] EW Misc 6 (EWCC)

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IN THE CENTRAL LONDON COUNTY COURT
APPEAL FROM THE SUPREME COSTS OFFICE

		Civil Justice Centre 26 Park Crescent London W1N 1HT
		15 June 2007

1. HIS HONOUR JUDGE DEAN QC: This is an appeal by the solicitors who acted in a clinical negligence case on behalf of the claimant, Mrs Barham, which eventually (and I say eventually for reasons which will become apparent in a moment) she brought against her GP and also the Barking, Havering and Redbridge Hospital Trust.

2. I have a chronology here, which is an extremely helpful document, produced by Mr Pooles, who has argued this case on behalf of the solicitors who are seeking to challenge the award of the costs judge, Master Simons, who reduced the uplift for the success fee under a conditional fee agreement, a CFA, from the original 100 per cent, which had been included in that agreement, to some 67 per cent in relation to profit costs of the solicitors.

3. I have to say a little about the background of the case. In August 2001 Mrs Barham suffered a back injury at work. In December those symptoms deteriorated and she attended her GP, who ultimately became the first defendant in the action, where he prescribed antibiotics (she was suffering a burning sensation in her bladder and in her stomach so obviously he must have assessed a risk of infection) and various tests. Following that attendance at the GP's surgery Mrs Barham inquired as to what were the results of the tests and was told they were normal. She was not happy with this and insisted on seeing the GP. In January 2002 she made another appointment with the GP and the decision was made that advice should be taken from hospital. A couple of days later she again rang the GP and was told to attend and she was then taken or sent to casualty at Old Church Hospital.

4. The following day, on 11 January 2002, she underwent an MRI scan which showed a prolapsed disc. On the very next day, 12 January 2002, she underwent surgical intervention and following that there was a subsequent leak of CSF, which is a form of spinal fluid. She was discharged and went home but then was immediately re-admitted for a lumbar drain. She was finally discharged from the hospital in February 2002. She resumed work in April of that year and by November of that year the bladder symptoms appear to have resolved.

5. In May 2003 she attended solicitors, Gadsby Wicks, who are a well known, highly experienced professionals in clinical negligence cases. She had attended previously on two occasions when it appears that the firm had not been willing to undertake her case. In May 2003, following an interview with a nurse who was employed by the firm, no doubt for making assessments, the firm decided they would undertake her case on the terms of a CFA.

6. It is now necessary to turn to the CFA and I will try to identify as briefly as possible the relevant provisions. It is dated 1 May 2003, made between Gadsby Wicks and Mrs Barham. There, first of all, was a glossary or definition section in the agreement and clause 4(c) is an important provision. The agreement provided for a success fee and it defined the circumstances in which that success fee would become payable in paragraph 4(c) in these terms:

   "Win. This means that Your Claim is decided in your favour either by a Final Court Decision or by an agreement which in either case pays you Damages or Provisional Damages that are to be paid by any one or more of the persons or bodies who are described in this Agreement as Your Opponent."

7. In subparagraph (e) of clause 4 "your opponent" was defined, first of all, as the GP by name:

   "… or any other person or body to whom we submit a claim on your behalf whether or not court proceedings are issued against that person or body."

8. Subparagraph (f) defined the claim as:

   "This is your claim against Dr Athreya [GP] or any other person seeking Damages for personal injury caused by clinical negligence."

9. So a success fee was to be payable in the events there described, that is, success by the payment of damages, broadly speaking, by either one of the GP, who is identified, or any other person against whom the claim should subsequently be brought. The success fee, which is of course the core of the agreement, is contained in paragraphs 34, 35 and 36. The relevant paragraph is 35, which says this:

   "We have set the percentage of 100% of the Basic Charges. [That means their basic profit costs in the event of success would be raised by 100%.] We are not permitted by law to set it at more than 100%. The percentage at which we have set the Success Fee reflects our assessment of your prospects of success in pursuing Your Claim at the time we entered into this Agreement and the fact that if you Lose we will not earn anything. It does not reflect the fact that if you Win we will not be paid the Basic Charges until our work is finished."

10. Then clause 36 identifies a number of matters which were said to have been taken into account in assessing the success fee at 100 per cent uplift on profit costs. I had better read this because a lot of time has been spent on it:

    "Our assessment of your prospects of success in pursuing Your Claim at the date we signed this Agreement include the following [then there is a series of lettered sub clauses, nine in all]: (a) the fact of success or failure will depend to a considerable degree upon the extent to which the court will be willing to accept your account of the history of your treatment, the injury which you have suffered and the surrounding circumstances."

11. In other words, whether the claimant is accepted by the court as a credible and reliable witness.

    "(b) the fact that we have not yet had an opportunity to test the credibility of your evidence with regard to such matters and in particular have not been able to check it thoroughly against contemporaneous written records and Your Opponent's version of the facts."

