Kilby v Gawith

Under Civil Procedure Rules 1998 r 45.11, a claimant who has entered a specified funding arrangement is entitled to recover the prescribed 12.5% success fee. The words “may recover” confer an entitlement once the condition is met. They do not give the court an all-or-nothing discretion to disallow the fee.

The fixed recoverable costs regime in Part 45 prevails over the general requirement in Part 44 that costs must be reasonably incurred. It deliberately provides a certain, standardised scheme which may over-compensate in individual cases. The existence of before-the-event insurance cannot justify a different construction.

The claimant was injured in a road traffic accident. She entered a conditional fee agreement with her solicitor, although she had before-the-event insurance. Liability and damages were agreed, but the defendant disputed liability for the fixed success fee claimed in costs-only proceedings.

A District Judge held that the success fee was recoverable without discretion. HHJ Stewart QC, sitting in the Liverpool County Court, dismissed the defendant’s first appeal. The defendant then appealed, with permission, to the Court of Appeal.

The central issue was whether Civil Procedure Rules 1998 r 45.11(1) gave the court a discretion to refuse the fixed 12.5% success fee because the claimant had available before-the-event insurance.

1. Appeal dismissed. Sir Anthony Clarke MR, with whom Arden and Dyson LJJ agreed, held that the claimant was entitled to the success fee prescribed by Civil Procedure Rules 1998 r 45.11.

2. The natural meaning of r 45.11(1), which states that a claimant may recover a success fee if the specified funding arrangement exists, is that the claimant has a right to recover it once that condition is satisfied. This differs materially from r 45.10(1)(a), which expressly provides that the court may allow a disbursement claim and therefore confers a discretion.

3. The prescribed 12.5% rate under r 45.11(2) reinforced that construction. If a discretion had been intended, it would be improbable for it to be confined to allowing the whole fee or none of it. The rules did not permit a reduction of the success fee even where exceptional circumstances could justify a claim for costs exceeding the fixed costs under r 45.12.

4. The purpose of Section II of Part 45 was a fixed, certain and readily calculated costs scheme. Its agreed standard levels could over-reward or under-reward in particular cases, but that was accepted in order to remove costly satellite disputes. The general rule in Part 44 against unreasonably incurred costs must therefore yield to the mandatory Part 45 scheme. The reasoning in Nizami v Butt [2006] EWHC 159 and Lamont v Burton [2007] EWCA Civ 49 supported that conclusion.

5. The importance of before-the-event insurance, including the guidance in Sarwar v Alam [2001] EWCA Civ 1401, did not warrant a special construction of Section II. Any policy change to account for such insurance was for the Rules Committee or the Civil Justice Council.

6. Obiter, the court considered that Section III of Part 45 pointed in the same direction, although its construction of Section II did not depend on that view.

• Court of Appeal (Civil Division) — dismissed the defendant’s second appeal: [2008] EWCA Civ 812.

• Liverpool County Court — on 14 August 2007, HHJ Stewart QC dismissed the defendant’s appeal from the detailed assessment.

• Birkenhead County Court — on 23 March 2007, District Judge Peake allowed the fixed success fee on detailed assessment.