Personal Injury Update – September 2014

Published: 01/09/2014 | Newsletters, Personal Injury


Contents

  • News
  • An Overview Of QOCS
  • QOCS – The Court Of Appeal’s View
  • Repeated Concussions – A Ticking Timebomb?
  • Case Law Update

News

Huw DaviesBy Huw Davies

In this month’s update, Nick Blake and Guy Watkins give consideration to the new frontier of QOCS in light of the recent Court of Appeal decision in Wagenaar whilst keen Ulster rugby fan Aidan O’Brien casts light on the possible future development of concussion based sport claims. The PI update is provided by Frederick Lyon, who along with fellow pupil Jake Rowley, has agreed to accept tenancy with us from October. We offer our congratulations to them both.

Farrar’s Building is hosting its annual PI seminar to take place on 2nd October 2014. Hopefully readers will have already received their invitations, but if not, and you would like to attend, please contact our Chambers Manager, Steve Gurnett. We look forward to seeing you all.

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An Overview Of QOCS

Nick BlakeBy Nick Blake

Introduction

Qualified One-Way Costs Shifting (“QOCS”) was introduced into the CPR in April 2013 as part of the Jackson civil costs reforms, with the aim of protecting those claimants who as a matter of public policy it was felt should enjoy protection against the risk of adverse costs, in the light of the abolition or recoverable success fees and ATE premiums. QOCS provides a qualified immunity for claimants in personal injury actions against enforcement of costs orders made in favour of the defendant.

The Court of Appeal has recently, in the case of Wagenaar,[1] confirmed that the QOCS provisions are lawful and they are therefore with us to stay. This seems a good time to examine how QOCS work and the situations in which a claimant may be liable to pay either limited or unlimited costs under the new regime.

In his final report[2], Jackson, LJ anticipated that granting QOCS protection to a Claimant would be dependent upon issues relating to the conduct of the litigation and upon consideration of the resources of the respective parties. He also recommended that QOCS should be subject to CPR Part 36, so that costs protection would be lost if the successful claimant failed to do better than a defendant’s Part 36 Offer.[3]

While the first and last of these considerations have survived, consideration of the resources of the parties has not been adopted by the rules committee and every claimant in personal injury matters will have the benefit of QOCS regardless of their ability to meet any adverse cost order. That qualified immunity can however be limited or lost.

  • where proceedings have been struck out on the grounds set out in CPR 44.15;
  • where the claim is found on balance of probabilities to be fundamentally dishonest pursuant to CPR 44.16(1)
  • where a claim is made for the financial benefit of a person other than the claimant or dependent in a fatal accident act claim or for the benefit of the claimant other than a claim to which QOCS applies pursuant to CPR 44.16 (2); and
  • where the defendant makes a successful part 36 offer

The Scheme

The QOCS rules are set out at CPR 44.13 – 44.17. CPR 44.13 limits QOCS to proceedings which include a claim for damages for personal injuries, under the Fatal Accidents Act 1976, or which arises out of death or personal injury and survives for the benefit of an estate by virtue of section 1(1) of the Law Reform (Miscellaneous Provisions) Act 1934.

Excluded from the scheme are applications for pre-action disclosure, and pursuant to CPR Part 44.17 proceedings where the Claimant has entered into a pre-commencement funding arrangement, that is where a CFA was in place prior to 1st April 2013.

The effect of QOCS is set out at CPR 44.14 which provides:

  1. Subject to rules 44.15 and 44.16, orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the claimant.
  2. Orders for costs made against a claimant may only be enforced after the proceedings have been concluded and the costs have been assessed or agreed.
  3. An order for costs which is enforced only to the extent permitted by paragraph (1) shall not be treated as an unsatisfied or outstanding judgment for the purposes of any court record.

At their heart the QOCS rules provide that subject to specific exceptions, an unsuccessful Claimant should not have to pay the costs of the successful defendant. It is not a complete immunity though. The successful claimant may be liable to pay from her damages any costs orders made in favour of the defendant during proceedings. That costs liability should not however exceed the amount of her damages and interest.