12. That means, as I read it, we are taking your account on trust as at this moment because we have not had the opportunity to see if there are matters which are objectively inconsistent or cast doubt on your case, or, we have not had the opportunity to consider the nature of the Defence or answer to the claim which the opponents may make.

    "(c) the fact that in order to Win you will need through to the completion of any trial the support of reputable, independent and suitably qualified medical experts whose expert opinions will be accepted by the court in preference to the opinions of any experts Your Opponent may engage to assist them."

13. There it is pointing out the risk that in litigation of this sort very often a substantial (if not the whole) part of a case will turn on the opinion evidence of medical experts, who may well be opposed by equally eminent experts on the other side, and the solicitor is at present unable to make a judgment as to which expert evidence is likely to carry more weight with the court.

    "(d) the fact that we have not yet had an opportunity to identify experts who will be able and willing to support Your Claim."

14. That means not only is there the risk that I have just mentioned in (c) but the fact is that we have not yet, as it were, contacted a suitable expert given the nature of the claim.

    "(e) the fact that we do not yet know the extent (if any) to which Your Claim will be defended by Your Opponent."

15. Will the claimant simply be pushing at an open door because there was an early admission of liability or will it be strenuously defended?

    "(f) the fact that if Your Opponent decides to defend the claim we do not yet know what experts (if any) will be willing and available to support the defence."

16. Again, just as they are not yet in a position to identify their own expert, they do not yet know the quality, the strength and the reputation of the expert who will be sought to assist the Defence. In medical negligence cases, of course, that can be very important. Very often, I am not saying necessarily in this case, but very often highly eminent medical witnesses are called and until one knows the identity of those witnesses and their past record in giving evidence, and so on, one cannot really assess how they can be properly compared with your own expert.

    "(g) the fact that we do not yet know to what extent and for what reasons any experts engaged by Your Opponent will be willing to give evidence to the court in defence of Your Claim."

17. There is always a risk, I suppose, that experts may not be willing to give evidence in Defence of the claim. Again, that is an element not of uncertainty, but certainly an element which is not known at this stage to the solicitors advising the potential claimant.

    "(h) the fact that for all of the reasons set out above we have not yet been able to form anything other than a preliminary view of your prospects of success because we have not yet been able to assemble all of the evidence which will be necessary to succeed at trial and we have not been able to assess the strength and credibility of the evidence (and in particular the expert evidence) which Your Opponent may assemble to defend Your Claim."

18. That means exactly what it says. Obviously at that stage they are not in a position to have an overall and thoroughly well informed view of the case in order to form a judgment on the likelihood or otherwise of success.

    "(i) In particular we are concerned that it may not be possible to establish any breach of duty because the symptoms that you reported to your general practitioner may not have been indicative of a serious condition and also that it may not be possible to establish causation because the earlier surgery may not have resulted in any improvement of the symptoms."

19. That means that we do not yet know, I think it is saying, whether your symptoms are consistent with and symptomatic of a serious condition and, furthermore, the very difficult question of causation has not yet been investigated. So those are the nine criteria which were taken into account, according to the claimant's solicitors, in assessing the uplift at 100 per cent of the profit costs. There are a number of other clauses but I think the only one which has really been discussed is clause 97 at page 17 of the agreed bundle. It provides:

    "We can end this Agreement at any time if we no longer believe that you are likely to Win. If that happens you will only have to pay us the Expenses. These will include the barrister' fees of any barrister who does not have a conditional fee agreement with us but will not include the interest referred to in paragraph 42 of this Agreement."

20. That gives the solicitor the unilateral option to review the progress of the case from time to time and to reassess the judgment which the solicitor may well have formed, and did in fact form, when the agreement was initially entered into. This was what one might call a clause whereby the solicitor can relieve himself from the possibility of spending further time without payment of profit. He would also be able to recover his out of pocket expenditure but in fact he will have no compensation for the time which he has given to the case to date. But it is an important clause because it suggests that the decision as at the date of the agreement in assessment of this is by no means a final one. It also suggests, it has been put in argument, that at the date of the agreement they did not believe that the conditions necessary for the operation of that get-out clause, or that cesser option, were present. That is, there would have been no point in signing the agreement if the clause would have been immediately operative.

    "We can end this Agreement at any time if we no longer believe that you are likely to Win."

21. That means that we do believe you are likely to win at this time but if we no longer have that belief at any time we may terminate the agreement. It is of course the solicitor's agreement and I doubt if there was any input at all from Mrs Barham or any independent legal advisers. I am not in any way suggesting that the agreement is in any way improper, but the fact is that it is their agreement.

