Callery v Gray (1) and (2): HL 27 Jun 2002

Success fees and ATE premiums were recoverable

Objection was made to a claimed uplift of 20% sought by the plaintiff’s solicitors. The defendant’s insurers said that there had been little at risk for them.
Held: The system of conditional fees insurance had been introduced to remedy defects in the Legal Aid system. The new system was open to abuse because of the danger of parties agreeing and setting fees they would not be called upon to pay, and it needed the control of the courts. The Court of Appeal will hear many more cases than the House, and that Court’s judgements and experience in this field should be respected. The House of Lords was not the best place to decide these issues. This was a very low risk case. Should after the event insurance be taken out before it was known whether the case was to be resisted?
Subject to reasonableness, success fees and ATE premiums were recoverable. The idea behind the Act was to transfer the burden of unsuccessful cases to the insurers, and thus in turn to the general public. Questions of what would provide a reasonable rate of return for solicitors are not ones for costs judges. Appeal dismissed.

Lord Bingham of Cornhill Lord Nicholls of Birkenhead Lord Hoffmann Lord Hope of Craighead Lord Scott of Foscote
Times 02-Jul-2002, [2002] UKHL 28, [2002] 1 WLR 2000, [2002] PIQR P32, [2002] 3 All ER 417, [2003] RTR 4, [2003] Lloyds Rep IR 203, [2002] 2 Costs LR 205
House of Lords, Bailii
Access to Justice Act 1999
England and Wales
Appeal fromCallery v Gray (No 2) CA 31-Jul-2001
A plaintiff could recover the costs of insuring himself against the risk of having to pay the other sides costs, and finding his own costs irrecoverable (after the event or ATE insurance). The earlier case had decided that such premiums may be . .
Appeal fromCallery v Gray, Russell v Pal Pak Corrugated Ltd (No 1) CA 18-Jul-2001
Claimants in modest, straightforward personal injury claims cases should have re-imbursed to them by the defendant, the cost of after the event insurance, if necessary by costs only proceedings. The solicitor’s success fee should also be recovered. . .
CitedBirkett v James HL 1977
Exercise of Power to Strike Out
The court has an inherent power to strike out an action for want of prosecution, and the House set down the conditions for its exercise. The power is discretionary and exercisable only where (a) there has been inordinate and inexcusable delay and . .
CitedThai Trading (a Firm) v Taylor and Taylor (of Taylors Solicitors, Caversham) CA 27-Feb-1998
A solicitor had agreed with his wife to act for her in litigation on the understanding that he would only recover his profit costs if she succeeded.
Held: This agreement did not offend public policy. This type of agreement was distinguished . .
CitedGirvan v Inverness Farmers Dairy and Another HL 13-Nov-1997
(Scotland) A second re-trial in order to obtain a jury assessment of damages more in line with that assessed by judges would be wrong. Lord Clyde: ‘In a system in which damages may be assessed in different cases either by a jury or by a judge it is . .
CitedGomba Holdings (UK) Ltd v Minories Finance Ltd (No 2) CA 1993
A clause entitling a mortgagee to recover legal costs from the mortgagor did not extend to costs that were unreasonably incurred or which were unreasonable in amount. Whether costs were unreasonably incurred or were unreasonable in amount was to be . .

Cited by:
CitedHollins v Russell etc CA 22-May-2003
Six appeals concerned a number of aspects of the new Conditional Fee Agreement.
Held: It should be normal for a CFA, redacted as necessary, to be disclosed for costs proceedings where a success fee is claimed. If a party seeks to rely on the . .
CitedBowman v Fels (Bar Council and Others intervening) CA 8-Mar-2005
The parties had lived together in a house owned in the defendant’s name and in which she claimed an interest. The claimant’s solicitors notified NCIS that they thought the defendant had acted illegally in setting off against his VAT liability the . .
CitedAlfa Begum v Supin Klarit CA 15-Feb-2005
The court ordered the reduction of the success fees agreed between the claimant and her solicitors from 100% to 15%. The case was nearly a stone cold certainty. . .
CitedKris Motor Spares Ltd v Fox Williams Llp QBD 12-May-2010
The claimant sought to challenge the After the Event Insurance (ATE) bought by its solicitors late in the day in their claim, before then withdrawing the conditional fee agreement. The premium was over andpound;90,000.
Held: The appeal failed. . .
CitedKololo v Commissioner of Police for The Metropolis QBD 9-Mar-2015
The claimant sought disclosure of information under the 1998 Act. The defendant said that the application was an abuse of process and an attempt to circumvent the 2003 Act. The claimant had been convicted of involvement in kidnapping and murder in . .
CitedMcGraddie v McGraddie and Another (Scotland : Costs) SC 28-Jan-2015
The parties, father and son had fallen out. The father said that a property purhased by the son with money provided by the father, was held in trust for the father. The Court had rejected the argument of the son that this had been a gift. The . .
CitedTimes Newspapers Ltd and Others v Flood and Others SC 11-Apr-2017
Three newspaper publishers, having lost defamation cases, challenged the levels of costs awarded against them, saying that the levels infringed their own rights of free speech.
Held: Each of the three appeals was dismissed. . .
CitedCoventry and Others v Lawrence and Another SC 22-Jul-2015
The appellants challenged the compatibility with the European Convention on Human Rights of the system for recovery of costs in civil litigation in England and Wales following the passing of the Access to Justice Act 1999. The parties had been . .

Lists of cited by and citing cases may be incomplete.

Costs, Personal Injury, Legal Aid

Leading Case

Updated: 31 October 2021; Ref: scu.174121