Post-Jackson: What costs issues arise when acting in a personal injury claim for a child claimant?

The new protocols for RTA and EL/PL claims outline the additional fixed costs which can be recovered in respect of an infant approval hearing when acting for a child claimant. However, the protocols' guidance doesn't answer many other issues surrounding the funding of PI claims on behalf of children.

CPR 46.4 makes it clear that no money may be deducted from an award to a child or a protected party without the permission of the court. What is far less clear, is in what circumstance the court would give such permission? Can the issue be dealt with by summary assessment or, is it necessary to go to the expense of a detailed assessment?

Traditionally, the courts have been reluctant to order costs against a protected party. If this approach continues in the post-Jackson world, claimant solicitors will find themselves unable to take a proportion of the child's damages as their success fee under a CFA.

This issue has arisen as a consequence of the implementation of ss 44 (4) and 46(1) of LASPO Act 2012, which prevents the recovery of additional liabilities from defendants.

Simmons  v Castle [2013] 1 All ER 334

To date, there has been no higher court judicial guidance on this issue, which is unfortunate, as it is anticipated that the vast majority of firms will find it uneconomic to act for child claimants if they are only paid fixed costs under the protocols. In common with claimants generally, child claimants benefited in April 2013 from the 10% increase to their general damages following the decision in Simmons. If claimant solicitors are not allowed to claim their success fee from a child's damages, child claimants will get a windfall of 10% more general damages than if their claim had settled pre-April 2013.

Pre-April 2013 CFA

Where a Litigation Friend entered into a CFA before April 2013 but, before the claim settles, the child reaches the age of 18, the original CFA will cease to be valid. A new post-April 2013 CFA can be entered into by the claimant, but it will only run from the date of the new CFA. This puts the recoverability of the costs incurred under the original CFA in doubt. This issue has not yet come before the courts and so the impact on the claimant solicitor's costs is unknown.

The latest position

Some judges are taking the view that PD 44 para 9.9(2) allows them to undertake a summary assessment of the claim when considering payment of the success fee. Other judges consider the level of information they require to make a decision in the best interests of the child needs to be provided by way of detailed assessment. If a detailed assessment does take place, the claimant solicitor is in a position of conflict; representing both the child's interests and their own interests.

Other judges having been making directions in the following terms:

• If costs between the parties are to be dealt with at the approval hearing- either by agreement or by assessment and the claimant's solicitors seek to deduct a % from the damages to meet any success uplift under a CFA or any other additional liability then-
  • [EITHER] the general rule under 46.4(2)(a) is disapplied as a detailed assessment is disproportionate and the court will consider the issue of this payment for costs from the fund at the approval hearing by summary assessment (and the defendant is excused attendance from that part of the hearing)
  • [OR] the approval hearing will also be used for the purpose of a detailed assessment. In the interest of proportionality the detailed assessment procedure set out in Section II of Part 47 is disapplied and the court will conduct a detailed assessment by oral submissions at the hearing (and the defendant is excused attendance from that part of the hearing).

Anecdotal evidence is that some firms are undertaking PI claims on behalf of children by:

•  entering into a standard CFA with the Litigation Friend, which provides for recoverability of solicitor and own client costs, together with a success fee capped at 25% of the claimant's damages. It remains to be seen whether, at the conclusion of the case, the courts will allow the CFA to be enforced and a deduction made to the claimant's damages
• the Litigation Friend agrees to pay the solicitor and own client costs (on the understanding that these costs cannot be reclaimed from the claimant damages). There is the possibility of reclaiming ATE insurance costs, which the Litigation Friend incurs on behalf of the claimant, as CPR 21.12 provides that a Litigation Friend who incurs expenses on behalf of a child is entitled to recover them out of the damages received provided, that the expenses have been reasonably incurred and are reasonable in amount. CPR 21.12(2)(a) confirms that ATE insurance is an expense. The purchase of ATE insurance can be considered necessary, given the limited costs protection offered by QOCS

On the 2 May 2014, the CPR committee confirmed they were considering this issue and, specifically, what (if any) amendments need to be made to the CPR to resolve the difficulties outlined above.

Until clarification of the rules is provided, practitioners are left with significant uncertainty regarding whether PI claims on behalf of children are economically viable and exactly what (if any) costs can be reclaimed from the claimant's damages.