Conditional fee agreements (CFAs) have been criticised once again in the Court of Appeal ruling of Simcoe v Jacuzzi. The court ruled that interest should run on an award of costs in favour of a successful claimant represented under a CFA from the date of the costs order (the incipitur rule) and not the date costs are assessed (the allocator rule). While this clarification may be gladly received by practitioners, Master of the Rolls, Lord Neuberger seized the opportunity to condemn the legal bill of £74,000 in a claim worth around £12,750.
Facts
In October 2007, Irwin Mitchell agreed to act for the claimant, Mr Simcoe, under a CFA in a personal injury claim against his former employer, Jacuzzi UK Group plc. Irwin Mitchell issued proceedings in Leeds County court on 16 April 2010 which were compromised by way of a consent order. Damages of £12,750 were agreed with costs. Detailed assessment proceedings were initiated and the claimant’s costs were subsequently agreed at £74,000.
Issue
After agreement of costs and damages, the only outstanding issue was whether interest on the costs of £74,000 was payable from 16 April 2010 as the claimant contended or from the date upon which the sum was formally agreed as the defendant contended. The court held in favour of the defendant but permission was given to appeal due to it raising an important point of principle.
Appeal Decision
In his decision Lord Neuberger concluded the general rule was that interest should run from the incipitur date.
The Court of Appeal reviewed case law and legislation including: Sections 17 and 18 of the Judgements Act 1838, the County Courts Act 1984, the County Court (Interest on Judgements Debts) Order 1991 and Rule 40.8 of the Civil Procedure Rules 1998.
Lord Neuberger made the following points in his judgement:
- Rule 40.8 was not valid in the County Court because the Lord Chancellor failed to get concurrence from the Treasury during its enactment;
- The County Court (Interest on Judgements Debts) Order 1991 therefore applied to County Court judgements and, although it gives courts discretion, it on “the balance of justice, favoured the incipitur rule”;
- Where CRP40.8 does apply it favours the incipitur rule;
- The presence of a CFA does not justify departure from the incipitur rule because, even if the claimant is not out of pocket, their solicitors have effectively been financing their clients’ litigation and should not be expected to continue to do so until costs are agreed or assessed.
If you would like further information about this case note or wish to discuss a potential or current claim, we have experienced lawyers on hand who can give you sound legal advice. Please contact Sarah Vincent by email svincent@rollingsons.co.uk or by telephone 020 7611 4848.
