COST BITES 232: COSTS JUDGE REJECTS ARGUMENT THAT THERE SHOULD BE A “SHORT CUT” TO APPROVAL OF SOLICITOR AND OWN CLIENT COSTS FROM A PROTECTED PARTY’S DAMAGES
A solicitor who wishes to deduct “solicitor and own client” costs in a case involving a minor or protected party requires approval by the Court. Here we have a case where the claimant’s solicitors argued, robustly, that the current process whereby such costs are assessed are unfair. The judge (equally robustly) rejected that argument. The purpose of the procedure is to protect the interests of the claimant. The system in place at present provided protection for claimants (against their own lawyers) and could not be subject to any form of short cut.
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“It seems to me there might be serious consequence for protected parties if solicitors were to receive payments from damages without proper scrutiny. At the risk of stating the obvious, damages are generally paid to compensate parties for their losses. General Damages were increased to allow for payment of success fees, following LASPO (which largely ended the recovery of additional liabilities -success fees an the costs ATE premiums- defendants in most personal injury litigation) but there was no corresponding increase in awards to cover shortfall claims. If large sums are paid out of damages it might in some cases affect the ability of a protected party to fund care.”
KEY PRACTICE POINT
If a claimant solicitor wishes to recover solicitor and own client costs in addition to the success fee then that solicitor has to “go through the hoops”. There are no short cuts. This involves early and full explanation to the client. If the client is a minor or a protected party it then involves an assessment of solicitor and own client costs by the courts. However in other cases the solicitor could be called upon to justify the deduction in a solicitor and own client assessment.
THE CASE
In CFB v AXA Insurance UK PLC [2025] EWHC 915 (SCCO) Costs Judge Brown considered an argument that a solicitor who acted for a client in a personal injury case could bypass the solicitor and own client assessment process.
The claimant had suffered a serious head injury. The case had settled. Inter partes costs were agreed and approved by the judge. The success fee and insurance premium were also approved by the judge (he noted that it may have been possible for these to be agreed without the need for a hearing). The key issue remaining was the approach the court should take to the solicitor’s claim for “solicitor and own client” costs – those costs not recovered from the defendant.
THE ARGUMENTS ON BEHALF OF THE CLAIMANT’S SOLICITOR
The claimant’s solicitor argued that it was not necessary for the court to carry out an assessment of those costs because they had received an advice from Leading Counsel who was experienced in both personal injury and the law of costs. Rather than carry out an assessment – it was argued, the court should adopt a “light touch”.
THE JUDGMENT ON THIS ISSUE
- This is my decision on an application to approve the settlement of two claims for costs. One is a claim by the Claimant against the Defendant (the ‘inter partes’ claim); the other is a claim for costs by the Claimant’s solicitors (Prince Evans Solicitors LLP, ‘PE’) against the Claimant. I will redact part of this judgment for publication in public (in particular the references to material which were without prejudice in the substantive claim and, at Mr Roy’s request and until determination of the issue as to whether the Claimant’s solicitors are entitled to assert privilege in relation to the compromise figures that that I have seen in respect of PE’s claim, these figures [2]).
2. The Claimant is a protected party represented by a litigation friend and has been successful in recovering damages in the action referred to in the heading above. The claim by the solicitors is commonly referred to as a claim for Deduction from Damages, because the fund from which the payments is to made on the solicitor’s claim is normally the damages that have awarded the protected party.
- 3. A Deputy has been appointed for the Claimant. I understand that he is a partner or member of the solicitors PE and to my mind rather obviously has a conflict of interest when dealing with a claim against the Claimant by his own firm. He has however approved the payment of the sum sought by his firm as has the Claimant’s litigation friend (his wife). Neither the Deputy nor the Litigation Friend were present at the hearing. Mr. Smith, the solicitor who had conduct of the proceedings, was present at the hearings before me.
4. At hearings on applications in claims for Deduction for Damages, it is not unusual in my experience for junior counsel, costs lawyer or a costs draftsman to appear for the solicitor (the protected party is not normally either present or represented). Usually it is generally recognised and acknowledged by any such representative that they are acting on behalf of the solicitor and that the interests of the protected party are not aligned with those of the solicitor on a claim by the payment out of the damages. Unusually however in this case Mr Roy KC, although apparently instructed by the Claimant’s solicitors, said in the course of the hearings[3] that he was appearing on behalf of the Claimant.
