Before: MASTER HAWORTH Between: STEPHEN FAHY (Executor of the Estate of Maureen Young, Claimant

Transcription

1 IN THE HIGH COURT OF JUSTICE SENIOR COURT COSTS OFFICE Case No: PHW Cliffords Inn Fetter Lane, London, EC4A 1DQ Date: 01/03/2012 Before: MASTER HAWORTH Between: STEPHEN FAHY (Executor of the Estate of Maureen Young, Claimant Deceased) - and - (1) CAPE PLC (2) NORSE MERCHANT FERRIES LIMITED Defendants MR. THOMAS BLACKBURN (of Just Costs Solicitors) for the Claimant MR. ALEXANDER MACPHERSON (instructed by Berrymans Lace Mawer) for the Defendants Digital Transcription by Marten Walsh Cherer Ltd., 1 st Floor, Quality House, 6-9 Quality Court Chancery Lane, London WC2A 1HP. Tele No: , Fax No: , DX: 410 LDE info@martenwalshcherer.com Website:

2 MASTER HAWORTH 1. I am asked to decide the success fee in relation to the first conditional fee agreement entered into in this case with the firm of Avalons on 10th August The agreement is in standard form applicable in 2004 when the 2000 CFA regulations were still in force. The relevant part of the agreement, which is the risk assessment required in pre 2005 CFAs, is set out at appendix 1. It is in very brief form, indeed extremely brief compared the majority of risk assessments that this office is used to seeing in these types of cases. It refers to a fee earner, Malcolm Trotter, who I now know is a Grade C fee earner, who was authorised to carry out this risk assessment and then presumably enter into the CFA with Mrs. Young. The date of the risk assessment was 10th August He refers to the type of claim as an employers' liability accident, referring to an asbestos-related condition. 2. There are then five factors that he has considered: protective equipment provided, no; third party details obtained, yes; TP insurance details obtained, no; HSE investigation carried out, unknown; risk assessments carried out, unknown; chance of success 50%, therefore success fee 100%. The agreement is signed. It is dated 10th August. The agreement covers "your claim for damages for an asbestos-related condition suffered as a result of your working environment." 3. I remind myself that when dealing with setting of success fees I do not have the luxury of the benefit of hindsight as to what has happened during the life of the case. I have to put myself in the situation and with the knowledge that the fee earner had when he entered into the agreement on 10th August Factors that may have occurred in relation to the case after that date are something that I cannot take into account. 4. A 100% success fee is being claimed with 95% recoverable from the paying party. It transpires from what I have been told by the claimant's lawyer that in actual fact the only information the solicitors had at the time the agreement was entered into was the following. The first contact with Mrs. Young was the day before the CFA was signed on 9th August She had confirmed to them that she had a diagnosis of mesothelioma. Thereafter no further investigations were carried out by the solicitors prior to the CFA being signed. They did not know the names of any potential defendants. They did not have her working history. They had not seen any documents that related to this case whatsoever. It was on those bald facts that the solicitors chose to enter into the CFA agreement and to claim 100% success fee on their costs.