22. What happened was the case in fact did not proceed to final litigation. There were various stages. Ultimately the case settled against both of the defendants. After the signing of the CFA, in October 2003, the same year, the claimant's solicitors finally obtained delivery of the medical records and commissioned reports on liability and causation. Then having considered the matters, presumably with the assistance of expert input, on 4 December 2004, well over a year later, the claim form was issued. On 17 January 2005 letters of claim were sent with draft Particulars of Claim. In September 2005 case management directions were given in the case. Following those directions, in November 2005, there was an exchange of witness statements and at that stage the second defendant, that was the hospital, made an offer of £5,000. On receipt of that offer in November the claimant made a part 36 offer to the hospital in the sum of £7,000 and in December the hospital accepted that offer. So the case settled against the hospital after completion of the documentary disclosure and the exchange of witness statements, but not exchange of expert evidence, as between that particular defendant and the claimant.

23. The GP held out for a little longer. In January 2006 experts' reports were exchanged with the GP and in February 2006 the claimant made a part 36 offer in the sum of £25,000. On 24 April 2006 the GP made a counter offer of £20,000, which was accepted.

24. So Mrs Barham successfully obtained damages from both defendants, happily without the necessity for a full-blown hearing in court. In those circumstances the success fee clearly became payable to the claimant's solicitors. There was then a detailed assessment of costs before Master Simons and during the course of that assessment Master Simons reduced the uplift on the profit costs from 100 per cent to 67 per cent.

25. Just pausing there, I will say now a little about the law, as little as I can manage, or as little as I can get away with. It is quite clear and it has not been in dispute, that when a conditional fee agreement is entered into, in considering the risk, the risk has to be assessed on the basis of the information which is available to the parties at the time the agreement is entered into and when the court is faced with a detailed assessment the court is itself obliged to put itself into that position. That is the effect of the practice direction which is set out in practice direction 44.11.7, which in the current edition of the first volume of the White Book is at page 1197. Part 11.7 says this:

    "Subject to paragraph 17.8(2), when the court is considering the factors to be taken into account in assessing an additional liability, it will have regard to the facts and circumstances as they reasonably appeared to the solicitor or counsel when the funding arrangement was entered into and at the time of any variation of the arrangement."

26. So one is not allowed to take into account hindsight. With hindsight of course, although this litigation, particularly in the case of the first defendant GP, was coming to a stage, I imagine, where there was nothing else left to do but prepare immediately for trial, in the case of the hospital they settled at a rather earlier stage and in fact the settlement was acceptable to the claimant, no doubt on the advice of her solicitors. So in the event obviously procedural matters had to be dealt with, witnesses had to be prepared, experts engaged and (inaudible) and the like, but the critical crunch battle of litigation in court did not take place. To that extent it was a very successful proceeding so far as Mrs Barham was concerned.

27. I now must make a distinction between the principles which apply when a costs judge is making a detailed assessment in the case of first instance, on the first occasion, and the principles which apply when there is an appeal to this court from a decision which the costs judge has already made. As I understand it, and it has not been disputed, the costs judge approaches the matter afresh. He has to make his own judgment having regard to all the facts and circumstances and, in particular when dealing with the success fee uplift, the facts and circumstances which were reasonably known at the time the arrangement was made. He is not as such hearing a formal appeal from the arrangement which the party and their solicitors entered into. He is assessing in terms of principle the costs with particular reference to conditional fee arrangements, ie what should be a reasonable division of costs on a party/party basis. So the parties present at that assessment would be effectively the solicitors and the defendants who have to pay the costs as a result of their concessions in relation to liability. I assume, although I have not been told in terms, there was an agreement included in the settlement that each of the defendants would be responsible for the costs of the claimant.

28. So the jurisdiction which the costs judge exercises is a jurisdiction, as it were, to consider the reasonableness of the costs, applying the relevant principles, which of course a costs judge, indeed any judge, must do. He is, as I understand it, obliged to make his own judicial assessment and obviously it is a jurisdiction which contains a degree of discretion. This is a case where a considered decision has to be made in which judgment functions very largely. Costs judges, of course, have considerable experience of settling these costs accounts. I am not aware that there are costs judges who specialise in clinical negligence cases, but they have a wide jurisdiction and no doubt a costs judge will be very familiar with this type of litigation.

29. That is a major difference between that approach and the approach when the matter comes before this court on appeal. If one of the parties is dissatisfied with the decision of the costs judge then they have a limited right of appeal to this court. Taking this from the skeleton argument of the second defendant, which was prepared by Mr Post of counsel, the appeal is brought under part 52 of the CPR and the test on appeal is therefore: was the decision of the lower court wrong or unjust because of a serious procedural or other irregularity in proceedings in the lower court? This is not a general appeal. The jurisdiction which is exercised by this court on such an appeal is one which is akin in many respects to the approach of a court when considering a judicial review type jurisdiction and what the court must do is not see whether it agrees as a matter of substantive merit with the decision of the costs judge, but it must be concerned to see that the costs judge has not fallen into error of law in arriving at his decision.