5. It is appropriate for me to record that (for reasons which may become clear) I had some concern that Mr Roy’s submissions appeared more consistent with someone who was appearing on behalf of a solicitor in respect of a proposed Deduction from Damages, rather than the solicitor’s client. As I think I expressed in the course of the hearing, but in any event appears from what I set out below, many of the submissions made by Mr Roy might be seen as seriously disadvantageous to protected parties. Indeed they seemed to be heavily aligned with the interests not only of his instructing solicitors but also those of FOCIS, the Forum of Complex Injury Solicitors who appear to have been pressing for a rule change to facilitate payments of costs to solicitors from the damages received by protected parties. But his explanation of this apparent contradiction is that it is clear that when looked at properly as a matter of law, the current procedure for determining these claims is seriously defective, and if a proper procedure were followed the Claimant’s best interests would be to accept the compromise in respect of PE’s claim against him. That is, he says, because the Claimant would do worse if this claim were to be determined in accordance with a proper method of assessment or determination
THE COSTS
“Compromise of the inter partes costs
9. Against a claim in an electronic Bill of Costs (‘the electronic bill’) of £439,167.62 (all figures inclusive of VAT) the proposed settlement is for £378,000 inclusive. I am told it includes £5,500 in respect of interest and £1,300 in respect of the costs of assessment[4]. This equates, I understand, to recovery of c. 85% of the claim in the electronic bill.
Compromise of PE’s claim for costs
10. In respect of the Additional Liabilities PE claim £31,413.80 in respect of success fee and for a ATE premium of £1,680. I see no obvious difficulty with these claims, which might have been dealt with on the papers.
11. However PE also seek a recovery of what is referred as a “shortfall” costs (‘the shortfall claim’), being a shortfall in base costs recovered from the Defendants. This is essentially the 15% or so not recovered in the inter partes claim set out in the electronic bill.
12. Very unusually, a further bill has been served, a paper bill of costs[5], in the sum of £23,078.32. This is said to contain “pure” solicitor’ client costs (and I refer to this as the ‘pure SC claim’).
13. The figures have changed slightly in the course of the application. The proposed compromise on PE’s claim is [ ] against what is said to be a potential claim for about £120,000. The shortfall claim and the pure SC claim constitute about [ ] of the compromise (the rest being the claim for the Additional Liabilities).
14. In seeking to persuade me that I should approve the settlement of the shortfall claim and the pure SC claim reliance is placed on the status of counsel who advised on this settlement approval, Mr. Roy- leading counsel who practices in personal injury and also has experience dealing with costs issues. Mr Roy says that he has evaluated the sums recoverable on PE’s claim and I am asked to approve payment of this sum as an alternative to detailed assessment. He makes it clear that I should not decide any of the points that might arise (if there were to be a detailed assessment) and that I should have regard not just to what I might decide but to a range of opinion to include what other costs judges might decide and, more particularly (and importantly for the purpose of argument he advances), that I need not and should not give anything more than a “light touch” scrutiny to the merits and quantum of these claims.
CRITICISM OF THE PRACTICE NOTE
The claimant had extensive criticism of the Practice Note that dealt with assessments in these circumstances.
“23. In summary Mr. Roy submits:
(1) The Practice Note creates a heavy presumption against approval of a settlement between solicitor and client of the solicitors’ claims for Deductions for Damages and such a presumption was wrong as a matter of law.
(2) This approach, said to have to adopted by the SCCO, is wrong. In serious and/or difficult traumatic brain injury (‘TBI’) claims (which he appeared to contend constituted a special category of litigation) there should be no heavy presumption against approval, approval should be dealt with as Mr Roy contends claims for damages are dealt with in the King’s Bench Division (KB), by way of a “light touch” relying on the advice of counsel.
(3) The procedure which Mr Roy understands the SCCO to adopt in conducting an assessment was unfair as in general it involved an assessment without Points of Dispute, which is wrong as a matter of law. Further, it is wrong for a judge to raise issues on a bill. This gives rise to a serious procedural irregularity because the judge is entering into the ‘arena’ and the process ceased to be adversarial, as it should be.