3 5. The purpose of a success fee is to compensate the solicitor who enters into the agreement for the risk of a failed case. It follows to some degree that the less the solicitor knows about the case the higher the risk that he is taking on. It becomes more of a gamble rather than a sophisticated or educated risk based on information that the solicitor may or may not have gleaned. 6. The defendants in their points of dispute say this. They refer to the fact that the claimant was diagnosed with mesothelioma in March 2004 and it is well-known that mesothelioma is contracted as a result of exposure to asbestos dust. It is very rare for this to have been produced by any other type of exposure. It is clear that no documentation had been considered prior to undertaking the risk assessment for the first CFA. No Inland Revenue records, GP, hospital or occupational health or personnel records had been obtained. Had those records been obtained and considered prior to the carrying out of the risk assessment it would have been obvious that the exposure to asbestos dust was sufficient for liability to have attached to one of the defendants. The defendants rely on the case of Ku v. Liverpool City Council. 7. The problem with Ku is that the case postdated the CFA being entered into. To argue that the claimant's solicitors should have entered into a staged success fee and the fact that they did not do so is in my judgment unreasonable. In light of the solicitor's knowledge at the time the CFA agreement was entered into I have discounted that fact. The solicitors could have entered into two-stage success fees in 2004 but, dredging my memory back to those days, not many solicitors did. 8. The defendants then go on to offer a 50% success fee offered entirely without prejudice to reflect the issues as to whether there is any liability for the claimant to pay costs under her retainer with her solicitors. This matter has been dealt with by me previously. 9. So far as the defendants are concerned their position is that they now resile from the offer of a 50% success fee. Mr. Macpherson (for the defendants) directs me in his skeleton argument to a number of comments made by Master Whitaker. He refers to the fact that in Master Whitaker's experience over 95% of asbestos claims there is no real prospect of success of any defence and that if liability can be eliminated as an issue at an early stage then almost all claims can be quickly timetabled and reach a settlement on issues of quantum. 10. The big difference in this case is that at the time this CFA agreement was entered into the solicitors did not even know the names of any potential defendants or, for that matter, how and in what circumstances mesothelioma had been contracted. 11. Mr. Macpherson spent a good deal of time in submitting to me that the appropriate level of success fee should be in the region of 27.5% based on the fact that post November 2005 there is an industry-wide agreement set out in Part 45 CPR in mesothelioma cases and in other employers' liability cases fixed success fees should be the norm and are fixed at 27.5%. 12. This was an agreement reached between all parties, both claimant and defendants, to obviate the need to carry out risk assessments and to reduce costs in these types of cases. Of course that information or the information which gave rise to that argument is not a matter that has been put before me today in the form of evidence. All that I

4 can do is take judicial notice of what has happened post November It may be that Avalon's solicitors were dealing with these types of cases day in and day out and, therefore, had some idea of the overall risks of cases that they were winning and cases they were losing. Again I have no evidence to that effect. 13. The only evidence that I can consider is what is before me. When the solicitors entered into this agreement with this unfortunate lady who contracted mesothelioma they knew very little. That, to my mind, demonstrates that there was a significant risk in this case. They may not, for example, have been able to obtain a satisfactory working history from her or she may not have fallen within the categories of claim that would compensate her in terms of damages or there may not even be a defendant they could follow up with a view to issuing proceedings and obtaining a liability judgment. To my mind, based on the risk assessment that I have seen and the evidence that I have heard, I prefer the submissions of the claimant to those of the defendants. Looking at this matter on 10th August 2004 through the eyes of Mr. Trotter, who was tasked to enter this agreement, this, to my mind, was a risky case. It was a 50/50 case. A 50/50 case, whether the ready reckoner approach is considered the right approach or not, in all cases means that one case in every two will fail and in those circumstances and in my judgment that qualifies for 100% success fee. That is true in the sense that this is what is claimed in the CFA agreement. However, the inter partes element is only claimed at 95%. The other 5% was never going to be recoverable from the paying party. Therefore, in my judgment the recoverable element is 95%." (Further submissions follow) 14. I am asked to decide the level of success fee in relation to the second CFA entered into on 12th April 2006 between the personal representative or executor of Maureen Young, who by that time had died the previous October. The fee earner involved in the case at the firm of Pannone, was a Mr. Patrick Walsh who, from a witness statement filed in this matter, clearly has considerable experience over many years in dealing with mesothelioma cases. 15. Along with the CFA, which is in standard form, with the usual Law Society conditions, What you need to know, Conditional Fee Agreements, there was no risk assessment. However, with the bill a statement of additional liabilities has been served pursuant to the relevant section of the costs practice direction. The success fee claimed is 100%. There is no reduction for postponement of fees by the solicitors. 16. The reasons for the success are set out at follows: (1) the fact that if the claimant lost the claimant's solicitors would earn nothing; (2) the claimant's solicitors' assessment of the risks of the case. Point (1) is not a factor that I take into account, it is a financial factor, it is not a risk that the claimant takes on board in terms of the risks of the particular case. The solicitors assessment of the risks in this case was included, in a number of bullet points as follows: Three sources of asbestos dust. It is very difficult to establish who to proceed against, the risk of succeeding against one defendant and failing against another defendant. The time elapsed since exposure to asbestos and, in this particular case, the time involved was some 40 years or so. The deceased