The Exceptions

CPR 44.15 sets out the circumstances where the Defendant “can enforce orders for costs made against the claimant to the full extent of such order without the permission of the court”.

This will only occur “where the proceedings have been struck out on the grounds that:

  • (a) the claimant has disclosed no reasonable grounds for bringing the proceedings;
  • (b) the proceedings are an abuse of the court’s process; or
  • (c) the conduct of:
    1. the claimant; or
    2. a person acting on the claimant’s behalf and with the claimant’s knowledge of such conduct, is likely to obstruct the just disposal of the proceedings.”

It seems likely, given what is at stake, that strikeout applications may be made more frequently in the future.

Fundamental Dishonesty

Costs orders against a claimant can also be enforced in full but with the permission of the Court pursuant to CPR 44.16(1) where “the claim is found on the balance of probabilities to be fundamentally dishonest.”

CPR44 PD24 gives some guidance as to how the question of whether a claim is fundamentally dishonest will be determined, but is silent on what might constitute fundamental dishonesty:

“In a case to which rule 44.16(1) applies (fundamentally dishonest claims):

  • the court will normally direct that issues arising out of an allegation that the claim is fundamentally dishonest be determined at the trial;
  • where the proceedings have been settled, the court will not, save in exceptional circumstances, order that issues arising out of an allegation that the claim was fundamentally dishonest be determined in those
    proceedings;
  • where the claimant has served a notice of discontinuance, the court may direct that issues arising out of an allegation that the claim was fundamentally dishonest be determined notwithstanding that the notice has not been set aside pursuant to rule 38.4;
  • the court may, as it thinks fair and just, determine the costs attributable to the claim having been found to be fundamentally dishonest.”

There is as yet no authoritative judgment on what might constitute “fundamental dishonesty”. In a recent County Court case,[4] a claimant who had suffered a knee injury was caught, in the words of the Judge “bang to rights” by video surveillance evidence, and promptly settled his case against the first defendant at a much reduced value and discontinued against the second defendant. It was held that:

  • “… this phrase in the rules has to be interpreted purposively and contextually in the light of the context. This is, of course, the determination of whether the claimant is “deserving”, as Jackson LJ put it, of the protection (from the costs liability that would otherwise fall on him) extended, for reasons of social policy, by the QOCS rules. It appears to me that when one looks at the matter in that way, one sees that what the rules are doing is distinguishing between two levels of dishonesty: dishonesty in relation to the claim which is not fundamental so as to expose such a claimant to costs liability, and dishonesty which is fundamental, so as to give rise to costs liability.
  • “… a claimant should not be exposed to costs liability merely because he is shown to have been dishonest as to some collateral matter or perhaps as to some minor, self-contained head of damage. If, on the other hand, the dishonesty went to the root of either the whole of his claim or a substantial part of his claim, then it appears to me that it would be a fundamentally dishonest claim: a claim which depended as to a substantial or important part of itself upon dishonesty.

The Judge went on to find that the dishonesty in question was fundamental to two heads of damage, future care and general damages and thus to around half of the total value of the claim and that it was clear that any sensible definition of a fundamentally dishonest claim” was met. He ordered that the second defendant could recover its costs upon discontinuance in full against the claimant.

Whether the same approach is eventually taken by the Court of Appeal remains to be seen. On the reasoning of the Judge in this case it would not necessarily be every claim involving conscious exaggeration by the claimant which would lead to the defendant being permitted to enforce its subsequent costs order in full.

Guidance from the Court of Appeal is eagerly awaited, but whatever that guidance may be, there is the prospect of fully contested CPR 44.16(1) applications resembling full trials becoming a regular feature.

Claims For The Benefit Of Others

CPR44.16(2) provides that “orders for costs made against the claimant may be enforced up to the full extent of such orders with the permission of the court, and to the extent that it considers just, where:

  • (a) the proceedings include a claim which is made for the financial benefit of a person other than the claimant or a dependant within the meaning of section 1(3) of the Fatal Accidents Act 1976 (other than a claim in respect of the gratuitous provision of care, earnings paid by an employer or medical expenses); or
  • (b) a claim is made for the benefit of the claimant other than a claim to which this Section applies.