(4) The statement in the Practice Note that the starting point for the costs of a Deduction from Damages assessment was no order for costs is wrong; if the judge requires an assessment of the costs this would require the payment of a court fee. It would be seriously unfair to solicitors who wanted to pursue a shortfall that they should have to pay such a fee.
24. Mr Roy was generally critical of what he perceived to be a reluctance on the part of the court (the SCCO in particular) to facilitate the payment of shortfall claims[8].
25. Cases involving TBI are, he argues, liable by their very nature to generate client care work which means that there will be costs which are reasonable on a solicitor client basis even if unreasonable inter partes (i.e. between the parties in the substantive claim). He says there is an understandable desire on the part of solicitors who have acted for clients to be paid these shortfall costs over and above those that have been recovered by defendants. An expectation that court fees are payable on assessment and that no order as to costs will be made in the solicitor’s favour creates a ‘lose -lose’ scenario and imposes an unfair “tax” on the solicitors.
26. I had understood it to be suggested that the court fees payable on an assessment of Deductions from Damages should be recoverable from the Claimant – albeit that there was a reluctance on the part of Mr Roy to frame the issue in quite this way. I also understood it to be suggested that if I were to order an assessment consideration should be given to the appoint a legal representative to act for the protected party and prepare Points of Dispute- and that matter be dealt with as a section 70 Solicitors Act 1974 assessment, applying the statutory rule for costs recovery[9]. In any event, the corollary of his submissions for current purposes appeared to be that I should adopt a procedure that was, he submitted, fairer to a solicitor and this required me to take a “light touch” approach to the approval of the Deduction from Damages in TBI cases without any need to consider the merits too closely; indeed, I should not question in any detail or in any substantial way the views of Mr Roy, which I should trust. This would, he says, mitigate the unfair features which he has identified.
27. The need to have regard to the countervailing interest of the protected party on any deduction from their damages albeit recognised by Mr. Roy did not at least at first blush feature as prominently in his submission as might have been expected. It seems to me there might be serious consequence for protected parties if solicitors were to receive payments from damages without proper scrutiny. At the risk of stating the obvious, damages are generally paid to compensate parties for their losses. General Damages were increased to allow for payment of success fees, following LASPO (which largely ended the recovery of additional liabilities -success fees an the costs ATE premiums- defendants in most personal injury litigation) but there was no corresponding increase in awards to cover shortfall claims. If large sums are paid out of damages it might in some cases affect the ability of a protected party to fund care. This is perhaps particularly so where compensation is not full (as here) because the risks of liability or (possible) contributory negligence have reduced the level of damages that might otherwise be payable. Further, it might said that, although in this case the claim is relatively modest, claims for shortfall costs may be in the hundreds of thousands of pounds.
28. Indeed the submission of Mr. Roy appeared to borrow from the submissions of FOCIS which have been advanced in pursuit a change in the law. FOCIS argues that the current system is unfair so that solicitors handling complex claims are not adequately rewarded. However Mr Roy’s argument is not that a rule change is required: his solution to his alleged problem was as I have indicated for a “light touch” approach.
29. In any event, whatever concerns or interests there might be, the correct approach to these issues is a matter of law and to my mind the correct approach is clear and apparent from the rules. Whilst recognising the very considerable industry of Mr Roy, I think my conclusions as to his criticisms at least of the Practice Note can be stated fairly shortly…”
THE ARGUMENTS ON BEHALF OF THE CLAIMANT’S SOLICITOR
40. Mr Roy’s case is that the court should simply ascertain whether or not the proposed deduction is within a reasonable range. That, he says, is all the court does when approving substantive claims for damages by protected parties. He says that in the context of a claim for damages, the court typically adopts a “light touch” approach consistent, he says, with providing an external check. As I understood his contention was that in general when dealing with damages claims the court will rely upon the advice of counsel without scrutinising the matter any further and that is what should happen here. In this case I should “tailor my approach to mitigate the potentially problematic aspects of the Practice Note”. Because damages for TBI were liable to generate irrecoverable costs and there should, if anything, be a presumption in favour of accepting at least a significant solicitor/client costs which the court should accept without scrutiny of the claim in the individual case.
