30th April, 2012
Maximum recovery is what every Solicitor is after when it comes down to their fees and a key part of this is obtaining the highest success fee possible.
Unfortunately there are many instances when the optimum success fee is not recovered. The existence of a CFA must be reported to the Defendant Solicitors. If it is not, then under CPR 44.3B no additional liabilities are recoverable. It is only on new cases started post October 2009 that it has become mandatory to inform the Defendant of the CFA, prior to this it was simply optional.
Most practices have standard letters where the fact that a CFA is in existence is a set paragraph. Where that is not the case, or where there was a period following on from the rule change in October 2009 where there was no standard paragraph in the letters, it is worth undertaking a file review to see whether or not any notice of funding has been given to the Defendant regarding the existence of the CFA. If it has not been notified to the Defendant, this should be rectified at the earliest opportunity, and the appropriate notice be provided. Doing so will strengthen the position if a relief from sanction application is required.
Where a CFA is entered into part way through the conduct of a case this again must be notified to the Defendant at the earliest opportunity. It is even possible that success fees can be retrospective, but this is definitely not the norm. In the case of ‘J N Dairies Limited v Johal Dairies Limited and Gurbir Singh  EWHC 90211’ (costs), there was a 100% success claimed retrospectively. This actually was introduced after a very significant amount of work had been completed and the retrospective success fee equated to £295,000. This hearing was held at the SCCO in front of Master Gordon-Sacker, who did not allow the retrospective success fee. The reasoning for his decision was
“It was not reasonable to incur, overnight, a liability to pay significant sums – to pay almost twice as much as would otherwise have been payable had these arrangements not been entered into.”
Relief from Sanctions Application
Failure to notify the Defendant that the case is funded by a CFA can have recovery implications, in respect of the success fee, however there can be a way around this by, filing a relief from sanctions application.
If the Claimant has failed to inform the Defendant that a CFA is in place with a success fee, CPR 44.3B says that unless the Court orders otherwise a party may not recover any additional liability for any period during which that party failed to provide information about a funding arrangement.
Under CPR 3.9 relief from sanction can be sought, but the application should be made promptly. There are a number of issues that the Court will consider when coming to a judgment, such as whether there is a good explanation for the failure, the effect the failure to comply had on both parties, and what effect the granting of relief would have on each party.
Weighing up whether or not to submit an application from relief from sanctions is dependent on many factors, but it is always worth considering, particularly in a RSI. Occupational Stress, or WRULD case when a significant success fee could be recoverable.
Recent cases of interest regarding relief from sanction include ‘Manning and Beggs v King’s College Hospital NHS Trust’. This case went to appeal and the judgment was that the relief was granted. Whether a paying party had been prejudiced by the lack of notice was a central issue to be considered. It was held that there was no prejudice on the substantive proceedings in the failure to refer to a success fee. There was however cost consequences, as the Judge was critical of the long delay in submitting the relief from sanction application, and the penalty for this was a reduction of 25% in the Claimant’s costs of the assessment.
If you require any further information with regards to any of the issues, please do not hesitate to contact us on 01780 482651 or at email@example.com