(3) Where paragraph (2)(a) applies, the court may, subject to rule 46.2, make an order for costs against a person, other than the claimant, for whose financial benefit the whole or part of the claim was made.

PD12.2 gives as examples of claims made for the financial benefit of a person other than the claimant or a dependant subrogated claims and claims for credit hire.

CPR 44.16 and PD12.4(d) give the court a discretion as to whether to allow the defendant to enforce costs orders in full or in part. PD12.6 however gives important guidance, providing that where rule 44.16 applies, the court will normally order the claimant or, as the case may be, the person for whose benefit a claim was made to pay costs notwithstanding that the aggregate amount in money terms of such orders exceeds the aggregate amount in money terms of any orders for damages, interest and costs made in favour of the claimant.

The Successful Part 36 Offer

The provisions relating to QOCS within Part 44 are silent as to the effect of Part 36 offers, so it is necessary to examine provisions of Part 36 itself. Where the defendant makes a successful part 36 offer, CPR 36.14(2) provides that unless the court considers it unjust to do so, it will award costs to the claimant up to the end of the relevant period and the defendant its costs thereafter. There is nothing within CPR 44.13 to 44.17 to alter those provisions in QOCS cases.

The orders for costs in favour of Claimant and Defendant respectively can be set-off against each other under CPR 44.12, and it is possible that there may be a net costs liability due from claimant to the defendant. If that should occur then as a result of the provisions of CPR44.14(1), the net costs liability in favour of the Defendant can be enforced in any case, without permission, against the claimant’s award for damages and interest, up to the amount of those awards. In many cases this will result in the defendant who has made a successful Part 36 offer being able to set off the entirety of the costs awarded to it against the claimant’s damages, interest and costs.

  • [1] Wagenaar v Weekend Travel Limited (t/a Ski Weekdend) & Serradj [2014 EWCA Civ 1105
  • [2] Jackson : “Review of civil litigation costs: final report” (December 2009) Ch.19
  • [3] Jackson : “Review of civil litigation costs: final report” (December 2009) Ch.19, paras 4.7 & 4.10
  • [4] Gosling v Hailo, County Court (Cambridge), 29 April 2014

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QOCS – The Court Of Appeal’s View

Huw DaviesBy Huw Davies

Introduction

Qualified one-way costs shifting (hereinafter inelegantly referred to as “QOCS”) formed an integral part of the civil litigation costs reforms introduced in April 2013 following publication of the Jackson Report.

In the recent case of Wagenaar v Weekend Travel Limited (t/a Ski Weekend) & Serradj [2014] EWCA Civ 1105, the Court of Appeal considered for the first time the application of QOCS. The Court of Appeal’s decision is noteworthy in a number of respects, but most significantly it should give pause for thought to defendants contemplating joinder of a third party for an indemnity or contribution in personal injury proceedings.

Wagenaar v Weekend Travel Ltd – The Outcome At Trial

Dr Wagenaar (“the Claimant”) suffered severe injuries in a skiing accident whilst on a package holiday in France organised by Weekend Travel Limited (“the Defendant”). The Claimant sued the Defendant under the Package Travel, Package Holidays and Package Tours Regulations 1992 and in negligence. The Defendant joined the Claimant’s ski instructor, Ms Serradj (“the Third Party”), seeking an indemnity or contribution in respect of the Claimant’s claim on the grounds that, if the accident had been caused by negligence at all (which was denied), it was caused by the negligence of the Third Party.

After a trial, His Honour Judge Hughes QC (sitting as a Deputy Judge of the High Court) dismissed both the Claimant’s claim and the Defendant’s additional claim against the Third Party.

