Redwing Construction Ltd v Wishart

On a standard costs assessment, CFA success fees and ATE insurance premiums must be reasonable and proportionate when separately assessed. The principal factor is the claimant’s objectively assessed prospects of success when the funding arrangement was made. Strong prospects ordinarily justify a materially reduced uplift or premium; where success was virtually assured, no uplift may be allowed. There is no presumption that an ATE premium is reasonable. Funding arrangements are permissible in adjudication-enforcement proceedings, but substantial uplifts require careful scrutiny because such claims commonly succeed and are determined summarily. A party that fails to notify the opposing party of a funding arrangement in accordance with the rules should generally recover no enhanced CFA costs incurred before notification.

The claimant obtained judgment enforcing an adjudicator’s decision. The court had already determined the substantive enforcement issues in [2010] EWHC 3366 (TCC). This judgment concerned the summary assessment of costs, particularly a 100 per cent CFA success fee and an ATE insurance premium of £8,480 for £20,000 of cover.

The issues were whether the funding arrangements and their additional liabilities were reasonable and proportionate, whether the claimant’s late notification affected recovery, and what allowance should be made in the circumstances of a relatively straightforward adjudication-enforcement claim.

1. Redwing was entitled to costs on the standard basis, but the CFA uplift and ATE premium had to be assessed separately from the base costs. Any unreasonable or disproportionate additional liability could be reduced.

2. The prospects of success, judged primarily when the CFA was entered into, were a primary consideration. The greater the prospects, the lower the reasonable uplift. Where success was virtually assured, no uplift might be allowed. The same approach applied to an ATE premium, since the premium should reflect the litigation risk.

3. On a summary assessment, the court could make a realistic broad-brush assessment by comparing the premium with the cover provided. There was no presumption that the premium was reasonable. The claimant bore the burden of establishing reasonable costs on a standard assessment, although a paying party raising a genuine issue should provide material supporting its objection.

4. The notification requirements for funding arrangements were important. In the absence of a good reason for late notification, the default position was that the successful party should not recover the enhanced CFA percentage for costs incurred before formal notification.

5. CFAs and ATE insurance were legally permissible in adjudication-enforcement proceedings. Nevertheless, the TCC would scrutinise substantial uplifts carefully because such proceedings usually succeed and are commonly dealt with by a short summary judgment hearing. Funding arrangements should not be used primarily as a commercial threat.

6. Redwing’s prospects of obtaining substantial judgment were very strong, although there was a limited risk on two jurisdictional issues. The court therefore allowed 20 per cent of the solicitors’ basic charges as the CFA uplift and 20 per cent of the ATE premium. No CFA uplift was allowed for costs incurred before notification on 19 November 2010.

Not stated in the judgment.