Kerry Underwood


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In Chapman v Tameside Hospitals NHS Foundation Trust, Bolton County Court 15 June 2016

the court was considering the issue of costs in; a fixed costs, ex portal employers liability claim discontinued shortly before trial but where the court found the successful defendant’s conduct of the litigation to be “entirely unacceptable and egregious.”

The court found that this was “exactly the type of conduct which Part 44.2 is designed to address.”

CPR 44.2.1 gives the court a very wide discretion as to costs and 44.2.4(a) specifically states that in deciding what order, if any, to make about costs, the court will have regard to all of the circumstances including the conduct of the parties.

Here, the court held that it could apply CPR 44.2 in a fixed costs case and that the indemnity principle did not apply to such cases.


see Nizami v Butt [2006] EWHC 159 (QB)


“18. Mr Bacon, for the Claimant submitted:

  1. i) Master O’Hare’s analysis was correct. CPR 45 Section II provides for a self-contained scheme for the recovery of costs in litigation involving road traffic accidents giving rise to relatively small claims. The costs are recoverable whether or not they have actually been incurred. The Indemnity Principle has no place in a scheme where the costs are fixed. The Defendant’s arguments subvert this principle.
  2. ii) CPR 45 Section II applies to a closely confined category of cases. As CPR 45.7 makes clear, it is limited to costs-only proceedings under the procedure set out in CPR 44.12A.

Costs-only Proceedings


(1) This rule sets out a procedure which may be followed where –

(a) the parties to a dispute have reached an agreement on all issues (including which party is to bear the costs) which is made or confirmed in writing; but

(b) they have failed to agree the amount of such costs; and

(c) no proceedings have been started.

If the Defendant’s argument that the indemnity principle applies to this category of cases is correct, there is no reason why it could not challenge the amount of costs.

iii) As to Mr Mallalieu’s point iii), the success fee which is recoverable under Part 43.11 is in relation to a funding agreement as defined in CPR 43.2 (1)(k)(i), and not as defined in CPR 43.2 (3) and (4), which require ‘an agreement which satisfies all the conditions applicable to it by virtue of s.58 of the Courts and Legal Services Act 1990.’ CPR 43.11 is not concerned with compliance with conditions, simply with a funding arrangement, which is defined as a conditional fee agreement which provides for a success fee within the meaning of s.58(2) of the Courts and Legal Services Act 1990. Section.58(2) provides:

For the purposes of this section and section 58A –

(a) a conditional fee agreement is an agreement with a person providing advocacy or litigation services which provides for his fees and expenses, or any part of them, to be payable only in specified circumstances; and

(b) a conditional fee agreement provides for a success fee if it provides for the amount of any fees to which it applies to be increased, in specified circumstances, above the amount which would be payable if it were not payable only in specified circumstances.

  1. iv) In any event this appeal is premature since the Claimants have not yet prepared a bill of costs, let alone been in a position to provide a certificate. As Master O’Hare recorded:

The Claimants’ solicitor volunteers to give a certificate as to compliance with the Conditional Fee Agreement regulations in this case.




  1. I am advised by the Assessors that until the Court of Appeal decision in Hollins v. Russell [2003] EWCA Civ 718 numerous technical challenges were made to the validity of conditional fee agreements. As Mr Mallalieu put it in the course of argument, ‘the history of litigation in this field indicates that disproportionate points were taken.’ The challenges sought to show that conditional fee agreements did not comply with primary and secondary litigation; and were therefore unenforceable between solicitor and client. On this basis the paying party was able to rely on the Indemnity Principle so as to argue that it could avoid liability for the receiving party’s costs. It is clear that such challenges had a significantly detrimental effect on the efficient conduct of personal injury litigation and were inconsistent with the overriding objective of enabling the court to deal with cases justly. As Judge LJ noted in Bailey v. IBC Vehicles Ltd [1998] 3 All ER 570 at 575a:


The defendants’ request that the plaintiff be required to provide information proving that the indemnity principle has been observed represents pointless satellite litigation.”


Written by kerryunderwood

May 3, 2018 at 8:35 am

Posted in Uncategorized

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