Bensusan v Freedman

Factual and Procedural Background

On 10 April 2000, the Plaintiff, an elderly lady of nervous disposition, underwent root canal treatment by the Defendant, a dentist. During treatment, a dental instrument detached and was swallowed by the Plaintiff. Medical examination confirmed the instrument lodged in her intestine, but surgical removal was not attempted and it was later passed naturally. The Plaintiff suffered shock and anxiety as a result.

The Plaintiff retained solicitors from a specialist dental negligence practice under a conditional fee agreement with a 50% success fee and no after the event insurance. The Plaintiff’s solicitors issued a letter of claim and settlement negotiations ensued, culminating in a settlement of £2,000 plus costs within five weeks.

Following settlement, the Plaintiff’s solicitors sought payment of costs on account. Partial payment was made by the Defendant’s insurers, but disagreement arose over the amount of costs payable. Attempts to agree costs failed, leading to a Part 8 costs only application under CPR rule 44.12A. The application was initially dismissed but later restored and transferred to the Supreme Court Costs Office for detailed assessment of the bill of costs totaling £3,419.69, including base fees, success fees, disbursements, and VAT.

Legal Issues Presented

1. Whether the costs incurred by the Plaintiff’s solicitors, including the choice of a distant specialist firm, were reasonable and proportionate.
2. The appropriate grade of fee earner for the case.
3. The appropriate level of success fee under the conditional fee agreement.
4. The proper application and procedure of costs only proceedings under CPR rule 44.12A.

Arguments of the Parties

Plaintiff's Arguments

• The Plaintiff’s solicitors justified the use of a specialist dental negligence firm despite its distance, citing the complexity and importance of the case to the Plaintiff.
• They claimed a grade 1 fee earner rate of £180 per hour plus a 50% success fee, arguing the case involved liability issues and potential defences such as contributory negligence and procedural defences related to dental practice standards.
• The success fee was set at 50%, reflecting risks including the possibility of losing the case, delayed payment of basic charges, and the nature of the funding arrangement.
• They submitted that clinical negligence claims generally carry a higher litigation risk than personal injury claims, justifying a higher success fee.
• They argued that instructing other solicitors would have led to additional costs and delays, such as the need for expert and counsel involvement.

Defendant's Arguments

• The Defendant contended that the claim was straightforward and not complex, suggesting that a grade 2 fee earner was appropriate.
• They argued there was no justification for the Plaintiff to instruct solicitors in a distant location and that proceedings should have been brought in the Plaintiff’s local court.
• The Defendant maintained that liability was never seriously in dispute and settlement was reached quickly, reducing the risk and complexity.
• They submitted that the success fee should be limited to 20%, consistent with Court of Appeal guidance for straightforward claims.
• The Defendant acknowledged the Plaintiff’s solicitors complied with funding disclosure requirements but criticized the level of success fee claimed given the nature of the claim and its early settlement.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by assessing the reasonableness of the Plaintiff’s choice to instruct distant specialist solicitors. Applying the test from Wraith and Sullivan, the court found that while the Plaintiff had the right to choose any solicitor, the choice was not reasonable in this instance given the simplicity of the claim and the availability of competent local solicitors. However, the actual location of work in Nantwich resulted in a cost saving compared to the Plaintiff’s local area.

Regarding the grade of fee earner, the court accepted the Defendant’s argument that the case was straightforward and did not warrant a grade 1 fee earner. Despite the Plaintiff’s solicitor’s prior dental and barrister qualifications, the court held that a grade 2 fee earner was appropriate, reflecting the simplicity and low complexity of the claim.

On the success fee, the court extensively reviewed the Court of Appeal’s decision in Callery v Gray, which limited reasonable success fees to 20% for modest, straightforward claims. The court rejected the Plaintiff’s solicitors’ argument for a 50% success fee, noting the absence of special features increasing risk and the early settlement without proceedings. The court emphasized that success fee assessment must consider the solicitor’s knowledge at the time the CFA was entered into, without hindsight bias.

The court also discussed the procedural framework for costs only proceedings under CPR rule 44.12A, noting confusion and misuse by parties. It clarified that costs only proceedings are intended as a simple, consensual process to resolve costs disputes after settlement, requiring agreement on costs issues before initiating proceedings.

Specific items in the bill were reviewed, with some reductions made in correspondence charges and time allowed for document preparation, reflecting the court’s focus on reasonableness and proportionality.

Holding and Implications

The court’s final decision was as follows:

• The Plaintiff’s choice of distant specialist solicitors was not reasonable under the Wraith test, but actual work location led to some cost savings for the Defendant.
• A grade 2 fee earner rate of £110 per hour was appropriate, not the £180 claimed for a grade 1 fee earner.
• The success fee was reduced to 20%, consistent with Court of Appeal guidance for straightforward claims.
• The costs only procedure under CPR rule 44.12A was explained and guidance provided to avoid misuse and confusion.

The direct effect of this decision is a reduction in the costs payable by the Defendant and clarification on the application of success fees and solicitor choice in clinical negligence claims of modest complexity. No new legal precedent was established beyond the application of existing principles to the facts of this case.