30. Of course the ways in which such an error may be established are more than one, there are many ways. One is that if the judge below, the costs judge, misdirected himself on the law, if he put forward a proposition in law which was not a correct proposition of law. If, for instance, to take a very easy case, instead of having regard to the facts and circumstances known at the time when the CFA was entered into he looked at the whole history, noted that this case resulted in a settlement and said that it obviously was not worth a 100 per cent uplift, if he did that he would be wrong in law in a very obvious way. There are other ways in which a costs judge may render himself susceptible to the intervention of this court exercising a limited jurisdiction. For instance, it is important that the judge when coming to his assessment must take into account only those matters which are material and relevant to the particular decision which he is seeking to make. Further, the opposite side of that coin is that he must not take into account matters which are immaterial or irrelevant to the decision which he is required to make. Obviously he must act fairly, giving each party the chance to put their case and meet the case which the other party is putting.

31. There is a final safety net, as it were, which is sometimes called Wednesbury unreasonableness, which is that even if the costs judge cannot be criticised or even if a fault cannot be found in the direction on law, the regard to material and not immaterial matters, nonetheless at the end of the day if the decision is so way out beyond what a reasonable, properly instructed judge could have come to on the facts before him, it can be said to be wrong, that is called Wednesbury unreasonableness. It is a very high threshold to overcome. It is the safety net of last resort for somebody who is seeking to challenge the decision of a lower court, or an administrative tribunal for that matter, where the only power in the higher court is one of review rather than a hearing of a substantive appeal on the merits. Our jurisdiction is so limited and the contrary has not been argued.

32. Having laid that background I will now seek to deal with the judgment of Master Simons. This was an ex tempore judgment. It was considered in the course of what I understand was quite a substantive assessment and he had to deal with many matters and the uplift under the CFA was only one of them. I understand he delivered this judgment orally during the course of the assessment and before the assessment had been finally concluded. He took this as a discrete point, no doubt at a convenient point in the argument. Master Campbell and I sitting here today have been provided with a transcript of the judge's judgment. It is quite short and I will try to read most of it. He correctly identifies the issue in paragraph 1:

    "The issue that I have got to decide is with regard to the level of success fee."

33. Then he mentions it was set out in the agreement of 1 May and, he points out, "at a very early stage in the proceedings". Then he refers to the definition of the claim, which I have already read. Then in paragraph 3 he says this, and this is an important paragraph because Mr Pooles, on behalf of the solicitors who are challenging the reduction of the success fee from 100 per cent to 67 per cent, says at this stage the judge fell into the classic error in the classic case where a reviewing court can interfere of failing to take into account matters which were relevant to the issue and which he ought to have taken into account. I will read paragraph 3 in full carefully:

    "3. The success fee was set at 100 per cent. A risk assessment is set out in paragraph 36 of the conditional fee agreement, which sets out nine different factors, of which the first eight are all, as Mr Marven says, pro forma and can apply to any case. The only one which appears to be pertinent is condition (i) which says: 'In particular we are concerned that it may not be possible to establish any breach of the duty because the symptoms reported to your general practitioner may not have been indicative of a serious condition and also that it may not may not have resulted in any improvement in the symptoms.' It seems to me that at the time of the risk assessment only proceedings against Dr Athreya [the GP] were being contemplated.

    "4. Mr Marven [who appeared for the first defendant and who appeared in this court for the first defendant] says that the CFA says that the solicitors are entitled to be paid, as long as there is success against someone. He says that estimating the risks on a 50/50 case, which will entitle to a 100 per cent success fee, is clearly over-pessimistic. There was a nurse adviser who made the assessment and she should know something about whether there was likely to be a risk and she was perhaps more expert than the normal solicitor and therefore would be more qualified to assess the risks in a better way."

34. Just pausing there, I should explain that 100 per cent, as the CFA itself recites, is the maximum uplift allowed by law. There is a table which sets out the uplift which should be available dependent upon the degree of risk which is assessed for a particular case. The 100 per cent uplift is for a 50/50 case. The next one down is a 60 per cent chance of success case, in which case the uplift decreases rather dramatically from 100 per cent to 60 per cent. 67 per cent is what the costs judge awarded in this case. So there is not a direct linear relationship between the assessment of risks on a percentage basis and the permissible profit uplift on costs. A comparatively small drop of 10 per cent in risk results in quite a dramatic change in the level of the uplift.

35. Going back to the judgment, at paragraph 5 Master Simons continues:

    "5. There seemed to be, on the face of it, evidence that something had gone wrong [that is with the patient's medical care] and he also refers to the fact that success fee of 100 per cent was claimed against the second defendant [the hospital] before that second defendant had been identified. He, as does Mr Sorrell, [I gather he would have been for the second defendant at that stage, although Mr Post appears for the second defendant before us] refers me to the case of KU v Liverpool City Council in which the court encouraged parties to enter into CFAs that provide for a two stage success fee and indicated that if this is done there would be a much greater chance of recovering a high success fee should the matter progress towards trial.