5 husband had died before the case was taken on and was, therefore, unable to be interviewed to establish he was contaminated with asbestos dust in the late 1960s/early 1970s. Uncertainty of witness evidence to be obtained from the witnesses, no guarantee that they would be unequivocal about being exposed to asbestos dust after No guarantee that the issue of the hazard caused by importing asbestos materials in London Docks had been raised and that there were suggestions that the importation of the asbestos materials into London Docks had ceased by It was necessary to establish that any exposure to asbestos before the 31st October 1965 would have been substantial before a finding of negligence could be made. The amount of dust produced from cleaning overalls is nowhere near substantial and, therefore, the only relevant exposures were ones proved to take place after 31st October There is considerable risk that they may not be able to prove that the exposure with either the first defendant or second defendant is negligent. Offers of settlement, failing to beat an offer made by one or other of the potential defendants. 17. The points of dispute set out the defendant's objection to the payment of 100% success fee. They refer to the case of McGuire v Harland and Wolff, which was a case of secondary exposure to asbestos. Messrs. Pannone should have been well aware of this case, and that it was likely that the claimant would ultimately win and, therefore, a success fee of 27.5% was offered. 18. Mr. Macpherson for the defendants submitted to me that he accepted that there were significant risks in this case. 19. What evidence was there available to Mr. Walsh when he entered into the CFA agreement? I remind myself, I do not have the luxury of hindsight as to what subsequently happened in this case. I have to look at the factors that were in the mind of the solicitors when they entered into the conditional fee agreement in The information available is in the form of documents, particularly a handwritten document from a witness who unfortunately is called Mr. Brian Walsh, in a letter to Mr. Walsh from the former solicitors dated the 10th August In a brief attendance note, it states that Mr. Walsh worked on and off for a certain period carrying out dock work, mostly on board ships. Mr. Walsh worked on asbestos cargoes in In 1961 the docks banned all asbestos cargoes after union involvement. That prompted a response from the former solicitors Avalons by letter on 10th August 2005 to Mr. Walsh. The content was: "From the evidence that you have previously provided to us we note that in 1961 asbestos cargoes were banned from the docks. This was a result of union involvement. Are you able to confirm to me the name of the union that was involved in making this decision?" 21. Coupled with that information Mr. Patrick Walsh obtained a witness statement from Mrs. Young before she died. The first statement was handwritten and is dated 22nd November 2004 in which she details her life history and explains that her parents worked at Cape Asbestos Limited, the fact that they worked on the factory

6 floor as labourers and that they used to come home from work with their clothing covered in white dust. She remembers shaking both parents' overalls and dealing with the matter in that way. 22. She then refers to working in 1962 in the canteen at Woolwich Docks and the fact that she performed various tasks such as sweeping floors, wiping tables and, on occasions, serving food. She refers to the fact that many men came off the boats and ships in overalls covered in dust and dirt and that she has since learnt that they were in contact with asbestos. She makes no further reference to asbestos, save to say that in 1969 after seven years of being a housewife with a child she started to work as a waitress and, thereafter, refers to jobs which has no relationship with asbestos. 23. In a second statement dated 14th March 2005 which pre dates the instruction of Pannone in March 2006, she refers to the fact that she believed her husband worked for the Port of London Authority between 1958 and She also refers to her brother, James Allen, working with her husband. She mentions that she ceased working to look after her daughter who was born in 1963 and that she can recall her husband coming home covered in dust. There is no reference in the statement to what type of dust, it was simply the fact that she would shake and wash his overalls by hand. 24. I also understand that there was a statement from Mr. Allen, the brother, who indicates that he only ever worked with meat on the docks and that he did not see Mr. Young working with asbestos. 25. Prior to the entry into the conditional fee agreement Mr. Patrick Walsh prepared a detailed file note dated 14th March The file note has been disclosed to the defendants and in it Mr. Patrick Walsh reviews the case as he then saw it. What he says is this: "This is an extremely difficult case. There are a number of problems". He highlights the problem that "Mrs. Young died on 16th October 2005 from mesothelioma. It was acknowledged that she was exposed to asbestos dust from various sources. Firstly, he suggests she was exposed to asbestos dust from parents' overalls. They worked at Cape, Barking. She thought until 1961 would have been cleaning parents' overalls. However she would have been aged 26 at the time. Cape's lawyers have produced record cards showing that her parents worked there in the late 40s and latest employment would have been 1948 at Cape. Therefore, any exposure from overalls would have been insufficiently early to raise date of knowledge even with a company like Cape. The client was never asked whether she visited her parents in Cape's premises when they were working. If she went into the factory we may be able to get them for Breach of Factories Act. Client's husband worked on the docks apparently from 1960 through to 1970 thereabouts. He died in 1986." 26. He refers to the statement from the deceased s brother:

7 "He also worked on the docks, never worked directly with asbestos. Confirmed that her husband and others came into the canteen where the claimant worked in Unable to say whether husband was contaminated with asbestos dust or worked with asbestos. Another witness, Mr. Walsh traced by Avalons but as far as he is aware asbestos banned in 1960, so there would not have been asbestos on clothes in 1962, in the canteen or for that matter post 1965." 27. I pause here to say that Mr. Patrick Walsh with his experience thought that this was unlikely because of the date. He obviously thought in those circumstances, as submitted to me by Mr. Macpherson, that it was likely that asbestos and the use of asbestos or the importation of raw asbestos in sacks and not in containers or pallets continued for some time into the 60s. 28. The essence of the file note is contained in the last paragraph. This is Mr. Patrick Walsh making a note for himself as to what further needed to done in this case: "Interview surviving members of the family, including brother and any other brothers, sisters to find out if they ever went into Cape's factory. Speak to the brother to try and get more information about the work in the canteen and whether stevedores were allowed. Speak to Mr. Walsh and get more information from him about why he thinks 1961 asbestos was banned. Cross check this with the deceased brother. We need to do research to try and identify other witnesses who can give evidence about the use of asbestos on the docks and whether stevedores would have gone into the working area of Mrs. Young. We need to try and trace dockers who worked with her husband who would be able to confirm whether or not he worked on asbestos cargoes and whether he would have brought them home on his overalls post We need more information about Mrs. Young's work history than we have at present. We do not appear to have the inquest depositions. We do not know who is the appropriate client yet as there appears to be two executors, Mr. Fahy and a Mr. Russell." 29. These are not really matters that need trouble me at this stage. None the less before any of those further matters of investigation were undertaken Mr. Patrick Walsh entered into the CFA claiming a 100% success fee. 30. Mr. Macpherson says this assessment of risk is too high and that the fact of Mrs. Young's death does not materially affect the prospects of success. At the time Pannone entered into its CFA a witness statement had been obtained from Mr. Walsh and Mr. Walsh confirmed that at the relevant time Scruttons regularly brought in asbestos cargoes in hessian sacks resulting in employees such as himself and Mr. Young being heavily exposed to asbestos. The statement to which Mr. Macpherson refers was a statement that was prepared at a later date than the

8 statement to which I have referred to in this judgment and postdates the conditional fee agreement. 31. Mr. Walsh goes on to say: "Whilst Mr. Walsh would not specifically remember Mr. Young unloading asbestos he states that he had no doubt at all that he had done so, just as all dockside stevedores who worked for Scruttons over a number of years will have done." 32. This is a matter which postdates the entry into the conditional fee agreement. The point he makes is that there is no realistic chance of the defendant challenging any claimant's evidence on the basis that it was some 40 years after the alleged exposure to asbestos and on the balance of probabilities success in the claim was quite high. 33. The claimant makes the point to me that this is not a straightforward claim, that this was secondary exposure to asbestos. The exposure to asbestos by Mrs. Young is really limited to the issue of her exposure post 1965 by shaking and washing her husband's overalls. 34. Mr. Blackburn (for the claimant) submitted that both Mr. Young and Mrs. Young, at the time the conditional fee agreement was entered into, had passed away and, therefore, could not be questioned with regard to their exposure. The witness statement of Mr. Brian Walsh, at the time the CFA was entered into, went against the claimant on the basis that he thought at that stage that all asbestos had been banned in 1961 by the Port of London Authority. 35. What Mr. Blackburn submits is that Mr. Walsh inherited not a particularly good hand or set of cards, to put it colloquially, that the Cape claim in relation to the possibility of cleaning the parents overalls was dead in the water on the basis of what he knew at the time. The claim against the employer, the Port of London, relating to the employment in the canteen in 1962 was also likely to be dead in the water because of the small level of exposure, leaving the question of the secondary exposure based on cleaning the overalls and/or shaking them. In that respect the witness evidence available was contradictory to put it at its best. 36. The defendants offer 27.5% by way of a success fee. They acknowledge that this case had significant risks. In my view the way in which the solicitors have approached the success fee in the second CFA is completely different from the solicitors in the first CFA. In that case the solicitors basically knew nothing. Prior to the second CFA the solicitors knew a good deal of information but, in my view, knowing quite a lot did not significantly alter the risks in this case which to my mind and in my judgment were very significant indeed. 37. In hindsight once liability is established against the defendants or the defendants can be named then in the words of Chief Master Whitaker success all but follows. Here to my mind, and I accept what Mr. Patrick Walsh says in his witness statement, the prospects of success were 50% or less. That, to my mind, translates into a success fee of 100% and I therefore will allow 100% success fee. (Further submissions follow)