41. In support of this contention, Mr Smith’s evidence (following some discussion, it appears, with practitioners acting for catastrophically injured parties) is that historically the SCCO adopted a more flexible and light touch approach which he said was convergent with the approach to approvals to damages claim. There is nothing, in his view, to suggest that this did not work satisfactorily; Mr Smith’s evidence is that it did.
42. It is not I think necessary to deal with all the various elements of the arguments Mr. Roy developed. As to Mr. Smith’s stated experience of previous applications, and whatever the accuracy of his description as to what my have happened on cases before the Practice Note, I am not persuaded that it helps as to the proper interpretation of the rules. On this point, what other costs judges may or may not have done in other cases is irrelevant. Indeed whether it is appropriate for a solicitor or to give evidence of judicial practice in this way seems to me to me to be at best questionable -and the evidence is quite probably inadmissible. In any event to my mind the proposition which it seeks to support, that the court should simply accept counsel’s advice, without analysing it in some measure, is not consistent with the rules.
43. Necessarily the degree of consideration by a judge in deciding whether any settlement is in the best interests of protected party will depend on the facts of each case. It is clearly in the interests of a claimant that finality is achieved at an early stage- indeed there may be problems if the Court were to be too fastidious about this process. I would accept, of course, that a court must be wary before rejecting what might in due course prove to be a sensible settlement and should be wary that arguments about small sums which do not really matter are not likely to in anybody’s interest. But the requirement that the court must be satisfied that that it is in the interests of the protected party to dispense with an assessment is not subject to any qualification.
44. Part of the problem with Mr. Roy’s submissions as I see it, is that they do not recognise the problem to which the rules are directed. In respect of claims for damages, particularly those pursued on a CFA, there is a real possibility of conflict of interest between the solicitor and the client (the solicitors are paid their costs if success is achieved and are less directly interested in the amount recovered- this conflict giving rise to a risk of under compensation) – however this problem is mitigated in part by the advice of counsel. In respect of a shortfall claim the conflict of interest between the solicitors and the client is obvious.
45. In this context I see no mandate in the rules for the “light touch” approach which Mr. Roy says applies to the approval of deductions from damages. Nor, for what it is worth, is that my experience of what happens in the KB[11] . The judge should be provided with relevant documents CPR 21.10 (3) – albeit not necessarily all the medical notes for instance. Counsel’s advice may form a guide as to how any issue arising in the case may be resolved. But the mere requirement that the judge be provided with such an advice (CPR 21.10 (3) (h)) does not mean that the judge is bound to accept it. Typically the advice of counsel will set out the anticipated arguments of the parties on the issues arising. Counsel does not simply say that the settlement proposed is a good one and on this basis the court should approve it. The judge will consider the merits of the settlement and form their own view as to the merits. In some case (indeed not infrequently) a judge requires further explanation as to why a particular compromise is in the protected party’s best interests; and in some cases the proposed settlement is not approved.
46. Mr. Roy went on to say that a litigation friend should be presumed capable of making sensible decisions in the protected party’s interest and any other approach would, he says, be “paternalistic verging on patronising”. Due weight must be given to the litigation friend’s decision before ordering a detailed assessment (which he suggests amounts to a quasi trial). That would, he says, happen in the context of a claim for damages. It is not, he says, inherently more difficult for a litigation friend to understand the issues giving rise to costs settlement than issues such multipliers in a complex personal injury claim (multipliers, discount rates, periodical payments, etc-see too FOCIS’ submissions on this point).
47. However whilst the consent of the litigation friend to a deduction, is relevant it is not decisive. The suggestion that the court must give due weight to the litigation friend’s decision begs the question as to what is meant by “due weight“. The wishes of the family are, where appropriate, taken into account and it is not in a protected party’s interests that there be protracted delay in the resolution of a claim. Mr. Roy’s comparison of claims for personal injury damages with costs claims however misses the point. In general litigation friends, who are, of course, normally responsible adult members of the protected party’s family, have little or no qualifications or experience in dealing with either personal injury claims or costs. In damages claims the litigation friend will be guided by the advice of counsel or a solicitor in anything other than the simplest of cases. In costs claims I think it will be rare for a litigation friend to have any real appreciation as to whether costs are reasonable in the context of large personal injury claims: in general, they will simply trust their solicitors to claim only a reasonable amount. It is not necessary for me to go into the elaborate argument put by Mr. Roy to the effect that position was an analogous to a patient giving consent for surgery, quite obviously whatever the parallels it does not mean that the court should not look into the substance of the claim. What litigation friends do not generally have is the experience or expertise to decide whether a detailed assessment of the solicitors’ costs is in the interests of the protected party and there is, as is obvious a plain conflict of interest with the solicitor in respect of the solicitor’s claim costs. Indeed it strikes me that a court must be astute to the possibility that a litigation friend may be keen to approve the deduction from damages as it may relieve them from their own personal liability for the costs[12].
