The Dekagram: 14th July 2025

This week the team addresses two recent decisions on matters close to the hearts of all litigators: success fees, and striking out for defective service.

Success fees are a matter of contract between lawyer and client, not a matter of costs inter partes

In a recent appeal in the case of Duffield v WM Morrison Supermarkets Ltd [2025] EWCC 35, HHJ Monty KC has given welcome guidance as to the proper approach to be taken in assessing the appropriateness of success fees and ATE premiums.

The underlying claim involved a personal injury claim. The infant Claimant, by his litigation friend his mother, had instructed solicitors to act on a conditional fee agreement (“CFA”), under which the solicitors would enjoy a 100% uplift on the solicitors’ base costs. The CFA also provided for an ATE premium.

The claim was settled, and the matter was then listed before a district judge for consideration of the litigation friend’s request for deduction of her reasonable expenses (i.e. the success fee and ATE premium) from the damages agreed.

The District Judge approved the settlement, but allowed only a reduced success fee, and allowed nothing for the ATE premium, despite having found that the success fee was reasonably incurred. They took into account “the general approach of Simmons v Castle”, and in accordance with that authority, limited the success fee to 10% of the agreed damages.

HHJ Monty KC allowed the appeal (which was unopposed). In his judgment, it was “not open to the judge to determine the amount of the deductible success fee by reference to a Simmons 10% uplift on damages.  The Simmons uplift has nothing to do with the contractual recovery of a success fee between contracting parties.  That success fee will – in appropriate cases, such as the present one – be subject to the limitation on recovery imposed by CPR 21.12, but the basis is contractual.”

Whilst success fees fall within “costs” under CPR 21.12, the court must also have regard to CPR 46.9 and to the fact that if there were to be an assessment between the solicitor and litigation friend, it would be on an indemnity basis. Departing from CPR 46.9 would thus render the litigation friend vulnerable to personal liability for costs which are not permitted under CPR 21.12, but are not open to challenge as between the litigation friend and the solicitor.

In terms of the amount of the success fee, HHJ Monty KC could not “understand how it could be appropriate to quantify the success fee by reference to (a percentage of) the damages.  Even taking into account the “eight pillars of wisdom”, against the background of (a) a contractual arrangement between the solicitors [the litigation friend] (b) which provides for an uplift on costs not damages (c) in circumstances where [the litigation friend] entered freely into the contract and understood its terms, it strikes me as wrong in principle to depart from the contractual provisions, which base the uplift on costs not damages”.

The appeal was not interfering with a legitimate exercise of judicial discretion in circumstances where the first instance judge had failed to apply the presumptions and assumptions in CPR 46.9. In particular, where a client has expressly approved costs, there will be a presumption that those costs will have been reasonably incurred. In the absence of evidence to rebut that presumption, the presumption would prevail.

The correct approach in respect of success fees is that set out in Herbert v HH Law Ltd [2019] EWCA Civ 527 at [33-36].

In respect of the ATE premium, it made “no sense to have allowed a success fee […] but to have refused to allow the deduction of the ATE premium […] There was a litigation risk in this case, it was not open […] to find that it was unreasonable for [the litigation friend] to have insured against that risk.” As such, the judge’s conclusion that the ATE was not reasonably entered into was not just an exercise of discretion, but was wrong.

The proper approach to determining what may be deducted from damages is to determine what is reasonable. The court should ask:

i) is there material which causes the court to question whether informed consent was given?;

ii) if so, what evidence was there that informed consent was given?;

iii) if the court is not satisfied that informed consent was given, the success fee should be disallowed. If it is so satisfied, then the success fee should be allowed. Likewise, the proportionality of the ATE premium is not an issue.

Conclusion

Whilst it is a judgment at County Court level, this decision should provide useful and clear guidance for judges dealing with the increasingly complex area of success fees and recoverable disbursements. Judges do not like to see claimant damages eaten away by costs and disbursements, but certainty as to what can be recovered should help claimants to secure legal representation in a wider range of claims.

About the Author

Called in 2011, prior to pupillage Conor Kennedy spent two years working with a leading insurance law firm, gaining experience across regulatory, employment, leisure, travel and public sector teams. He has a varied civil practice and is accredited for Direct Access instruction, but has a particular interest and expertise in claims involving fundamental dishonesty.

High Court declines to strike out claim for technical breach of service rule

In Alliance Automotive Procurement Ltd v Auto Zatoka Spolka Z Ograniczona Odpowiedzialnoscia [2025] EWHC 1697 (Ch) (04 July 2025), HHJ Richard Williams (sitting as a High Court judge) refused an application to strike out a claim for over £900,000 because of a procedural deficiency with the response pack.

