Ghising v Secretary of State for the Home Department

Factual and Procedural Background

This appeal concerns a decision by Master Simons, Costs Judge, dated 6 May 2015, regarding the retrospective recovery of success fees under Conditional Fee Agreements (CFAs) in a costs assessment. The appellant was one of several appellants in a test case challenging the refusal of entry clearance to dependant adult children of veterans of the Gurkha Brigade who had settled in the United Kingdom.

The appellant was successful in the underlying appeal heard in the Court of Appeal in December 2012. Costs were ordered to be paid by the Secretary of State, but the parties failed to agree on the quantum, leading to a costs assessment hearing before Master Simons in May 2015.

The appellant’s solicitors initially applied for legal aid in July 2012, which was refused and resubmitted with further documentation in August 2012. During this period, the solicitors instructed counsel and prepared to conjoin the appellant’s appeal with others listed for December 2012. It was only in December 2012 that the appellant entered into CFAs with both solicitors and counsel, which included provisions for success fees. The respondent was notified of the CFAs on the same day they were executed.

Legal Issues Presented

1. Whether success fees under Conditional Fee Agreements can be recovered retrospectively for work done prior to the date the CFAs were entered into.
2. Whether the Costs Judge erred in principle in refusing to allow retrospective success fees in this case.

Arguments of the Parties

Appellant's Arguments

• It was reasonable for the appellant’s legal advisers to enter into retrospective CFAs, as they had acted in the appellant’s best interest from July 2012 on the assumption that legal aid would be granted.
• The delay and resubmission of the legal aid application was due to the Legal Services Commission’s dilatory process.
• The risk assessment at the time of entering into the CFAs in December 2012 was no different from that in July 2012; thus, retrospective success fees should be allowed.
• The Master erred in concluding that the risk was different in July compared to December 2012 and in refusing retrospective success fees as a matter of principle.
• The respondent suffered no prejudice from the late notification of the CFAs, and even if notified earlier, would not have acted differently.

Respondent's Arguments

• The Master exercised his discretion appropriately in a fact-sensitive assessment, and his decision should be respected.
• The burden was on the appellant to provide evidence for the retrospective success fees, which was insufficient.
• The appellant’s solicitors knew of the December hearing date by October 2012, undermining claims of surprise or late knowledge.
• The test was whether it was reasonable to enter into retrospective success fee agreements given the information available at the time.
• The Master’s decision was within reasonable parameters and no breach of the Costs Practice Direction fully occurred.
• The issue of prejudice was irrelevant as no relief from sanctions was sought.
• The Master appropriately disallowed unreasonable costs and made a principled decision on retrospective success fees based on all circumstances.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Birmingham City Council v Forde [2009] EWHC 12 (QB)	Retrospective success fees are not per se contrary to public policy; reasonableness to be assessed on detailed assessment without hindsight.	The court accepted this principle and noted that retrospective success fees are a matter of discretion in each case.
Motto v Trafigura [2011] EWCA Civ 1150	On appeal from costs assessment, the court’s role is to consider if the judge erred in law, principle, or was plainly wrong.	The court applied this test to evaluate whether the Costs Judge’s decision was legally or factually flawed.
The Commissioners for Her Majesty's Revenue and Customs v Blue Sphere Global Limited [2011] EWHC 90217 (Costs)	Consideration of prejudice in relief from sanctions cases.	The court found these cases not directly applicable as this case did not involve breaches warranting relief from sanctions.
Mishcon de Reya v Caliendo [2015] EWCA Civ 1029	Factors relevant to relief from sanctions, including prejudice.	Referenced but distinguished as not directly relevant to retrospective success fees here.
O'Brien v Shorrock [2015] EWHC 1630 (QB)	Relief from sanctions and prejudice considerations.	Not found helpful for the issues in this appeal concerning retrospective success fees.

Court's Reasoning and Analysis

The court focused on whether the Costs Judge erred in principle in refusing retrospective success fees. The Master had correctly identified that success fees should be assessed based on the risk at the time the CFAs were entered into, without hindsight. However, the Master concluded that the risk in July 2012 was materially different from that in December 2012, justifying refusal of retrospective success fees.

The appellate court found this conclusion unsupported by evidence. The initial legal aid application estimated success chances between 60-80%, and the later opinion in December estimated 65%, which fell within the original range. The reference to a skeleton argument increasing risk was factually inaccurate as it was served after the CFA was signed.

The court found the Master's reasoning on risk assessment internally inconsistent and lacking evidential basis for distinguishing the risk at the two times. The court also recognized that prejudice to the paying party, while a factor, was not determinative and the Master had properly considered it.

The court acknowledged the deference owed to the Costs Judge’s discretion but emphasized that on a point of principle such as this, the legal correctness of the decision is paramount. The court concluded that the Master was wrong to reject retrospective success fees on the grounds of differing risk and allowed the appeal on that principle.

Holding and Implications

The appeal is allowed on the point of principle. The court overturned the refusal to allow retrospective success fees under the CFAs for work done prior to their execution.

The direct effect is that the appellant may recover success fees retrospectively, subject to any further detailed assessment on the papers. No broader precedent altering the law was established; rather, the decision clarified the application of existing principles to the facts of this case.