    6. Mr Filtness says that at the time they did not know whether they were going to be able to establish any claim against anyone, one cannot look at the question in hindsight and there are difficulties in establishing cases of negligence. These are difficult cases, there were risks and 100 per cent is completely justified.

    7. I have to say that the decision in KU seems to me to be especially pertinent in this case. As I put it to Mr Filtness, if 100 per cent is going to be claimed on cases of this nature with no staging, it seems to me that every case that comes to his client's firm will generate a 100 per cent success fee because at the time of course there is no evidence because a client comes in and will make a statement and all the factors that have been set out in the CFA will apply, and clearly at that stage they have got no information other than what they have been told by the claimant. The fact that the second defendant had not been identified and there was no risk assessment even made against the second defendant and that the risk assessment came under the general heading seems to me a perfect illustration as to why a staged success fee is appropriate and as the Court of Appeal said that solicitors are much more likely to achieve 100 per cent success fee if they have provided in their agreement that there should be a staged success fee just in case there is a position where cases do not go to trial, and where the risk throughout seems to diminish. In a case that I suggested where the second defendants had, say, accepted liability immediately, nevertheless a claim for 100 per cent success fee would have been made against them and that, it seems to me, is not reasonable.

    8. It must be appropriate there is a staged success fee otherwise it seems to me that practically every case, except where a client comes to a solicitor with an admission of liability, the solicitor will be able to claim 100 per cent success fee, which I think defeats the whole object of success fees. I think that a staged success fee would have been appropriate in this case and therefore I do not think it is reasonable to allow a 100 per cent success fee.

    9. This was a very widely drawn CFA. I think that Mr Marven and Mr Sorrell are correct when they say that the solicitors were over-pessimistic about the possibility of success in the case. I accept that there were difficulties and they are not allowed to use the benefit of hindsight, but in the absence of there being a staged success fee I am going to set the success fee at 67 per cent, which I think is reasonable."

    And, although it does not say so, that represents a risk assessment of 60 per cent as opposed to 50/50.

36. That was the judge's judgment. He has been criticised for a number of reasons by Mr Pooles both in a carefully prepared skeleton argument and structured submissions which have been made during the course of today. I think I can, without doing injustice to all his submissions, pick up what appear to me at any rate to have been the main burden of them. First of all, as I have already indicated, he takes what was said in paragraph 3, where he said that the judge had really abandoned any consideration of the first eight risk factors set out in paragraph 36 of the conditional fee agreement and had concentrated only on the final one, condition (i). I will read it again:

    " The success fee was set at 100 per cent. A risk assessment is set out in paragraph 36 of the conditional fee agreement, which sets out nine different factors, of which the first eight are all, as Mr Marven says, pro forma and can apply to any case. The only one which appears to be pertinent is condition (i) which says: …" [Is the one which I have read, concerning whether there was an indication of a serious illness and possible difficulties of causation]."

37. What Mr Pooles says in relation to that is true in many, if not all cases. The first eight factors which are identified in paragraph 36 of the CFA may well be relevant. Nonetheless, he said, the fact that they may be relevant in the majority, or even every case for that matter, does not mean to say that they do not have weight. They may be relevant in many cases just because they have weight and because these are serious hazards of litigation, particularly of clinical negligence litigation. The judge effectively, he submits, has really given them no weight at all and in that he fell into error.

38. One has to be very careful about this. This is not a reserved judgment, it is an ex tempore judgment delivered orally, as I have already said, not even at the end of the assessment process but during its continuation. It is not a reserved judgment and one must be a little careful not to attribute to particular use of language more weight than it can bear. What it appears to me, and my colleague, the judge was here saying was not that he had disregarded all those factors. I should mention that of course he had all the material which had been available to the solicitor, including the statements from Mrs Barham, and I do not know, but probably some form of the notes of the nurse, I am not sure if he would have had those, but nonetheless he had all the material. He had detailed submissions supporting and attacking the 100 per cent uplift.

39. He has not said he disregards the issues in paragraphs (a) to (h). What he is saying is they are not pertinent. As I read that, he means they do not carry any strong relevance or any persuasive elements in this case, but considering the only issue which he was concerned with at this point, which was the 100 per cent uplift, all those were present and if they were to be applied in every case they would always justify a 100 per cent uplift. That is really what he is saying. What is relevant on the facts of this particular case, given the particular nature of this lady's complaint, is the question of whether her condition really was serious and whether, even if it was serious, any earlier surgical intervention could have made a difference because I think one of the complaints against the GP is that he had delayed unnecessarily in seeking a referral.

