The recent case of JXC v NIS [2023] EWHC 1000 (SCCO) (21 April 2023) is an example of a solicitor who had successfully concluded a claim of the utmost severity, but went on to encounter difficulties in securing payment from their client of costs which could either not be claimed from the Defendant or were not recovered from the Defendant.
In this case the solicitor represented a 19-year-old Royal Marines Commando, who sustained catastrophic head injuries when he fell 20 feet from an assault course, which had no safety netting installed. The claim, naturally enough, took a long time to conclude; the CFA was entered into in August 2013 and the award of damages, which had a total capitalised value of £14,000,000, was not approved until March 2021. At the conclusion of the claim, the solicitor presented the Defendant with a bill of costs in the sum of £1,300,488.44 and went on to secure a negotiated settlement amounting to £1,050,000. Subsequently the solicitor sought payment of the shortfall, which had been limited to £212,974.69.
The Court was therefore principally concerned with the nature of information provided to the client’s litigation friend as to base costs recovery from the Defendant and the costs budget.
Although the solicitor had informed the litigation friend that not all of their costs would be recovered and had indicated on 6 occasions between 2017 and 2021 that there would be a shortfall (even going as far as to quantify the shortfall at £245,000 in January 2021), the solicitor had not advised the litigation friend on anything to do with the Court approved costs budget. The client’s budget was first set by the Court on 27 January 2015 and was updated twice more in July 2018 and again on 22 June 2020. The solicitor went on to incur costs in excess of the approved budget which were calculated at £204,759.17.
The solicitor conceded that she had not asked the litigation friend to approve any of the costs budgets, had not given any specific advice to the litigation friend in respect of any budget overspend and had not advised on any corrective action that could be taken. It was nevertheless argued on her behalf that the litigation friend was aware that there would be a shortfall and that the shortfall would be approximately £245,000, which was higher than the claimed shortfall in any event. In other words, the advice given was sufficient to enable the litigation friend to make informed decisions notwithstanding the lack of specific advice on the costs budget.
The Court did not agree. In any solicitor/own client assessment, the solicitor is afforded a degree of protection by the presumptions in CPR rule 46.9(3)(a) and (b) that costs are presumed to be reasonably incurred and reasonable in amount if they were expressly or impliedly approved by the client. The Court found that the client had not been aware of the limits imposed by the costs management order, they could not have expressly or impliedly approved the expenditure. Accordingly, the solicitor was not entitled to rely on the presumptions in CPR rule 46.9(3)(a) and (b). Furthermore, the Court concluded that a budget overspend was not of itself unusual in nature for the purposes of CPR rule 46.9(3)(c), however the scale of the overspend was found to be unusual in amount.
As a consequence of the above, the budget overspend was considered to be unreasonably incurred and unreasonable in amount with the result that the solicitor could not recover any shortfall from the client because the budget overspend exceeded the total claimed shortfall.
In this case the Court was carrying out a detailed assessment under CPR rule 46.4(2) of costs payable to a protected party’s solicitor out of money belonging to the protected party. However, as such assessments involve consideration of CPR rules 46.9(3) and (4), the issues considered in this case should be of interest to any party involved in an assessment under the Solicitors Act 1974. The case also demonstrates the importance of giving appropriate advice at all stages of the costs management process.
For further information, please contact Robert Patterson, who is a Senior Associate in Clarion’s Costs and Litigation Funding Department and can be contacted at robert.patterson@clarionsolicitors.com.
