I have written about the practical approach to deductions regarding success fees and ATE premiums from children’s cases, which are usually subject to criticism from the Judiciary when sought from damages at an Infant Approval Hearing.
Whilst it is not a binding decision, a county court appeal has allowed a Circuit Judge to give some further guidance/clarity that may assist the District Bench in making such a determination.
Duffield v WW Morrison Supermarkets Ltd [2025] EWCC 35
The case concerned a child (Master Brendan Duffield), who was injured at a Morrisons supermarket in April 2022. His mother, Ms. Matuleviciute, served as his litigation friend. The claim commenced with the litigation friend entering into a Conditional Fee Agreement (CFA) with a 100% success fee uplift, along with an After The Event (ATE) insurance policy costing £650 plus IPT (12%).
The Judge approved a damage settlement of £2,250. Whilst the Judge allowed a success fee, they had reduced the success to £225 and refused the ATE Premium, given the following Judgment:-
1. Therefore, there are two separate deductions from the Claimant’s agreed sum of damages that I am asked to consider. The first is a success fee of £450 under a form of conditional fee or damages based agreement. The second is a premium under a costs based insurance policy of £675.
2. Under CPR 21.12, a Litigation Friend who incurs costs or expenses on behalf of a child is entitled to recover the amount of any such cost or expense to the extent that it has been reasonably incurred and is reasonable in amount. In deciding whether any cost or expense was reasonably incurred and reasonable in amount, I am required to have regard to all the circumstances of the case including the factors set out in CPR 44.4(3) and 46.9.
3. However, stepping back and focusing on the broader picture, I am presented with a situation where the Claimant acting through his Litigation Friend has accepted an award of damages of £2,250 and yet I am being asked to approve deductions from those damages which amount to approximately 50% of the total sum of the Claimant’s damages. As mentioned, that is £450 for a success fee and £675 for an ATE premium.
4. In relation to the deduction constituted by the proposed success fee of £450, I have taken into account the requirements of CPR 21.12 (10) which I found are met, although I focussed particularly on the risk assessment form which, as I have said, does not appear to be a particularly comprehensive risk assessment. It seems to say what has not been done rather than what has been considered. However, I am willing to accept that a risk assessment in name, albeit not a particularly helpful or considered one, has been provided for the purposes of CPR 21.12 (10).
5. So, in considering the amount of the success fee that is proposed as a cost deduction, I take into account the general approach of Simmons v Castle [2012] EWCA Civ 1039 and allow the deduction of a success fee, but, in the circumstances, I will limit that success fee to 10% of the agreed damages. That is 10% of damages which will be £225.
6. In relation to the ATE premium, whilst an expense may include all or part of a premium in respect of a costs insurance policy, I do need to consider whether it was an expense that was reasonably incurred and reasonable in amount having regard to all the circumstances and the factors set out in CPR 44.4(3) and 46.9.
7. I am not persuaded that, in the circumstances of this case, it was reasonable to incur a premium of £675 in relation to a costs insurance policy. This issue is not with the amount of the premium but with the fact that it was incurred at all. This was an accident that Brendan unfortunately suffered on the premises of Morrisons when he pulled a loose cabinet on to his foot. This is a personal injury case in which Qualified one-way cost shifting would apply. In the circumstances, it is difficult to see what, if any, risk could arise of the Claimant being required to pay the Defendant’s costs. The Claimant’s solicitors will have separately recovered an agreed amount of their costs from the Defendant. In addition, in a case such as this, it would be reasonable to expect that Morrisons would settle the case, which indeed they have.
8. So, any potential risk to the Claimant that might have been covered by a costs based insurance policy is not a risk that would, in the circumstances of this case, be one for which it would be reasonable to incur a premium for a costs based insurance policy. In the circumstances, there would be no reasonable expectation of the Claimant being at risk of paying the Claimant’s costs and it is therefore, difficult to see how such a deduction from the Claimant’s damages would have been reasonably incurred.
9. Therefore, I will allow the deduction from the Claimant’s damages of a £225 success fee but not a deduction of £675 for the premium for a costs based insurance policy.
The Judge essentially did what many Judges do (and some Solicitors might argue alternatively): reducing the success fee to 10% of the damages because Simmons v Castle increases PSLA to account for the Jackson reforms. The Judge clearly believed the total amount sought was ‘50%’ of the Claimant’s damages and therefore that the deductions were excessive. Whilst the Judge was satisfied there was a risk assessment, they also said it was not helpful for the purposes of CPR 21.12, but did not say in their decision why, just simply focusing on Simmons v Castle.
The Judge boldly stated that this was a case in which it would have been reasonable to expect Morrisons to settle. This, along with the usual QOCS point, led to the ATE premium not being allowed. She also alluded to the fact that the solicitors got paid regardless as a factor for refusing the ATE premium.
The litigation friend appealed and HHJ Monty KC heard the appeal in the County Court at Central London.
Appeal
The litigation friend appealed on the grounds that the judge wrongly reduced the success fee from the agreed contractual terms, the ATE premium was reasonably incurred and should have been allowed, and the appeal was unopposed, which is understandable given the Defendant had no vested interest at all in how the damages were to be utilised. Judge Monty KC allowed the appeal and set aside the first judge’s order.