40. That, in our judgment, is exactly the sort of exercise which a costs judge is entitled to undertake. If he were to be criticised on, as it were, absolute perfect grammatical expression and syntax then it would be almost impossible for costs judges to produce the work in the light of the very heavy pressure which lies upon them, particularly if he produces it as speedily as possible, which I am sure the parties are interested in. We do not read that as saying: I am abandoning all of these. We do read it as saying: if these were the only factors then there would be room for a 100 per cent success fee in every case. He is saying: in this particular case the real problem was whether she had a problem at all in medical terms and whether, if she did, she could prove that she has sustained any loss because of the way in which it was attended to or not attended to, as the case may be. That, in our judgment, is precisely the exercise the judge is expected to undertake.

41. The other matter which forms a substantive part of the argument on appeal was whether in some way the judge had misdirected himself when saying that you could never have a 100 per cent success fee unless you had an arrangement which provided for reconsideration of the risk in stages. In other words, in the initial stages, before any investigation had been done, the fee may be on one level. As the case progressed and the difficulties began to emerge there was provision for other uplifts on that. In this case, this agreement was entered into at the very earliest stage, even before there had been exchange of the protocol letters. For all the claimant's solicitors knew, one or other of the defendants may have admitted liability on exchange and being challenged. That did not happen yet. It does seem that the Defence of the second defendants would not even (inaudible). I am not allowed to look at hindsight, I know, but Mr Pooles has done with a view to (inaudible) as to say whether it is reasonable. I had better not trespass into that area at all.

42. Looking at it at the time, they did not know. Indeed they say they do not know. So this is not a success fee assessed by reference to known difficulties. It is assessed in terms because they did not know the difficulties, they did not know anything really other than their client's case. Mr Pooles said that they must have had doubts about it because this was her third attempt to get them to be involved in her case. We know nothing of that at all, there has been no evidence about why the two earlier attempts were not successful, that is in obtaining legal assistance from this firm. All we do know is that as a result of the assessment carried out by the nurse and, in this court at any rate, rather brief details of the nature of the complaints, they were prepared to take it on under an agreement, which I have said (although it is fair to say the costs judge did not mention this) that itself suggests that at a later stage they may think that success is something less than likely, if that means anything, something less than the 50/50 chance. But, as I say, perhaps too much weight should not be put on that paragraph 97, the escape clause. "We no longer believe you are likely to win." That is what it appears to say, but it is fair to say that was not taken into account by Master Simons and perhaps one should not put too much weight on it here.

43. As I see it, the second major point was that the costs judge seems to have believed that you will never get a 100 per cent uplift unless you engage in a CFA which contains provision for a review and reassessment of the risk at stages and the opportunity to uplift the profit costs at these stages. He says this is a misreading of the decision which was mentioned and it has been cited to Master Simons. That is the decision in KU v Liverpool City Council. That decision was a very different case from this, as indeed Mr Pooles points out, and he says the facts were so different that what was said by the Court of Appeal cannot really have had any relevance to more sophisticated and complicated forms of litigation.

44. This was a case against Liverpool City Council which, as a simple description, and lawyers will almost immediately recognise, was said to be a case of somebody who had been injured by falling into a hole on the property occupied or under the control of the City Council, what in the trade are known as tripping cases. But this is not such a case. It is a rather different type of case. That involved a young claimant who had fallen into a substantial hole. At the very early stage the solicitor undertook to prosecute the claim with a CFA with a 100 per cent uplift. But it is apparent that when he made even the initial investigations the hole was in the nature of a trap, a hidden danger to a young person, and therefore the case was likely to have fallen into that category where success could be reasonably assured, or certainly a better than 50/50 chance. The matter is dealt with in the judgment of the Court of Appeal, delivered by Brooke LJ at paragraphs 20 and onwards. I will read some of these:

    "When a court has to assess the reasonableness of a success fee it must have regard to the facts and circumstances as they reasonably appeared to the solicitor at the time when the CFA was entered into. [He cites practice direction 11.7 and a case called Atack v Lee.] The principle that the use of hindsight is not permitted when costs are being assessed is an old one [and he cites authority for that and he also quotes from a judgment of Megarry J in The Duchess of Argyll v Beuselink, again a case where the facts are far removed both from KU and this one.] Megarry J said in that case:

    "'In this world there are few things that could not have been better done if done with hindsight. The advantages of hindsight include the benefit of having sufficient indication of which of the many factors present are important and which are unimportant. But hindsight is no touchstone [of negligence].'"

45. It was in the context of negligence he was talking, but hindsight is expressly disavowed as being relevant under the practice direction. At paragraph 21 Brooke LJ in the KU case goes on:

    "In October 2001 the claimant's solicitor would not have had access to the post-2001 evidence or other material cited in paragraphs 12-16 above. When deciding upon a success fee he had two choices. He could have taken the view that this claim would probably settle without fuss at a reasonably early stage, but he wished to protect himself against the risk that the claim might go the full distance and might eventually fail. In those circumstances he could select the two-stage success fee discussed by this court in Callery v Gray. In this situation he would be willing to restrict himself to a low success fee if the case settled within the protocol period -- or within such other period, perhaps until the service of the defence, as he might choose -- and to have the benefit of a high success fee for the cases which did not settle early. As things turned out, he would have benefited on the facts of this case if he had adopted this course: a high two-stage success fee would have been more readily defensible in a case which did not settle until proceedings were quite far advanced.