48. In any event it is plain that the court would not be making a decision in the best interests of the protected party if it simply deferred to the views of the litigation friend. There have been quite a number decisions of Costs Judges in which it was not accepted that the litigant friend’s consent was determinative. I refer to my own decision in BCX v DTA [2021] 12 WLUK 234 as to the time spent by the solicitors in dealing with what is called rehabilitation, typically attendance at multidisciplinary (MDT) meetings. I reduced this claim substantially[13]. The litigation friend cannot be expected to know when work done by a solicitor is reasonable and scrutiny of this work is necessary, otherwise a solicitor would quite cynically run up a large bill for costs for work which is not progressive and wholly unreasonable. I do not accept that this decision and other such decision were “patronising” or wrong. Indeed other decisions by other costs judges indicate the need for court involvement (in JXC v NIS [2023] EWHC 1000 SCCO[1] Costs Judge Leonard was concerned a claim made by solicitors for cost claim by a solicitors against protected parties in excess of the costs budget in circumstances where the solicitors had not kept the litigation friend properly informed of costs budgets- and see too more recently perhaps AKS v NFU [2025] SWHC 125 (SCCO)[14]).
49. Mr. Roy says on behalf of the Claimant that he is independent counsel and that this independence should provide me with appropriate reassurance. But again counsel will generally acting on the instructions of the solicitors and may have an interest in a particular outcome. I mean no slight to Mr. Roy but it is plain that there are large sums of money to be gained if ultimately decisions were made to order a deduction by way of “light touch” on the part of the court and reliance, in the way suggested, on counsel’s advice. The fundamental difficulty is however that the court needs to be satisfied that the proposed settlement is in the interests of the protected party and to my mind that requires the court to consider the merits of the proposed claim against the protected party. This cannot be delegated to counsel.
50. I have some considerable concerns about Mr. Smith’s stated reliance on Mr Roy’s advice by reasons of his judicial appointment as Deputy Costs Judge. Mr. Roy is leading counsel with experience of dealing with costs issues. However in my judgment it is not enough that counsel simply says that the sums looks reasonable, whatever their status or experience. There is generally no need for an advice (which might be protected by privilege). It is the content of the submission to the court that is important not the status of the person who provides it. Whatever the practice before the Practice Note, it is plain that the Note aims to ensure that the court has a skeleton argument which deals with the merits of the solicitor’s costs claim and the sorts of concerns which commonly arise in assessment whether on the standard or indemnity basis. They are of the sorts of possible objections or concerns that I have set out in the appendix to this judgment.
51. I do not accept the contention that costs payable on a indemnity basis are bound to be significantly higher than costs of the standard basis and this should account for the shortfall claimed. An assessment between solicitor and client is not simply the determination of a sum due under a contract[15]: it requires a consideration of the reasonableness of the costs claimed. The same sorts of issues which arise inter partes assessment often arise in a solicitor/client assessment (lack of delegation, multi fee earner attendance, excessive time etc). Moreover in a solicitor/client assessment, the court is required to apply the presumptions in CPR 46.9 (3)[16] in deciding whether the costs claimed by the solicitor are reasonable. Approval or agreement to elements of costs creates a presumption of reasonableness only if approval or agreement is informed (see McDougall v Boote Edge Esterkin [2001] 1 Costs LR 118 and Herbert v HH Law Ltd [2019] EWCA Civ 527 [37] and [38]). There will moreover be a presumption that costs as between the solicitor and client are unreasonable if the costs are unusual in nature or amount and the solicitor did not tell the client that as a result the costs might not be recovered from the other party.