Judge Monty KC noted that the Judge had clearly found the success fee to be reasonably incurred, but disapproved with the amount. Judge Monty KC correctly stated that the 10% uplift as per Simmons v Castle had nothing to do with the success fee calculations. He also went further and considered CPR 46.9
36. The court must also have regard to CPR 46.9 and thus the fact that were there to be an assessment between the solicitor and the litigation friend, it would be on an indemnity basis. This means, in my view, that if the court departs from CPR 46.9, it renders the litigation friend vulnerable to being personally liable 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 so finding, I am agreeing with, and adopting the words of, HHJ Lethem in Hennes at [13]:
“Thus the effect of that recognition is that the Court is likely to start from a presumption that providing the litigation friend has approved the costs, they have been reasonably incurred and are reasonable in amount. Secondly, the judge is likely to start from the assumption that the costs are proportionate.”
37. Returning to the success fee, I really cannot 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 and Ms Matuleviciute (b) which provides for an uplift on costs not damages (c) in circumstances where Ms Matuleviciute 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. In any event, the Simmons 10% uplift is to do with damages, not costs as between the litigation friend and the solicitors.
38. It seems to me that the judge was wrong in principle about the quantum of the success fee. This is not a disagreement about the exercise of a discretion. It seems to me that the judge failed to apply the presumptions and assumptions in CPR 46.9. In particular, there is a presumption that solicitor and own client costs have been reasonably incurred if they were incurred with the express or implied informed approval of the client. That was the position here, on Ms Matuleviciute’s evidence. There was nothing to rebut that presumption.
He then referred to Herbert v HH Law Ltd [2019] EWCA Civ 527 and found that as the litigation friend had inforemed consent, the success fee could be reduced by reference to the 10% uplift.
With respect of the ATE premium, the Judge referred to West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220 and said that ATE premiums’ reasonableness is judged by market norms, not case-by-case assessment. He further went on to say that QOCS does not negate the need for ATE insurance, especially when risks like adverse costs orders remain, and (something I have reiterated time and time again), disbursements which are not indemnified by a CFA. The outcome was the success fee and ATE premium was allowed in full.
48. In my view the judge was wrong in the reasons given for disallowing the premium. These are as follows:
(1) Qualified One-Way Costs Shifting (“QOCS”) applies. As Ms Crorie says, QOCS relates to enforcement, not the principle, of a costs order. Even where QOCS applies, a child claimant is at risk of losing their damages if an adverse costs order is made against them.
(2) It was difficult to see how there was any risk of the Claimant having to pay costs. I also agree with Ms Crorie that the risks against which protection is provided by an ATE go further than an adverse costs order, and may include liability for other disbursements such as second opinion medical reports. I further agree that an adverse costs risk is present notwithstanding QOCS – for example, the effect of any Part 36 offer. A similar point was made in BXC v DTA [2021] EWHC B27 (Costs)at [87]. This point also seems to me to ignore the general risk inherent in all litigation.
(3) Express Solicitors have separately recovered their costs. That is incorrectly looking at matters as at the hearing, rather than at the time the ATE was taken out.
(4) It would have been reasonable to expect the case to settle. I am not at all convinced by that. Liability had been denied. I do not think it possible to say with certainty that it was bound to settle.
49. I have no doubt that the ATE was reasonably entered into, and that the judge’s conclusion to the contrary was not just an exercise of discretion with which I disagree, but was wrong. Having assessed the success fee at 10%, that meant that there was a risk attached to the litigation which meant that the cost of the premium was deductible. That being so, I have no hesitation in concluding that the premium ought to have been allowed as a deduction in full.
Commentary
While this decision clearly advances beyond my earlier discussions on judges’ refusal to approve ATE premiums or their reductions in success fees, the core principle remains unchanged: success fees are often misunderstood. Many overlook that the 25% deduction is a cap, and that the amount deducted from damages to cover the success fee can be as high as 100%. It could be 30%, for example. However, if these success fees, when applied to the base costs, amount to more than 25% of the damages, then only 25% can be allowed.
When I make submissions, I always begin by explaining how the success fee is calculated and what it could be, since the base costs might be assessed and reduced beforehand. After that, I consider whether the full success fee can be deducted, given that only 25% of the damages can be deducted.
This judge clearly indicated that deducting 50% of the damages overall was inappropriate. They initially held the view that the costs were not proportionate or reasonable. Instead of presuming that costs are reasonable, the presumption is that they are unless evidence suggests otherwise.
I have always found ATE premiums to be easily justifiable because the main arguments revolve around QOCS issues. Some costs are reasonably incurred with the ATE insurers’ approval and can be indemnified by the policy if damages are awarded or agreed upon, making the order enforceable. However, some costs may be negligently or inappropriately incurred and would not be covered by the ATE. My primary argument for ATE is that the cost of the premium, which the litigation friend would pay if the case is unsuccessful, is usually much lower than the overall disbursement liability. Judge Monty’s reliance on West helps distinguish the premium from a disbursement, since it is an expense directly incurred by the litigation friend and therefore not subject to the same court scrutiny as costs and disbursements.
No doubt, Claimant solicitors and their instructed advocates will be relying on these points going forward.
Information
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From the 12th January 2026 and onwards, Alec Hancock will practice as a Barrister at Magdalen Chambers in Exeter. For instructions on matters on or after 12th January 2026, please contact Magdalen Chambers via clerks@magdalenchambers.co.uk or by telephone on 01392 285 200.