    "Alternatively, he could have selected, as he did in fact, a single-stage success fee, being a fee which he would seek to recover at the same level however quickly or slowly the claim was resolved. In those circumstances it would not be possible to justify so high a success fee."

46. So what the court is there saying is that if you are going to lock into a high success fee at too early a stage, you might find it difficult when you come before a costs judge to justify that decision because if you had taken the decision to take a lower profit uplift at the initial stages, with a further uplift if the case proceeded beyond those initial stages, because that was a time when there would be a better risk assessment, and so on, then that on the face of it sounds more easy to justify or, to use a word, more reasonable. The learned Lord Justice went on:

    "We must therefore consider the reasonableness of the single-stage success fee on this basis. Although Mr Williams, who appeared for the claimant, cautioned us to be aware that we lacked the local know-how that would be readily available to district judges in Liverpool, we must do the best we can on this re-hearing on the evidential material the parties provided to us.

    "This was not a typical case involving an alleged tripping accident on a city pavement. The solicitor had visited the scene and could see that the hole represented a concealed trap for the unwary. He had also spent 78 minutes taking his client's instructions before the CFA was entered into. The identification of the owner of the grass should not prove over-complicated, and the likelihood of a defence proving successful was not particularly high (despite the arguments raised by Mr Williams in paragraph 14 of his skeleton argument, which we have considered carefully). In a claim as small as this, it is not reasonable that the defendants should have to pay the claimant's solicitor a higher success fee against the risk that the value of the claim was so low that legal costs would not be recoverable at all: this is a risk the solicitor must bear himself if he is willing to act at all."

47. What Mr Pooles says about that is that puts that case and the observations on the desirability of staged success fees into its factual context. This was a claim where even before the document was signed off, the solicitor had the opportunity to assess the locus and make a real assessment of whether this presented an actionable risk to his client and make a real assessment of the likelihood of any Defence succeeding. So, Mr Pooles says, this is really no more assistance than being an illustration of a case where a 100 per cent success uplift was manifestly inappropriate and, obviously, as a characterisation of the facts of that case that submission cannot be faulted.

48. At paragraph 25 the learned Lord Justice goes on:

    "In our judgment an appropriate single-stage success fee would have been 50% in this case. On the hypothesis that winning and losing claims are of equal weight, this would reflect a 2:1 chance of success. This, incidentally, represents a figure that is closer to the chances of success shown in the Pascoe Pleasance study [which he then refers to]."

49. Some reference has been made to similar figures showing the success or otherwise in clinical negligence cases. As all counsel have urged on us, we are considering an individual appeal in an individual case with a limited jurisdiction to see whether the costs judge has gone outside the parameters of law, as I have sought to describe them.

50. I feel, and I believe my colleague agrees with me, that a close analysis of more general matters would not be appropriate. I should say that interesting arguments have been made upon the public policy basis for permitting success fees in litigation of this sort and the problem is that, although some cases will succeed, others may not, and unless courts assessing costs are reasonably careful to consider the interests of solicitors involved in litigation, particularly complicated litigation of this sort, the policy of achieving representation for worthwhile cases may be defeated because solicitors are not prepared to take the costs risk.

51. Those general considerations do not seem to us particularly pertinent or material to the particular matters of this case. It did not seem to us that Master Simons was laying down a priori imperious conditions about success fees, nor was he seeking to penalise (as at one time seemed to be suggested, but I think that may have been just a misunderstanding of language) the solicitors because they had the temerity to seek to bargain for a 100 per cent uplift. What he makes clear is that he is considering very carefully, given the nature of the judgment, which I said was ex tempore, this particular case and these conclusions are directed at arguments in this particular case. I take it up at paragraph 4:

    "Mr Marven says that the CFA says that solicitors are entitled to be paid, as long as there is success against someone. He says that estimating the risk of a 50/50 case, which will entitle you to a 100 per cent success fee, is clearly over-pessimistic."

52. Then he mentions the assistance which the nurse adviser could make by way of input. Mr Pooles says perhaps that is not really material. Although a nurse may have greater knowledge of medical treatment and medical conditions and the significance of presenting symptoms, she is less likely to be familiar with the legal issues raised by clinical negligence and an experienced clinical negligence solicitor is probably in as good a position to make an assessment. The fact remains in this case they did have the benefit of some medical input in making the risk assessment and I understand it was in fact the nurse's decision that ultimately persuaded the claimant's solicitors to accept the case. He goes on at paragraph 5:

    "There seemed to be, on the face of it, evidence that something had gone wrong and he also refers to the fact that success fee of 100 per cent was claimed against the second defendant before that second defendant had been identified. [That is true enough.] He, as does Mr Sorrell, refers me to the case of KU v Liverpool City Council in which the court encouraged parties to enter into CFAs that provide for a two stage success fee and indicated that if this is done there would be a much greater chance of recovering a high success fee should the matter progress towards trial."