9 38. The CFA of Mr. Kilvington, counsel, is an agreement entered into in standard APIL PIBA 6 terms on 3rd September 2008 without a risk assessment. It simply states that a 100% success fee is reasonable. It appears to be entered into on the basis of standard terms. What I said earlier in relation to counsel's success fees, I repeat. This is a late challenge to counsel's success fees which I have allowed, and in those circumstances the claimant will have the right to comply with the relevant provisions of the practice direction and advise counsel of any reduction in their success fee. They may then make further representations to me either by way of an oral hearing or for the matter to be dealt with on paper in the absence of agreement between the parties, subject to the question of who pays the costs. 39. So far as the agreement itself is concerned I am assisted by the fact that on or about the date that the CFA was entered into Mr. Kilvington provided a detailed opinion in relation to the matter which really amounts to a risk assessment. Putting it briefly, he assesses the risk of succeeding against each defendant individually and concludes that the prospects of success are between 60% and 70%. 40. It is fair to say by this time the evidence has clarified itself to some degree with further witness evidence from Mr. Allen, the deceased s brother, and, secondly, from Mr. Brian Walsh. This evidence is helpful in relation to the claim against the second defendant, Scruttons, and in those circumstances, without going through his opinion in detail, the submissions made to me by Mr. Macpherson are that in those circumstances the chances of success are higher than the 50% to 60% suggested by Mr. Kilvington in his advice. I have to say that I find some merit in that argument. 41. Whilst it would not be fair for the matter be dealt with by way of strict mathematical principles, I have formed the view that when one looks at the evidence available the chances of success against one defendant under Fairchild principles, success against any one would be sufficient. In those circumstances the likelihood of success was somewhere nearer, not the 80% to which Mr. Macpherson contends or the 50% or 60% to which Mr. Kilvington thought likely but somewhere in the middle, around about 70% or 75%. 42. On the basis of chances of success at 70% to 75%, I am going to allow a success fee of 40%. (Further submissions follow) 43. Looking at the CFA of Mr. Melton entered into just before a hearing by the defendants to set judgment aside I am told no witness evidence was served. Master Eastman said there is no real risk on liability. I accept that there is always some risk. Putting it bluntly, I think probably the risk was somewhere between 80% and 95%. The paying party has offered of 27.5% which is an offer that I am minded to approve. So far as Mr. Melton is concerned the success fee will be 27.5%. (Further submissions follow) 44. I am going to rely on the judgment in Rogers, at paragraph 117. I am not an expert in ATE premiums, but having said that I have to look at the reasonableness of the ATE premiums in this case. I have also considered the judgment in Kris Motor Spares Ltd at paragraph 44. I have concluded in this case where the issue is raised as to the size

10 of the premium there is an evidential burden on the paying party to advance at least some material in support of the contention that the premium was unreasonable. They have not provided any such material although they have had ample time in which to do so. I take on board that it is standard base assessment. Any doubt as to the reasonableness goes in favour of the paying party. 45. Using my experience in dealing with these cases and nothing more, this is an issue that regularly comes before these courts for determination and costs judges on this corridor are well used to dealing with premiums in these cases. Considering all the relevant factors this premium is on the high side. 46. Therefore, using my experience in dealing with these matters I am going to reduce the premium by a small amount. The total figure claimed is 7,321 plus 4,392 in round figures, 11,713. I am going to allow a premium of 9,