As regards costs, the judge decided that the QOCS rules applied both to the costs of the main claim and the costs of the third party proceedings. He therefore made orders for the Claimant to pay the Defendant’s costs, and for the Defendant to pay the Third Party’s costs, but ordered that neither costs order was to be enforced pursuant to CPR 44.14. The judge decided that the scope of application of the QOCS regime pursuant to CPR 44.13, viz. proceedings which include a claim for damages for personal injuries, was wide enough to include a contribution claim. He also considered that any other outcome would cause serious injustice for the Defendant, who would have had to pay its own costs and those of the Third Party, notwithstanding that it had successfully defended the main claim.

The Defendant appealed against the costs orders on the grounds that QOCS did not apply to the case at all. The Third Party appealed against the stay on the order for costs in her favour on the basis that the judge was wrong to hold that QOCS applied to the third party proceedings.

The challenge to the operation of QOCS in general

The Defendant raised three main points on appeal, each of which was rejected by the Court of Appeal in dismissing this part of the appeal:

  • (a) It was argued that the QOCS provisions are ultra vires section 51(3) of the Senior Courts Act 1981 (the “SCA 1981”) which provides that “[t]he court shall have full power to determine by whom and to what extent the costs are to be paid”. It was contended that section 51 of the SCA 1981 did not allow the introduction by secondary legislation of a restriction on the High Court’s discretion as to costs. The Court of Appeal disagreed. Vos LJ stated that the court’s full power to determine by whom and to what extent the costs of any proceedings are to be paid under section 51(3) of the SCA 1981 is to be read subject to the power of the rules committee to make rules applicable to certain circumstances concerning the availability of an award of costs, the amount of such costs, and the exercise of the court’s discretion in relation to costs;
  • (b) The Defendant contended that the QOCS rules should not have had retrospective effect since most of the costs in question had been incurred before these rules came into force on 1st April 2013, and therefore the application of QOCS was unfair and prejudicial. This point was summarily rejected on the grounds that it is well established that the presumption against retrospection does not apply to legislation concerned with matters of procedure, and that such provisions are to be construed as retrospective unless the contrary intention is clearly indicated. No such contrary intention was evident here; indeed the existence of transitional provisions (in relation to pre-commencement funding arrangements) militated against such an intention;
  • (c) Finally, the Defendant argued that its junior Counsel had entered into a CFA before April 2013, that this was a pre-commencement funding arrangement and that QOCS therefore did not apply to that agreement. In rejecting this argument, the Court of Appeal noted that the QOCS regime has only one specific transitional provision, viz CPR 44.17 which provides that the regime does not apply to proceedings where the claimant has entered into a pre-commencement funding arrangement, and held that CPR 48.1 did not have the effect of carving out the Defendant’s CFA from the general QOCS regime.

The Challenge To The Application Of QOCS To The Additional Claim

The Court of Appeal allowed the Third Party’s appeal against the application of the QOCS provisions to the additional claim and removed the stay on enforcement of the costs order in her favour.

Lord Justice Vos noted that the issue on this appeal raised a more fundamental question than simply the just solution between the parties, and that if QOCS was intended to apply to all parties to any proceedings in which any claim for damages for personal injuries is made, it would have far reaching economic implications in many fields, for example clinical negligence claims, road traffic claims and work accident claims. He also stated that it was clear from the Jackson Report that the rationale for QOCS was the protection of those who had suffered injuries from the risk of facing adverse costs orders obtained by insured or self-insured parties or well-funded defendants. There was nothing in the Jackson Report to suggest that QOCS should apply to the costs of disputes between those liable to the injured party.

Against that public policy background, the Court of Appeal was clear that the proper construction of the QOCS provisions was that they did not apply to the third party proceedings brought by the Defendant. Whilst it was acknowledged that the word “proceedings” in CPR 44.13 is a wide word which could in theory include the entire umbrella of the litigation, by its terms CPR 44.13 is applying QOCS to a single claim against a defendant or defendants which includes a claim for personal injuries or other claims specified in CPR 44.13(1), and is not applying QOCS to the entire action in which any such claim for damages is made.

