Mini-summary
Where a solicitor represents a protected party, the Court, subject to certain exceptions (CPR 46.4(3) and Practice Direction 46 at paragraph 2.1 – inapplicable on the facts of this case) must assess the costs payable by that protected party to that party's own solicitor out of their damages: CPR 46.4(2)(a). The costs will be assessed in accordance with the indemnity principle as is usual for a client-solicitor assessment: see CPR 46.9.
A litigation friend, or court of protection deputy, will not have the power to compromise costs (even client-own solicitor costs) without approval of the court.
Pursuant to the application of the solicitor acting for the protected party, the Court was considering what solicitor costs were recoverable from the damages awarded to the protected party after the successful resolution of the protected party's claim including whether, and the extent, to which a success fee was recoverable.
AKS (a protected party by BXG her grandmother and litigation friend) v National Farmers Union Mutual Insurance Society Ltd [2025] Lexis Citation 46
What are the practical implications of this case?
Perhaps the most basic relevance of the case is that serves as a reminder of the strict and tightly drafted rules in the CPR governing settlements concerning protected parties and the formalities mandated before a settlement will bind a protected party. This should be noted by solicitors acting for protected parties, litigation friends, and court of protection deputies.
The case is also importance to those acting for protected parties under conditional fee agreements and is also of significance more widely to the developing approach of the Courts to success fees.
The case enjoins practitioners to pay careful attention to the assessment of risk and the need for a clear rationale and evidential basis for risk assessment including potentially early notification and discussion of success fees with clients (including litigation friends in protected party litigation).
What was the background?
The Claimant, AKS was a protected party within the meaning of CPR 21.1(2)(d).
Solicitors acting for AKS (a protected party) recovered damages in the sum of £3.7million. There was a costs order for the defendant to pay AKS the costs of the claim.
However, there was a further provision requiring any costs claimed by AKS' solicitors against AKS to be subject of detailed assessment.
Both party-party costs and solicitor-client costs (success fee) required the approval of the Court.
The success fee being irrecoverable from the defendant, could only be recovered from AKS.
In a strangely convoluted and tortured litigation history, AKS' solicitors purported to enter into a compromise of the success fee element of the claim with AKS' court appointed deputy. The solicitors sought to withdraw their approval application based on an alleged compromise of the application and these repeated attempts were refused by the Judge. In the first instance, the Judge sought evidence of the alleged compromise. The solicitors sent him an order from the Court of Protection which rather than approving any such compromise or even empowering the deputy to do the same, recorded in terms the orthodox position. That orthodox position under the CPR required specific court approval of any compromise.
In a sad twist in the case, during the protracted litigation history, the claimant's solicitors went into administration and then compulsory liquidation.
Initially, the Judge assessed the amount recoverable under the success fee at nil. That order was revisited on a set aside application by the claimant's deputy, who had compromised the sum payable by way of a success fee under a mistake of law as to her power to do so.
Therefore, the Court had to assess the recoverability of the success fee on the evidence available to it, which was limited given the insolvency of the firm and its failure to engage with the application as it developed.
What did the court decide?
The Court relied on a bill of costs of £267,117.27 from the claimant's solicitors to the defendant as there was no client-solicitor bill of costs produced. The defendants had agreed to pay £220,000 against those costs representing just under 82.5 percent.
The Judge found as a fact, on the evidence available, that the protected party was not contractually obliged to pay a success fee; the CFA provided for a 25 percent uplift on costs due client-solicitor under contract once VAT was added. The Judge calculated that this contractually due and owing figure was £39,283.71 (inclusive of VAT). The Judge noted the figure purportedly compromised by the claimant's deputy and paid to the claimant's solicitors was nearly twice that figure.
The Judge then proceeded to consider reasonableness in accordance with the indemnity principle that creates a rebuttable presumption that costs are reasonable.
However, the Judge noted that success fees should be set at a rate proportionate to the risk to the solicitor of going unpaid applying C v W [2008] EWCA Civ 1459.
Further the Court noted that a "solicitor claiming a success fee at a higher percentage than is justified by that risk will not be able to rely upon the presumption ... without informed consent from the client, and informed consent can only be given following a full and fair explanation (Herbert v HH Law Ltd [2019] EWCA Civ 527)."
The Judge went on to hold a 15 percent success fee against basic charges only was reasonable and awarded a success fee figure of £16,502.64 (including VAT) and he also approved the settlement between the claimant and defendant in the sum of £220,000.
Case details
- Court: Senior Courts Costs Office
- Judge: Costs Judge Leonard
- Date of judgment: 23/1/2025
Originally published by LexisNexis here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
