Ruling not ‘good’ news

Crane v Cannons Leisure Centre

(Court of Appeal - 19 December 2007)

Rowley Ashworth, the claimant's solicitors, appealed against a decision that the fee incurred by a costs consultancy firm were a disbursement and, therefore, not subject to a success fee.

The Court of Appeal considered two issues: whether a success fee could be applied to the costs of an independent costs consultant; and whether the success fee for the substantive action should be the same for the costs of the detailed assessment proceedings.

On the first point, it was held that the collective conditional fee agreement between Rowley Ashworth and the claimant's union entitled Rowley Ashworth to a success fee in respect of work done by independent costs consultants, as that work was a profit cost and not a disbursement. The CCFA itself was considered ambiguous as to whether or not the charges of a costs consultant were to be considered a disbursement or a profit cost; thus, the focus was on the nature and responsibility of the work.

Rowley Ashworth had not relinquished control or responsibility for the work and as it was work that it was retained to do.

Dissenting, Lord Justice Kay considered the allowance of a success fee on work that the solicitor had not undertaken themselves to be simply unjust, because they would have benefited from tasks they had not completed themselves.

The second point was given short thrift. The court followed the principle set out in KU v Liverpool City Council (2005) that the court cannot award a different success fee for different parts of the proceedings.

COMMENT

This decision is not good news for paying parties as it provides for the recoverability of excessive success fees on work not undertaken by solicitor's themselves. Lord Justice May commented that the claim for costs was for 10 times the damages due, in part to the inadequate scope of the small claims track, providing further impetus for claims reform generally. - Adam Burrell, BLM Birmingham.