Callery v Gray
A claimant who succeeds under a conditional fee agreement may recover a reasonable success fee and after the event insurance premium from the defendant.
Facts
Mr Callery was a passenger in a car that was hit by a car driven by Mr Gray, and he suffered minor injuries. He instructed solicitors under a conditional fee agreement, a no win no fee arrangement, with a success fee of 40 per cent, and took out after the event insurance to cover the risk of paying the defendant's costs if he lost. The claim was settled quickly. Under the Access to Justice Act 1999, success fees and insurance premiums could be recovered from the losing party. The defendant's insurers argued that it was unreasonable to enter into such arrangements at the very start of a modest claim, before it was clear whether liability would be disputed.
Legal principle
The House of Lords held that it was reasonable for Mr Callery to enter into the conditional fee agreement and take out insurance at the start of the claim, and that the success fee, which the Court of Appeal had reduced to 20 per cent, and the insurance premium could be recovered. The House said that the Court of Appeal was best placed to supervise the developing practice of costs under the new regime, and declined to interfere with its decision. The recoverability of success fees and premiums was later abolished for most claims by the Legal Aid, Sentencing and Punishment of Offenders Act 2012, following the Jackson review of civil litigation costs.
Related cases on civil justice and procedure
- American Cyanamid Co v Ethicon Ltd [1975] AC 396
- Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55
- Arkin v Borchard Lines Ltd [2005] EWCA Civ 655, [2005] 1 WLR 3055
- Barton v Wright Hassall LLP [2018] UKSC 12, [2018] 1 WLR 1119
- Biguzzi v Rank Leisure plc [1999] 1 WLR 1926
- Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416
- Denton v TH White Ltd [2014] EWCA Civ 906, [2014] 1 WLR 3926
- Dunnett v Railtrack plc [2002] EWCA Civ 303, [2002] 1 WLR 2434
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