O'Brien v Shorrock & Anor

A conditional fee agreement must be construed by reference to its language and admissible context. A claim for damages under the Uninsured Drivers Agreement is distinct from an application for an award under the Untraced Drivers Agreement unless the CFA expressly covers both. A success fee is assessed prospectively, by reference to the risks reasonably perceived when the CFA was made. Hindsight, including the fact that the case reached trial, is impermissible. Where the solicitors’ risk assessment is accepted, conversion of prospects into a success fee is principally arithmetic, subject to relevant contractual and structural factors. The date notified under the Costs Practice Direction is the date the CFA was made, not an earlier retrospective commencement date. Non-compliance requires a structured relief-from-sanctions assessment.

The Motor Insurers’ Bureau appealed against decisions made on detailed assessment of the costs of a substantial personal injury claim. The claimant’s solicitors had entered into a CFA on 21 October 2009, but the document stated that it took effect from 6 November 2008. The underlying claim concerned the identity of the driver of an uninsured vehicle and was ultimately compromised after the claimant succeeded on that issue.

The appeal concerned the construction of the CFA, the appropriate success fee, and the effect of giving the earlier retrospective date in the Notice of Funding under paragraph 19.4(2) of the Costs Practice Direction.

1. Construction of the CFA. The CFA covered the court claim for damages against Michael Shorrock and the MIB under the Uninsured Drivers Agreement. It did not cover a separate application for an award under the Untraced Drivers Agreement. The language referring to court proceedings, damages, Part 36 offers and interim or provisional damages was inconsistent with covering the non-adversarial scheme application. The admissible context, including the solicitors’ professional duty to explain the agreement, supported that construction.
2. Success fee. The relevant risk was the risk apparent when the CFA was executed. The accepted assessment of prospects at 60% justified a 67% success fee by the applicable ready reckoner. The fact that the case proceeded to trial could not be used retrospectively to increase the fee. The single-stage structure and the fact that substantial costs would not have been incurred under the CFA if liability failed were factors supporting a reduction, not an increase.
3. Date of the CFA. Under paragraph 19.4(2), the date to be notified was 21 October 2009, when the agreement was made. Its contractual retrospective effect from 6 November 2008 did not alter that date. Strict compliance mattered because the paying party was entitled to know the potential extent of additional liability, including whether success fees were claimed on pre-CFA costs.
4. Relief from sanctions. The breach was significant. Applying the structured approach in Denton v TH White [2014] 1 WLR 3926, relief was nevertheless proportionate because the MIB knew from the outset that a CFA existed and knew its stated retrospective start date. The success fee was therefore fixed at 67% for costs incurred from 21 October 2009, and at 20% for costs incurred between 6 November 2008 and 21 October 2009.
5. The appeal was allowed to that extent. The MIB was treated as the successful party on costs, subject to a 30% discount, and was awarded the costs of the relief application.

• High Court (Queen’s Bench Division): On appeal from Regional Costs Judge Deputy District Judge Harris, the success fee was reduced from 75% to 67% after 21 October 2009 and from 40% to 20% for the earlier period. The appeal was allowed to that extent.