52. The presumptions under CPR 46.9 (3) are important in considering whether the particular costs sum claimed in this case are reasonable but are also relevant to the question as to whether as a matter of generality the indemnity basis will necessarily result in a higher recovery than a standard basis assessment. As the former Senior Costs Judge Gordon-Saker explained in ST v ZY [2022] EWHC B6,
“To avoid the presumption the solicitor is required to explain to the client that the costs may not be recovered because they were unusual. “Unusual” must therefore be read in the context of a between the parties assessment.
53. The judge went to on to explain that the provisions are not concerned with costs which are merely “unreasonable”: a solicitor is not required to inform the client that particular costs may not be recovered because a court may conclude that they were not reasonably incurred or reasonable in amount. But it is clear that these presumptions provides some protection to a client against a claim by solicitor in circumstances where the client does not recover all their costs of the other side to the litigation. These protections arise as a matter of substantive law and are based on long standing principles of consumer protection[17].
54. Indeed whilst it may well be that costs awarded on the indemnity basis are often assessed as higher costs on a standard basis this does not necessarily follow from the rules (see CPR 44.3 (2) and (3)). Consideration of proportionality may limit the recovery of costs on a standard basis and not on an indemnity basis but this may not be a substantial factor in high value claims. Doubt will be exercised in a paying party’ favour on a standard basis, whereas it exercised in the solicitor’s favour on an indemnity basis- nevertheless, a judge may have little doubt in a assessment as to what is a reasonable level of cost for a particular piece of work. As the more experienced costs lawyers and costs draftsman will readily acknowledge there is no necessary difference in the assessment of what is reasonable under the two bases. In the circumstances I am not sure it follows from the rules that there must be a shortfall of any particular amount; each case is to be dealt with on its own merits.
55. Nor am I satisfied that in TBI cases there is an inherent likelihood that there will be significant reasonable costs which are not recovered inter partes but that are recoverable between solicitor and client. It may well be some time is taken up emotional support of a pastoral nature, as Mr. Roy put it, but vulnerability is a factor to be take under CPR 44.3(5) in determining inter partes costs on the standard basis. So allowance has to be made for the greater demands on solicitors when conducting cases for protected party and other vulnerable parties, both when costs budgeting and assessing costs. As with the determination of damages in personal injury claims, a defendant has to take their victim as they find them. In the circumstances I do not think I should simply assume that there are large number of attendances and of work for which could not recovered from the other side because a case involves TBI.
THE CLAIMANT’S SOLICITORS ARGUMENT THAT THIS WAS AN UNFAIR PROCESS
56. Mr. Roy contends that it is extremely difficult, if not impossible, to conduct any detailed assessment in a fair or satisfactory manner in accordance with the Practice Note. Points of Dispute are obligatory under the rules and the Practice Note does not provide for these. This, he says, is a very serious problem; the court cannot draft them. They are prerequisite to a fair assessment, citing Ainsworth v Stewarts Law LLP [2020] EWCA Civ [178].The court is not in any event equipped to draft Points of Dispute. These can only properly done by an opponent/client challenging a bill. Moreover, for the court even to attempt to do so would require enormous judicial time to the detriment of other court users.
57. Mr. Roy is in my judgment wrong to describe Points of Dispute as mandatory: the ordinary direction for Points of Dispute in a solicitors/client assessment is subject to any other order the Court may make (see CPR 46.10). The assessment has to be fair (and the solicitor must have adequate notice of any possible objection of costs and an adequate chance to deal with it) but there are no compulsory directions for a solicitor/client assessment, as r 46.10 makes clear. The rules provide that the court must approve any settlement and any deduction from damages. If a court is not satisfied that the proposed arrangements are in the protected party’s interests, it is (as a matter of trite law) required to explain why, and it follows that that the court must enable those concerns to be addressed in a detailed assessment. The primary legislation thus clearly provides for an independent assessment of a solicitor’s costs with no input from the client at all. PD 46.8, consistently with that, disapplies the default cost certificate provisions of CPR 47. Detailed assessment has proceeded on this basis in the SCCO for many years now.
58. It seems to me that so long at the solicitors are put on notice any objections and has an opportunity to deal with them then fairness can be achieved. An assessment is, after all, not a trial or a quasi trial –it is generally a relatively flexible process which involves a consideration of the papers without witness statements or oral evidence.
