Smiths Dock v Edwards: Asbestos and Uplifts
Smiths Dock v Edwards: Asbestos and Uplifts
SMITHS DOCK LIMITED v. JILL EDWARDS (Widow and Executrix of the Estate of PETER GUY EDWARDS, deceased)[2004] EWHC 1116 (QB)
This costs argument arose out of a claim for mesothelioma resulting from asbestos exposure. The issue in this case was whether a success fee of 87% was reasonable and thus recoverable. Counsel for the Appellant argued that a case where liability is in issue at the time the CFA is concluded is to be treated differently from a case where the only effective issues that remain go to quantum, as the former could lead to a claim failing in its entirety whereas the latter only serve to reduce damages. He argued that in reality the live issues in this case related to quantum and that although this ought to be reflected in the success fee, the risk could not be said to be so high as to justify an uplift of 87%.
The court did not accept this argument and decided instead that “….Where there are several factors, as here, which may ultimately affect the final award, advising [on quantum] is very far from straightforward..”. The quantum issues in this case [at the time the Claimant entered into the CFA with her solicitors] were:
1) The potential for a Holtby reduction [although this was a mesothelioma case, the risk assessment carried out by the Claimant’s solicitors pre-dated Fairchild v. Glenhaven Funeral Services Limited [2003] 1 AC 32];
2) The risk of contributory negligence;
3) One of the lay witnesses was unwell and there was a possibility he would not be able to give evidence;
4) The deceased had had other health problems which could affect causation and/or quantum including hereditary spastic paraplegia, spinal deformity and left ventricular cardiovascular problems;
In addition, it should be pointed out that the Court did not accept that the only issues that remained effective in this case at the time the CFA was concluded were “quantum issues”. The court found that the risk on liability was not negligible [there were some unhelpful comments in a medical report which the court found could not be discounted by the Claimant’s solicitors, although these were later withdrawn a couple of months after the CFA was signed].
Given all of the above, the court held that an 87% success fee was reasonable. The court accepted that liability and quantum could be considered separately, but added that ultimately a single success fee had to be arrived at “on an assessment of the prospect of winning”. The court did not however say whether an 87% success fee would still have been reasonable had there been no liability issue whatsoever.
However, it is certainly clear that the mere fact a case involves only quantum issues does not preclude a high success fee being deemed reasonable. There are still therefore only two categories of case where the courts have set a limit on the maximum recoverable success fee. These are:
1) Modest and straightforward claims for personal injuries resulting from road traffic accidents where the maximum success fee has been set at 20% [Callery v. Gray [2001] 1 WLR 2112];
2) Simple claims that settle without court proceedings being issued where the maximum success fee has been set at 5% [Halloran v. Delaney [2002] EWCA Civ 1258].
(Note that in both of these cases the courts left open the possibility of a higher success fee if there was some feature of the case which suggested that the claim may not be sound).
In other cases, the reasonableness (or lack thereof) of a success fee remains an issue to be decided on the particular facts of the case.
As from 1st June 2004 success fees in all road traffic claims arising out of accidents which occurred after 5th October 2003 will be governed by the fixed uplift regime created by the new CPR 45 Part III