XDE v North Middlesex University Hospital Trust

When a legally aided litigant switches to a conditional fee arrangement, the recoverability of resulting additional liabilities depends on the objective reasonableness of that particular decision. The court must examine the litigant’s actual reasons for switching, rather than assessing funding methods at a generic level or relying on advantages identified only after the event.

Where the operative reason is that the legal aid limit has been reached, the receiving party must show that the solicitors acted reasonably in managing the funded case. This includes monitoring expenditure, seeking timely and properly constituted extensions, and explaining accurately and fairly why alternative funding is required. A failure to do so may make the switch unreasonable.

The claimant appealed from a preliminary costs ruling by Master Rowley in the Senior Courts Costs Office. The Master disallowed recovery of a success fee and an after-the-event insurance premium, holding that discharge of the claimant’s legal aid certificate and the subsequent conditional fee arrangement were unreasonable.

The underlying clinical negligence claim had been compromised on liability and quantum. The claimant argued that the principles in Surrey v Barnet and Chase Farm Hospitals Trust and others [2018] 1 WLR 5831 did not apply because the claim did not benefit from the statutory damages uplift, and that the legal aid funding had effectively been exhausted. The central issue was whether the switch in funding, in the circumstances and for the reasons actually given, was reasonable.

1. Appeal dismissed. The Master had applied the correct legal approach and his evaluative conclusions disclosed no error of principle or plainly wrong assessment.
2. The principles stated by the Court of Appeal in Surrey v Barnet and Chase Farm Hospitals Trust and others [2018] 1 WLR 5831 applied generally. The fact that a particular damages uplift was unavailable did not mean that conditional fee funding was objectively preferable to legal aid, nor did it remove the need to scrutinise the claimant’s actual reasons for changing funding.
3. The relevant inquiry was not whether conditional fee funding had potential advantages identified on appeal. The court had to consider the reasons actually relied upon when the decision was made. Here, the operative reason was that the legal aid limit had been exceeded and that the solicitors considered an extension unlikely.
4. The solicitors were bound by the contractual limits of the legal aid funding. They were expected to monitor expenditure, attempt to keep the case within budget, and make timely, properly constituted applications for additional funding where necessary. The December 2011 request was inadequately particularised and insufficient. The January 2012 request for a formal application was not properly answered.
5. The burden remained on the claimant to establish that the solicitors’ conduct and the resulting switch were reasonable. The finding that a late application might have failed did not discharge that burden. The claimant had not shown that the lateness made no difference.
6. The court distinguished the certain loss of the Simmons v Castle uplift from the disputed advantages advanced for conditional fee funding. The latter were not so overwhelming that their omission from the advice could be disregarded.
7. The Master’s separate finding concerning the litigation friend’s lack of involvement did not require separate consideration in light of the conclusions above.

• High Court (Queen’s Bench Division): Appeal from the Senior Courts Costs Office dismissed. The decision of Master Rowley was upheld.