59. Indeed, the absence of Points of Dispute is not an unusual aspect of costs assessment. Following the last hearing I drew Mr. Roy’s attention to the following provisions/practices: detailed assessment in cases of public funding (a ‘legal aid assessment’) -CPR 47.18; detailed assessment of costs payable out of funds – CPR 47.19 (these are generally cases where there are beneficiaries of a fund who are liable to be affected by payment of costs; and the practice of Costs Judges, Deputy Costs Judges and Costs Officers assessing costs claimed by deputies under costs orders in the Court of Protection. All are instances where the court is required to carry out an assessment (normally initially provisionally) without Points of Dispute. Until recent rules changes (in 2024) the same applied to the costs in the Supreme Court, where no Points of Dispute have been served (see Section 9.1 Practice Direction 13 in the Supreme Court)[18]- a process which continues for cases which are not caught by the new rules. Costs Judges are, in these instances, expected to form a view as to the reasonableness of costs without Points of Dispute.
60. The court in Ainsworth was plainly addressing different circumstances where a party with capacity had ignored warnings given that its Points of Dispute were defective. The decision in that case was not directed to the situation here.
61. In practice in these claims Points of Dispute have often been prepared by a defendant in the substantive claim. Although they prepared for an inter partes assessment they can often stand as Points of Dispute for consideration in respect of the solicitors’ claim for a Deduction (acknowledging that there can often be a different basis for assessment).
62. Indeed when dealing with shortfall claims where possible I have sought to give some consideration to the merits of the claim at or prior to directions hearing and have set out my concerns in any order listing the matter for assessment. I have generally invited the representative for the solicitor to specify whether there are any particular work in the litigation which costs which could not be recovered from the defendant (there may well, for instance, be good grounds for claiming the costs associated with medical report obtained by the solicitors on the litigation friends instructions but which could be relied upon[19]); I would expect that such costs can readily identified as there may be a good basis concluding that a more lengthy detailed assessment is not required if that is how the claim is put and the costs are otherwise reasonable). I have offered (as I indicate above) to carry out any assessment provisionally and on the papers in order to avoid a hearing but giving the solicitors the option to request for an adjustment of my allowance if they consider it inadequate[20]. The concerns set out in the order made at a directions hearing puts the solicitor on notice of the matters that need to be addressed at the hearing. Mr. Roy was critical of the procedure of setting out concerns in this way which he referred to as a procedure involving ” Quasi-PoDs or the like (the suggestion here is a broad non-exhaustive list of concerns)”. To my mind these procedures ensure that the solicitors know the case they have to meet, and have an opportunity to meet it. If solicitors are taken by surprise by any concern arising the issue can be put back in the assessment (as happens in ordinary assessment without any real difficulty).
63. Mr. Roy suggested that I could order the protected party or litigation friend to serve compliant Points of Dispute (alternatively the court appoint (and pay for) independent lawyers to do so), with what Mr. Roy referred were the “normal consequences” if they fail to do so[21]. However as I see it there is no clear mandate in the rules (or indeed jurisdiction for this). There is no procedure for default costs certificates and no reason for the court not to assess the reasonableness of the costs in the particular circumstances of these cases. Rather obviously this could have the effect of enabling solicitors to obtain payment without court scrutiny. Accordingly I reject Mr Roy’s case on this point.
64. Further, I do not accept Mr. Roy’s criticism to the effect that the court is putting itself in a position whereby it is or has the appearance of being biased. Nor does the judge adopt an adversarial mindset. The fact that one party in the assessment or potential assessment is a protected party and/or is unrepresented is just an ordinary incident of litigation. It should not afford the party that is represented any advantage.
65. Dealing with an unrepresented party may mean more involvement is required from the court to ensure the case is dealt with properly (i.e. in accordance with the law) but to my mind that does not intrinsically involve the judge acting outside their role and acting as an advocate or getting into the ‘arena’ as it was put. As I have said (and as is well known) the court is required to assess (generally provisionally) other bills without Points of Dispute in various circumstances as I have indicated above. Indeed claims by solicitors against protected parties and children for success fees are routinely summarily assessed by district judges on application without the need for the protected party to be represented to draft Points of Dispute. There is nothing unusual in a process that involves a court setting out objections to costs without a party having first raised them. That is the task of the judge on these claims and as Judge Leonard commented in JXC at [15] that process does not compromise the independence of the judge. It follows that from the very task that the court is asked to undertake when it is unable to approve a settlement, is to ask the solicitors to justify their claims. In doing so, it has to state the reasons for rejecting the compromise (as the court would do if it were rejecting a compromise of a claim for damages).
