Important decision will help insurers make cost savings

01 Mar 2011

Success Fees “at Trial” Restricted:  An important decision for insurers to note has come about from the judgment in the long awaited appeal case of Amin & Hussain v Mullings & Royal Sun Alliance.

This important ruling will mean that insurers will achieve a cost saving and will overcome the paradoxical situation which they faced previously, namely being penalised if the matter is settled at the door of the court even if it is the claimant who has come to them with late settlement proposals.

The case related to an appeal by the Defendants who contended that the Claimant’s legal representatives should not be entitled to a success fee uplift of 100%, where the claim had settled on the day of trial but before the actual hearing of the trial had commenced.

In the first instance Mr Recorder Willetts had held that the Claimant’s legal representatives were entitled to a success fee uplift of 100%. Slade J was asked to consider whether the Recorder had erred in holding that the claim concluded at trial because settlement was reached on the day fixed for trial, and had therefore erred in applying the 100% success fee. If the Recorder had erred the Claimants sought to still uphold the 100% success fee on the basis that quantum of the Defendants’ counterclaim was still determined at trial and it was both the Claimant’s claim and Defendants’ counterclaim which formed “the claim” which was therefore still concluded at trial.

The Defendants submitted that the Recorder erred in failing to distinguish between the hearing of the Defendants’ counterclaim and the Claimant’s claim.

In addition it was put forward that this claim was identical to Deepak Sitapuria v Moorzadi Khan. In that case (relating to success fees in an employer’s liability claim) HHJ Stewart QC held that a trial has not commenced for the purpose of the uplift in solicitor’s fees if a settlement is reached before the hearing of the case has started. HH Judge Stewart disagreed with the judgment of Master Maworth in Dahele v Thomas Bates & Son Ltd where he decided that a case “concludes at trial” for the purpose of the rule relating to the uplift in fees if it settles on the day fixed for trial. The Defendants also relied upon the subsequent dictum of Master Haworth in Steven Gandy v Peter King where he stated that “to my mind the word “trial” denotes an examination and determination of issues between the parties by a Judge, or some other tribunal”. It was also suggested that the difference between “at trial” and “before a trial has commenced” was significant.

The Claimant referred to the conclusion reached in Dahele and submitted that at trial must mean on the day fixed for the hearing. The Claimant also submitted, in the alternative, that if it was found that the Recorder erred then “the claim” comprises the entire proceedings (i.e. both the claim and the counterclaim) and that, as such, as the Defendant’s counterclaim was still determined at trial, “the claim” was still determined at trial thus attracting the 100% uplift.

Slade J held that the Recorder had erred in holding that “at trial and that it is clear that “at trial” means at a contested hearing. She held that “there is a 100% uplift to solicitor’s fees when the claim concludes after the commencement of the contested hearing of the claim” and that “there is a 12.5% uplift where the claim concludes before a trial has commenced”. She felt it was “immaterial whether the claim is concluded on the date fixed for the trial but before it starts or on some earlier date”. As such it was held that the Recorder had erred in awarding an uplift of 100% and the correct uplift was 12.5% in respect of solicitors costs and 50% in respect of Counsel’s costs.