Rule 7.8 provides that, when particulars of claim are served, they must be accompanied by forms on which the defendant may admit or defend the claim and acknowledge service. Those forms specify, for the defendant’s information, the time permitted for responding and paragraph 6.6 of Practice Direction 6B provides that the specified period must be that set by rule 6.35. There is a table with different durations for different jurisdictions.

The Defendant in the instant case was based in Poland and the corresponding periods were 21 days for filing an acknowledgment of service and a further 14 days for filing a defence. The Claimant, in error, served a response pack that specified 28 (instead of 35) days for filing a defence and 21 (instead of 14) days for filing an acknowledgment of service disputing jurisdiction. The Defendant applied to strike out the claim, or alternatively for a declaration that the service was ineffective.

The Defendant argued that proper service must include service of properly-formulated documents and specifying incorrect compliance dates could not be seen as a trivial error. It relied on the importance of due service as emphasised by the senior courts in cases such as Barton v. Wright Hassall LLP [2018] UKSC 12 and Shiblaq v. Sadikoglu (No. 2: Application to Set Aside) [2004] EWHC 1890 (Comm), with emphasis on its “yet greater importance in an international context”.

The Claimant accepted that an error in service of the claim form might invalidate service, but said that here there had been proper service of a regular claim form and particulars of claim and that the requirement for service of “forms for responding to the claim”, required by PD6B, had been complied with. Alternatively, the Claimant argued that the error had been minor and technical, insufficient to justify striking out the claim. It relied on Rushwork v. Harvey [2016] EWHC 1386 (QB), in which the High Court determined that (on the wording of the Mercantile Court Guide as it then existed) a failure to serve a response pack did not bar a claim continuing. On analysis of this decision, HHJ Williams identified relevant principles as including that:

(i) the court “will not use procedural rules as a trip-wire” and instead will look at the substance;

(ii) even where court rules require service of a response pack, in general the court “will be prepared to overlook” non-service; and

(iii) if default judgment were obtained in a case where a defendant had been provided with an incorrect response time, an application to set that judgment aside “would clearly proceed”, providing a level of protection for the defendant.

The court also considered Abela v. Baadarani [2013] UKSC 44, in which the Supreme Court held that “the most important” purpose of service “is … to ensure that the contents of the document served, here the claim form, is communicated to the defendant”. That was consistent with the definition of “service” in the Glossary to the CPR, namely “[s]teps … to bring documents used in court proceedings to a person’s attention”. HHJ Williams was unpersuaded that the court should treat defects in service more strictly in an international context as it would domestically (Rushwork, above, being a domestic case).

The judge noted that the Defendant had responded to the claim, and made its application to strike out the claim (based on the erroneous time periods), within the correct time limit. That raised a question as to what, if any, prejudice the Defendant had suffered as result of the Claimant’s errors, which were “of a technical nature”: “errors of form rather than substance”; and thus, in the words of Denton v. TH White Ltd [2014] EWCA Civ 906, “neither serious nor significant”.

Ultimately, and noting the caution expressed in Denton against parties acting opportunistically (and that “it is wholly inappropriate for litigants or their lawyers to take advantage of mistakes … in the hope … that they will obtain a windfall strike out”), HHJ Williams declined to exercise his discretion to provide the relief sought by the Defendant. In his short statement of reasons at the end of his judgment, the judge said:

(i) the Defendant had been validly served with the proceedings, understood it and was able to put in a defence on the merits;

(ii) the Claimant’s errors were not serious or significant;

(iii) the Defendant suffered no prejudice and it (through its solicitors) was aware of the errors from the outset;

(iv) the Defendant could have pointed out the errors and agreed correct time periods with the Claimant, but instead disputed jurisdiction and sought a strike-out of the claim; and

(v) striking out the claim would deliver to the Defendant a windfall, achieved opportunistically.

The decision can be seen an example of the courts exercising pragmatism, in furtherance of their function of hearing and resolving valid disputes, and rejecting an opportunistic attempt to defeat proceedings on the basis of a procedural technicality. It is notable that the judge’s analysis and conclusions were based largely in principle and did not place significant weight on the value of the claim – a factor that might have weighed in the Defendant’s decision to make its applications in the first place.

About the Author

William Dean has a busy personal injury practice involving both domestic and foreign accidents. He is a contributor to the Butterworths Personal Injury Litigation Service, in which he is the author of the “Foreign Accidents” section. He also acts in tribunal claims against the Criminal Injuries Compensation Authority, including in cases involving foreign jurisdictions, and is a contributor to the leading textbook in that field.