66. I accept that it would be inappropriate for a judge who has considered material (offers, counsel’s advice) which is privileged or without prejudice in respect of the claim for Deduction from Damages to then carry out the detailed assessment. But deductions can be decided on an open skeleton argument justifying the reasonableness of the costs. Indeed the advice provided here at least appears to be open as between the Claimant and PE. Plainly there cannot be any problem considering the privileged material generated in the underlying claim; any privilege is that of the Claimant and does not protect the material from disclosure as between parties to a solicitor -client assessment or to the court.
67. I accept of course that this process can be demanding on court time. But that is not a sufficient basis for adopting a different procedure. Mr. Roy’s suggestion that all difficulties can be avoided if I were to take a “light touch” approach essentially relying on counsel’s advice is, to my mind, plainly not an acceptable one. It might help the process if the protected party had fully independent advice and this were provided to the court. However merely because the current system may be improved does not mean that it is defective.
68. Accordingly I reject Mr. Roy’s contentions on this further point, and reject his ancillary point that that I should order the protected party to file Points of Dispute.
COSTS OF THE ASSESSMENT
69. Mr. Roy argues that the Practice Note will inevitably result in the solicitor, after accounting for their costs of the assessment, receiving a level of remuneration below what is reasonable. The bill as assessed will reflect a reasonable level of remuneration. But the solicitor will then have to deduct from this the considerable costs of the assessment (which is said to include an assessment fee or £4,980) The net remuneration will therefore below the reasonable figure as assessed. That the solicitor should not be compensated for the costs of the process of assessment was, he says, difficult to reconcile with article 1, protocol 1 right under ECHR.
70. On one level this appeared to be a complaint about the payment of court fees. That is a matter for the courts service (HMCTS). The fees payable are determined by reference to the criteria set out in on the relevant rules. They are not matters of discretion for the costs judge however compelling the case against the payment of a fee at the level suggested might appear.
71. There is no current application for costs for me to adjudicate on and since the Practice Note does not have the force of law and in any event only indicates no order as to costs as the starting point where the deduction from damages is not actively contested, it is not I think necessary for me to address this point any further. It is no part of my role to explain the Practice Note.
72. However, as I think would be obvious, the general rule about costs in the CPR is that the unsuccessful party will be ordered to pay the costs of the successful party(see CPR 44.2). Where the protected party is not taking part in the claim or even necessarily objecting to the payment, an issue might well arise as to whether they could be described as an unsuccessful party in an assessment. And in this situation the court may be required to exercise its discretion having regard to the circumstances more generally. Indeed, and perhaps more significantly, in the context of a solicitor/client assessment under the Solicitors Act 1974, section 70 (9) provides that on an assessment at the request of the solicitor, and when the client does not attend the assessment, the costs are not payable according to the event (the one-fifth rule) and thus normally borne by the solicitors on the understanding that the assessment is taking place in their interests. This statutory consideration may have some relevance in these circumstances. Whilst making make no determination of the matter, it might be thought to provide some underpinning to the guidance in Practice Note.
APPROVAL IN THE CURRENT CASE
The judge set out a number of factors that meant that he was not content to adopt the procedure in the current case.
105. It follows from the above that whilst I approve the inter partes costs settlement I am not however satisfied that it is in interests of the Claimant to dispose of an assessment under CPR 46.4.
106. I bear mind all that is said about costs and the potential exposure of the protected party to costs. I should not I think be held in terrorem on this point. The solicitors in this case have had an opportunity to set out their case for a shortfall payment. That should not have been difficult. But rather than engaging with concerns about what might happen in an assessment, high level issues about what seems to be a fairly settled procedure have been pursued which, for the reasons given, in my judgment lack substance.
107. Given the sums that may realistically be at stake it is not clear to me that an assessment of the shortfall claim should be a lengthy matter and unless the pure SC claim is still to be pursued (so that more involved legal issue may arise) it might just involve a costs draftsman taking me through relevant underlying documentation.