Lord Justice Floyd noted the injustice that would result from the judge’s construction of the QOCS regime in cases where the claimant succeeds against the defendant but the defendant’s additional claim against the third party fails. One would expect the defendant to pay the costs of both the claimant and the third party in that event; however, on the judge’s construction, the defendant would unjustly be relieved of the obligation to pay the third party’s costs.

The Court of Appeal was not particularly sympathetic to the argument of potential injustice to a defendant who has successfully defended the main claim if the reach of QOCS does not extend to the costs of related contribution proceedings. In specific reference to the Defendant’s action, Vos LJ stated (at paragraph 43) that:

“…It chose, in its own commercial interests, to bring the third party into the proceedings as a third party because, no doubt, it thought it commercially to its advantage to do so. In doing so, it would have weighed up the pros and cons including the costs consequences, which, on the defendant’s own case, it expected to be the ones normally to be expected in litigation before these courts (before QOCS were introduced). The defendant could have chosen to resist the claimant’s claim on its merits and saved itself the trouble and expense of joining the third party and the risk of an adverse costs order. It did not do so. Accordingly, I find myself unable to agree with the judge that the outcome, even in this case, of the construction that I have adopted creates a serious injustice for the defendant…”

Practical Considerations

Vos LJ’s comments bring into sharp focus the even greater need now for careful thought when a defendant is deciding whether or not to join a third party into a personal injury action.

The Court of Appeal’s decision that QOCS applies to personal injury claims only, and not to related additional claims, is likely to strengthen the argument in some cases for a defendant to wait until the main action has been determined before issuing separate contribution proceedings against a third party if necessary, thus avoiding the unhappy fate of having to pay the third party’s costs even if successful in defending the main action.

In appropriate cases, it will also be in a defendant’s interests to seek to persuade a claimant, who will generally have the protection of QOCS, to include any other potentialwrongdoer in the main action as a co-defendant (apparently not possible in Wagenaar for jurisdictional reasons).

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Repeated Concussions – A Ticking Timebomb?

260115-farrars.0091By Aidan O’Brien

Repeated concussions can pose real and significant dangers to the long-term health of sporting participants. Numerous studies have linked repeated blows with chronic traumatic encephalopathy, a disease with symptoms including memory loss and mood swings.

The prevalence of concussion in certain contact sports is alarming. The Rugby Football Union has cited studies that show an occurrence rate of about 3.9 per 1000 player hours (i.e. 1 concussion in every 6 games among all the players involved) at a professional level and 1.2 per 1000 player hours (i.e. 1 in every 21 games) at amateur level.[1] The frequency of concussion is, perhaps unsurprisingly, estimated as around 3 times higher in boxing and 5 times higher in professional horse jumping.

A significant issue, particularly in sports such as rugby, is that players are often loathed to admit that they are suffering the effects of a heavy knock. In direct contrast to footballers, the average rugby player spends most of his or her time pretending not to be hurt by a competitor’s challenge, rather than exaggerating the effects.

The lack of trained medical staff in lower leagues also poses significant problems in identifying instances of concussion and dealing with them appropriately.

The legal significance of these issues has been brought into sharp focus by recent developments in America. Earlier this month a Federal Judge approved a landmark settlement in a class action brought by 4,500 former American Football players against the Nation Football League (‘NFL’). The claimants argued that the NFL had concealed from them its knowledge of the risks of repeated head traumas. The Judge’s approval came soon after the NFL agreed to remove a $675 million cap on damages and a provision barring anyone who received concussion-related damages from suing amateur football leagues.

It is not hard to imagine that similar claims may eventually be launched in relation to other sports more favoured on this side of the pond. Our understanding of concussion is evolving rapidly and sporting bodies are being forced to react.

The International Rugby Board has recently developed a Pitch-side Concussion Assessment (PCSA), which dictates that a player who is merely suspected of suffering with concussion is required to leave the field for 5 minutes to undergo standardised tests, before possibly resuming play. The adequacy of such assessments, and the rigorousness with which they are applied, have often been questioned, however, it appears to reflect some positive progress. Other sporting bodies would be wise to take note. These measures will, of course, be too late for many. Earlier this year the 33 year old, ex-England rugby international, Shontayne Hape, retired from the sport due to the effects of repeated concussions. His permanent symptoms include constant migraines, sensitivity to light and sound, irritability, depression and memory loss. Scans determined that his brain function had been reduced to just above those with special needs.

