| COSTS — Assessment — Costs only proceedings — Personal injury action funded by collective conditional fee agreement — Action compromised with costs on standard basis to be assessed if not agreed — Claimant’s solicitors instructing costs consultants to conduct detailed assessment of claimant’s costs — Whether costs of conducting detailed costs assessment to be regarded as profit costs or disbursements
Crane v Canons Leisure Centre [2007] EWCA Civ 1352
CA: May, Maurice Kay and Hallett LJJ with Chief Master Hurst: 19 December 2007
In determining whether the costs of instructing costs consultants to conduct a detailed costs assessment under a collective conditional fee agreement were disbursements or profit costs, the issue was whether the solicitor remained responsible to the client for its proper conduct. A detailed costs assessment was solicitors’ work for which the solicitors remained liable to their client so that the fees were properly described as profit costs, not disbursements, and as such a success fee was payable on them.
The Court of Appeal so held (Maurice Kay LJ dissenting) when allowing the appeal of the claimant, Nicholas Crane, against the decision of Master Wright, sitting in Wandsworth County Court on 1 March 2006, to disallow the claimant’s solicitors’ success fee in respect of the costs of the conduct by costs consultants of the detailed assessment of the claimant’s costs under a collective conditional fee agreement on the basis that those costs were disbursements.
MAY LJ said that the question was whether the satellite costs of conducting the detailed costs assessment were to be regarded as profit costs or disbursements. The significance of the distinction was that the claimant’s solicitors would be entitled to a percentage success fee on those costs, if they were profit costs, as part of their base costs, but not if they were disbursements. The distinction in the definition of base costs and disbursements in the collective conditional fee agreement (“CCFA”) was between charges for work done by or on behalf of the solicitors and expenses which the solicitors incurred on the member’s behalf. That was a distinction between charges by the solicitors for work which they themselves did or were directly responsible for; and expenses they incurred for the client some of which were for other people’s work which they were not directly responsible for and which they passed on to the client at cost. If they properly chose to delegate their own work, they remained entitled to charge on their own account and the proper amount of the charge was not necessarily the same as the amount which they agreed to pay to their subcontractor. It would be more or less the same. It was right to concentrate on whether the work was solicitors’ work , a characteristic of which was whether the solicitor remained responsible to the client for its proper conduct. The costs consultants were doing work which the claimant’s solicitors had themselves undertaken to their client to do. It was solicitors’ work for which the solicitors were entitled to make their own direct charge. The defendants argued that a success fee of 45% on the costs of conducting the costs assessment should be disallowed or severely reduced as unreasonable. In his Lordship’s judgment there were clear policy reasons for the court not to require parties who entered into CFAs to address at the outset the risk of costs proceedings separately. There was general sense, if CFAs were to be a substantial means of financing civil litigation, that they should not be overcomplicated, that costs should be agreed wherever possible, and that, if there were to be contested costs proceedings, the means whereby the winning solicitor financed litigation which he lost should extend to the costs proceedings at the same rate as the proceedings themselves, if that he been agreed with the client.
MAURICE KAY LJ gave a dissenting judgment.
HALLETT LJ gave a judgment concurring with May LJ.
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