53. That is a perfectly legitimate conclusion to draw from the case. He does not say the court directed that initial success fees of 100 per cent are always susceptible to adjustment on a costs assessment. He merely says, what is perhaps rather obvious, that a matter which contains the possibility of review at various stages in a case where litigation is ongoing and developing and where risk assessment will inevitably be changing as more material is processed, on the face of it, all things being equal, is more likely to result in a justification for a 100 per cent uplift if that has not been claimed at the beginning and has only been claimed when the true nature and risk of the litigation is apparent.

54. Master Simons goes on:

    "Mr Filtness says that at that time they did not know whether they were going to be able to establish any claim against anyone, and one cannot look at the question in hindsight and there are difficulties in establishing cases of negligence. These are difficult cases, there were risks and the 100 per cent is completely justified."

55. That submission comes very near to saying that in clinical negligence cases where nothing is known at all the default provision should be a 100 per cent uplift. If that is meant to be a matter of policy neither I nor my colleague are prepared to endorse it. The matters have to be treated individually on a case by case basis and although, of course, over time, no doubt, an expectation will develop depending on the nature of the categories of cases, the stage has not yet been reached that one can say there is an automatic default position, particularly in cases which are at a very early stage.

56. At paragraph 7 Master Simons goes on: "I have to say the decision in KU seems to me especially pertinent in this case." He is not saying it is pertinent on the facts of this case. He is not saying this is a simple case like a little girl falling into a hole, but he is saying the principle seems to be pertinent, as we read it. He is not saying the facts are directly applicable, but the principle there stated, namely, a staged provision for payment, is inherently more likely to be held to support a 100 per cent uplift at some stage.

    " As I put it to Mr Filtness, if 100 per cent is going to be claimed on cases of this nature with no staging, it seems to me that every case that comes to his client's firm will generate a 100 per cent success fee because at the time of course there is no evidence because a client comes in and will make a statement and all the factors that have been set out in the CFA will apply, and clearly at that stage they have got no information other than what they have been told by the claimant."

57. In other words, if you choose to enter into a CFA at such an early stage you are, as it were, giving yourself the right to argue for or to bargain for 100 per cent and that cannot be right. It puts a premium on ignorance rather than the contrary.

    "The fact that the second defendant had not been identified and there was no risk assessment even made against the second defendant and that the risk assessment came under the general heading seems to me a perfect illustration as to why a staged success fee is appropriate and as the Court of Appeal said that solicitors are much more likely to achieve 100 per cent success fee if they have provided in their agreement that there should be a staged success fee just in case there is a position where cases do not go to trial, and where the risk throughout seems to diminish. In a case that I suggested where the second defendants had, say, accepted liability immediately, nevertheless a claim for 100 per cent success fee would have been made against them and that, it seems to me, is not reasonable."

58. In other words, he said it is premature to put your initial assessment on the facts of this case at 100 per cent uplift.

59. He concludes in paragraphs 8 and 9:

    "8. It must be appropriate there is a staged success fee otherwise it seems to me that practically every case, except where a client comes to a solicitor with an admission of liability, the solicitor will be able to claim 100 per cent success fee, which I think defeats the whole object of success fees. I think that a staged success fee would have been appropriate in this case and therefore I do not think it is reasonable to allow a 100 per cent success fee.

    9. This was a very widely drawn CFA. I think that Mr Marven and Mr Sorrell are correct when they say that the solicitors were over-pessimistic about the possibility of success in the case. I accept that there were difficulties and they are not allowed to use the benefit of hindsight, but in the absence of there being a staged success fee I am going to set the success fee at 67 per cent, which I think is reasonable."

60. So he is not penalising them for seeking 100 per cent, he is just saying it was unreasonable in his judgment, and it was his jurisdiction to make such a judgment, to set it so high. If it had been set at a lower rate with the opportunity for a staged increase then that might have been more reasonable. For my part I cannot fault that reasoning at all. It is possible to make what are essentially semantic or verbal points on the agreement, but if one reads this judgment sensibly it is perfectly apparent, at least to myself and I believe to my colleague, that the costs judge was directing his attention (i) to the individual agreement, (ii) in general terms a staged agreement was more likely to find favour for a high success fee than one which simply assumed it or took it right from the very beginning.

61. For my part, I can find nothing to fault in the reasoning of Master Simons and I would not allow this appeal. I understand Master Campbell agrees with me.