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Case Law Update

180215-1.258 copyBy Frederick Lyon

Arabell Wagenaar v (1) Weekend Travel Ltd (T/A Ski Weekend) (2) Nawelle Serradj (Third Party)

[2014] EWCA Civ 1105

(Laws LJ, Floyd LJ, Vos LJ)

Significance: While the Qualified One-way Cost Shifting rules (QOCS) applied to claims for damages for personal injury it did not apply to an additional claim made by one defendant against another under pt 20.

(1) Ultimate Products Ltd (2) Henleys Clothing Ltd v (1) Nigel Woolley (2) Timesource Ltd

[2014] EWHC 2706 (ch)

Ch D (Christopher Pymont QC)

Significance: A failure to notify defendants of new CFA agreements containing higher success fees was neither serious nor significant for the purposes of an application for relief from sanctions.

Facts: The case arose out of some passing off proceedings. The claimants/respondent’s (W) entered into CFA’s with their solicitors and these CFA’s were subsequently superseded by further CFA’s. W did not inform the defendants/appellants (U) of the new CFA’s or their terms. W applied for relief from sanctions to allow them to recover the additional liability should they be successful at trial. The appellants (U) appealed against a master’s decision that the respondents (W) were entitled in principle to recover additional liability in respect of conditional fee agreements (CFAs) entered into with their solicitors (S).

Held: W’s application for relief from sanction required the court to exercise its discretion under r.3.9. Applying the guidance in Denton v TH White Ltd [2014] EWCA Civ 906, [2014] C.P. Rep. 40, W’s failure to comply with r.44.15(2) was neither serious nor significant. It did not imperil future hearing dates or otherwise disrupt the conduct of the litigation or of litigation generally. U did not know, and had no right to know, the level of those success fees, or indeed any other terms of the CFAs. If W had complied with the notice requirements, U would have known that there were new CFAs in place, but that would have told them nothing more about the terms or amount of any success fee. They would have been, in substance, in exactly the same position. The failure to comply was correctly characterised by the master as a slip, mistake or oversight on S’s part. The master had been fully aware of the terms of r.3.9 and had exercised his discretion without material fault. If the instant court were to consider the matter afresh it would reach the same conclusion, Denton applied (see paras 12-17 of judgment).

Christine Yates (Personal Representative of the Estate of Gladys May Dalton, Deceased) v (1) Revenue & Customs Commissioners (2) Association of Personal Injury Lawyers

[2014] EWHC 2311 (QB)

QBD (Master McCloud)

Significance: The court set out an interim procedure to apply to asbestos disease claims relating to deceased persons proceeding, or to be issued at the Royal Courts of Justice within the specialist asbestos diseases
list, where the claimant sought disclosure from Revenue and Customs of the deceased’s employment history.

Facts: Revenue and Customs have recently taken the view, in a departure from previous practice, that it can not lawfully disclose employment schedules in respect of deceased persons outside the scope of issued
court proceedings. That has created the problem that intending claimants can not obtain the employment histories needed to be able to identify and sue the correct tortfeasors. The issue has been in danger of slowing up the progress of asbestos diseases claims nationally. The government has proposed that an amendment be included in the Deregulation Bill to allow Revenue and Customs to disclose national insurance contributions schedules to persons entitled to make claims under the Fatal Accidents Act 1976, persons entitled to bring proceedings for personal injury for the benefit of the deceased’s estate, or to persons claiming to be eligible under the Mesothelioma Act 2014 s.3 for a payment under the Diffuse Mesothelioma Payment Scheme. It was anticipated that the Deregulation Bill would become law no earlier than the end of 2014, so an interim solution was required.

