CFB (a protected party by LKP his litigation friend) v AXA Insurance UK PLC

Where a protected party’s solicitors seek payment from damages, the court must independently decide whether approval or dispensation from detailed assessment is in the protected party’s interests. A proposed deduction cannot be approved on a “light touch” basis merely because counsel considers it reasonable, because the litigation friend consents, or because a high proportion of inter partes costs was recovered.

The general rule under CPR 46.4 is detailed assessment, subject to the specified exceptions. The court may identify concerns without acting as an advocate and may conduct a fair assessment without Points of Dispute where the solicitor has adequate notice and an opportunity to respond. Solicitor-client costs remain subject to reasonableness requirements and the statutory presumptions. Claims for shortfall costs must therefore be justified by analysis of the particular bill.

The claimant, a protected party, had recovered damages following settlement of a serious personal injury claim. The court was asked to approve settlements of two costs claims: an inter partes costs settlement with the defendant, and claims by the claimant’s solicitors for a success fee, an after-the-event insurance premium, shortfall costs and pure solicitor-client costs.

The solicitors argued that the Senior Courts Costs Office applied an unlawful heavy presumption against deductions from damages, that serious traumatic brain injury claims warranted a “light touch” approval process, and that detailed assessment without Points of Dispute was procedurally unfair. The central issues were the proper construction of CPR 21.10 and CPR 46.4, the significance of the litigation friend’s consent, and whether the proposed deductions could be approved without assessment.

1. Outcome. The court approved the inter partes costs settlement. It refused to approve the proposed settlement of the shortfall and pure solicitor-client claims and did not dispense with detailed assessment under CPR 46.4.
2. There was no heavy presumption against approval created by the Practice Note. The rules themselves required detailed assessment unless an exception was established. A costs claim against a protected party is a claim requiring court approval under CPR 21.10, and the court must protect the protected party’s interests.
3. The court rejected the proposed “light touch” approach. Counsel’s advice may guide the court, but the judge must consider the merits of the proposed compromise and form an independent view. The obligation to decide whether dispensing with assessment is in the protected party’s interests is not qualified by the complexity of a traumatic brain injury claim or by the percentage of inter partes recovery.
4. The litigation friend’s consent was relevant but not decisive. The obvious conflict between solicitor and client, and the litigation friend’s lack of costs expertise, meant that deference to consent would not satisfy the court’s protective function.
5. Points of Dispute were not mandatory in every solicitor-client assessment. A fair process could be achieved by giving the solicitor adequate notice of the court’s concerns and a proper opportunity to answer them. The court was entitled to raise concerns and to assess costs without adopting an adversarial or partisan role.
6. Solicitor-client costs were not simply contractual sums. They remained subject to reasonableness and to the presumptions in CPR 46.9(3). Unusual costs could be presumed unreasonable where the client had not been warned that they might not be recovered from the opposing party. The bill disclosed concerns about excessive time, delegation, hourly rates, expert work and counsel’s fees, which required closer assessment.
7. The court could not assume that traumatic brain injury litigation necessarily generated substantial reasonable costs unrecovered inter partes, or allow a general margin of error. The particular bill had not been analysed sufficiently. The pure solicitor-client claims, including immigration and deputyship work, also raised substantial questions as to their connection with the personal injury retainer and the proper forum for recovery.

The judgment records that an appeal had been lodged against an earlier decision to adjourn the approval application. The appeal was stayed while the matter was reconsidered, and the judge proceeded with the resumed application after the appeal judge was informed of the change in course. The present judgment determined the approval application.