JXC (by his litigation friend CXJ) v NIS

On a solicitor-and-client assessment for a protected party, the court must independently assess costs claimed from the client, even where the paying party has agreed a satisfactory inter partes settlement. The assessment extends to the totality of costs payable from the protected party’s money, including budget overspend and success fees.

General information about an anticipated percentage shortfall does not amount to informed consent to substantial expenditure exceeding court-approved budgets. The solicitor must monitor the budget and explain, before overspend is incurred, its likely consequences and available options. Budget overspend may be unreasonable in amount under CPR 46.9(3)(c), even though it is not unusual in nature. A success fee must reflect the risks reasonably apparent when the CFA was entered into, including Part 36 risk, without substantial enhancement merely because the claim is high-value.

The claimant, a protected party, settled a substantial personal injury claim for a lump sum and periodical payments. The defendant agreed to pay the claimant’s costs on the standard basis, and the parties later settled those costs for £1,050,000.

The claimant’s solicitors sought to recover from the claimant’s damages a base-costs shortfall, a success fee under a conditional fee agreement, and an after-the-event insurance premium. The issues were whether the solicitors had obtained informed approval to expenditure exceeding court-approved costs budgets, whether the budget overspend was presumed unreasonable under CPR 46.9(3), and what success fee was reasonable.

1. Costs assessment. The court approved the inter partes costs settlement. Under CPR 46.4 and CPR 46.9, however, it had to assess the costs claimed from the protected party independently. Costs recovered from the defendant could be treated as reasonably incurred and reasonable in amount, but the assessment was not confined mechanically to the shortfall. It extended to the totality of costs claimed from the claimant, including budget overspend and the success fee.
2. Budget overspend. The solicitors gave general estimates of a 20–30% shortfall but did not explain the three costs management orders, the approved figures, the substantial reductions from the proposed budgets, or the likely consequences of exceeding those budgets. The litigation friend therefore had no informed opportunity to authorise expenditure beyond budget, seek revision, or avoid overspend. The presumptions in CPR 46.9(3)(a) and (b) were unavailable.
3. The overspend was unreasonably incurred and unreasonable in amount. Applying ST v ZY, it was not unusual in nature but was unusual in amount for CPR 46.9(3)(c)(i). The solicitors had not warned that its unusual amount might prevent recovery from the defendant, so the presumption of unreasonableness was unrebutted. Since the overspend exceeded the claimed base-costs shortfall, no part of that shortfall could be deducted from the claimant’s damages.
4. Success fee. The recoverable base costs had to exclude the disallowed overspend. The success fee had to reflect the risks reasonably apparent when the CFA was entered into. The court applied the guidance in C v W and NJL v PTE: the timing and consequences of a possible Part 36 offer required assessment, risks were not to be accumulated linearly, and the claim’s size did not itself justify a substantial uplift. The first-stage success fee was assessed at 33%, producing £225,759.53 inclusive of VAT.
5. The ATE premium of £1,629.60 was properly deducted from the claimant’s damages.

This was a first-instance costs assessment. The judgment records the prior approval of the damages settlement and the subsequent inter partes costs settlement; no appeal or lower-court judgment is stated.