Held: The interim procedure to apply to asbestos disease claims relating to deceased persons proceeding, or to be issued, at the Royal Courts of Justice within the specialist asbestos diseases list, where the claimant sought disclosure of the Revenue and Customs employment history of the deceased, was as follows: (a) the claimant should issue a claim at the Royal Courts of Justice against “persons unknown” in relation to the relevant deceased asbestos claim; (b) the claimant could then apply by email to either of the specialist asbestos masters for an order for disclosure by Revenue and Customs of the relevant employment history; (c) consistent with asbestos court practice at the Royal Courts of Justice, the application did not have to make use of CPR Pt 23 forms but the email had to attach a witness statement in support setting out the grounds for an order for disclosure under r.31.17; (d) attached to the email must be a draft order substantially in the form in the second schedule to the order annexed to the instant judgment, and a completed disclosure details form substantially in the form in the third schedule to the order annexed to the instant judgment; (e) the witness statement, draft order and completed schedule must be served on Revenue and Customs; (f) it was
anticipated, by reason of the broad consensus reached in the instant case, that Revenue and Customs would not oppose the approval of the order for disclosure provided that the requirements of r.31.17 were met, and the court would generally proceed on the footing that unless objection was made to the court to the making of the order within 14 days of service of the application on Revenue and Customs, the order would be made; (g) the procedure outlined should cease to have effect in the event that legislative reform provided an alternative procedure.

Coventry & Ors v Lawrence & Anor (No. 2)

[2014] UKSC 46

(Lord Neuberger (President), Lord Mance JSC, Lord Clarke JSC, Lord Sumption JSC, Lord Carnwath JSC)

Significance: The Supreme Court, and notably Lord Neuberger, have raised the spectre of success fees and ATE premiums being an infringement on the paying party’s Article 6 rights. It is not yet clear whether the infringement should be recognised by a declaration of incompatibility and the Court have noted that a further hearing would need to be held in order to determine the issue.

Facts: The case arose out of a nuisance claim involving a private residence and a speedway motor track. At first instance the judge found that the defendant’s were liable in nuisance and he directed that they pay 60% of the claimant’s costs inclusive of the ATE and success fee. In the Court of Appeal these findings were reversed. The claimant appealed. The Supreme Court found that the defendant’s were liable in nuisance (Coventry (t/a RDC Promotions) v. Lawrence [2014] UKSC 13, [2014] A.C. 822). The court later came to consider whether the costs order infringed the European Convention on Human Rights 1950 Article 6 or Protocol 1, Art 1.

Held: The claimant’s costs at first instance consisted of base costs, a success fee and an after the event insurance premium. The costs order required the defendants to pay 60 per cent of all three elements, these amounted to an overall figure of £1,067,000, this was described by the court as “very disturbing” (Para 34).

It was open to the instant court to consider whether the costs regime in the Access to Justice Act 1999, and in particular a claimant’s right to recover any success fee and ATE premium from unsuccessful defendant, infringed the Convention, James v. United Kingdom (A/98) (1986) 8 E.H.R.R. 123, MGN Ltd v United Kingdom (39401/04) [2011] 1 Costs L.O. 84 and Dombo Beheer BV v Netherlands (A/274-A) (1994) 18.

E.H.R.R. 213 considered. While the defendant’s liability for the costs might be inconsistent with their rights under art.6 or Protocol 1 art.1, it would be wrong for the court to decide the point without giving the government the opportunity to make representations. If the costs order infringed, the proper outcome might be to grant a declaration of incompatibility. However, that would be questionable given that the relevant provisions of the 1999 Act and the Courts and Legal Services Act 1990 had been repealed and replaced. If the Defendant’s wished to pursue the matter, the instant appeal would have to be re-listed for hearing once appropriate notice had been given to the Attorney General and the Secretary of State for Justice (paras 32-34, 40-44, 49).

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Author: Frederick Lyon Farrars (flyon@farrarsbuilding.co.uk)


Author: Nick Blake Farrars (chambers@farrarsbuilding.co.uk)


Author: Huw Davies Farrars (chambers@farrarsbuilding.co.uk)


Author: Aidan O'Brien Farrars (chambers@farrarsbuilding.co.uk)