Court of Appeal
Lord Justice Patten
Date: 24/02/2012

The Issues:  These were three appeals concerning the costs of proceedings to obtain Court approval on settlements involving minors. Three issues arose:

- Where damages are under £1,000.00

1. Are costs to be calculated in accordance with the fixed costs regime under CPR 45 Part II or are they subject to a process of detailed assessment in accordance with CPR 44.5?

- Where damages are under £1,000.00

2. If detailed assessment was the appropriate regime then how should costs be assessed, bearing in mind that damages did not exceed £1,000 and the claim would usually have been allocated to the small claims track (had it not involved a minor).

- Where damages are over £1,000.000

3. In one of the cases (Tubridy) damages were agreed at £2,100.00 and it was accepted that the matter would fall within the predictive cost regime. The dispute however was over whether Counsel’s brief fee could be recovered under CPR 45.10 (2) (c), - was it ‘necessarily incurred’ due to the claimant being a minor?

Held: In relation to the three points above:

- Where damages are under £1000.00

1. Where a child’s award for damages fell below £1,000.00, costs should be assessed by reference to the small claims track rather than the PCR - in effect CPR 44.5 II applies.

2. So if detailed assessment applies, how then are costs to be determined? The costs relating to the damages claim will fall within the normal scope of a small claim, so no costs would be recoverable. However, the requirement for the Court’s approval on the damages is outside the small claims regime, and may involve at a minimum, written advice to the Court on quantum. The obligation is still therefore to decide whether the costs claimed were proportionate and reasonably incurred. Relying upon the decision in O’Bierne v Hudson (2010), it was held that the correct approach is to ask whether the damages claim was sufficiently complex to justify the engagement of solicitors beyond the production of a report on the merits of the settlement, and to scrutinise the bill on that basis.

In his conclusion, Lord Justice Patten stated, “I am very conscious that the practical consequence of this ruling may be to discourage solicitors from taking on CPR 21.10(2) proceedings involving small claims because they are unlikely in many such cases to be able to recover their costs. But to apply a normal multi-track assessment of costs in all such cases seems to me to run contrary to the purpose of CPR 45.7(2)(d) which must, in my view, have been intended to allow the court to apply a less generous regime to approval applications based on small claims. The predictive costs regime could have been applied to all cases involving claims of less than £10,000 but it was not. If this produces a difficulty in practice then it will be for the Rules Committee to think again”.

- Where damages are over £1000.00

3. The Court of Appeal concluded in Tubridy that the costs of instructing Counsel to attend an approval hearing would not normally be recoverable. Counsel’s fees for attendance at approval hearings could only be recovered if the case involved complex issues. Patten, LJ held, “Many of these cases (and this one seems to be no exception) do not involve difficult issues and can be dealt with shortly on the basis of the written advice on the merits. In such cases the convenience of having counsel attend the hearing has, I think, to be borne by the solicitors as part of their costs just as they would have had to meet the costs of instructing a local agent”.

Comment:  The practical effect of this ruling is significant for Claimant solicitors, as it has now become clear that where damages are less than £1,000.00, the small claims track applies, even for minors, and it is open to paying parties to argue that it was not appropriate to engage a solicitor and therefore costs should be assessed accordingly.

Furthermore, even where damages are above £1,000.00, Claimant solicitors would need to think very carefully about instructing Counsel on infant approval hearings, as Counsel’s fee is no longer recoverable from the Defendant and cannot realistically be recovered as a disbursement from the Claimant (a minor). Whilst each case must be assessed on its own merits taking account of any unusual or complicated features, the clear message is that in the more straightforward approval cases, only very limited costs will be recoverable.

Whilst the above cases make it clear how costs are to be assessed in child cases, Claimant solicitors may now wonder what the position would be in respect of ATE policies, are these still recoverable? Medical reports are currently limited to £200.00, and should these now be in line with AMRO at £465. These points remain unclear.

NB: Re-affirms the decision made in Aurangzeb v Walker (2009)

View transcript on http://www.bailii.org/ew/cases/EWCA/Civ/2012/184.html

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