A personal injury firm was entitled to deduct 50% from its client’s damages through its success fee and after-the-event insurance premium, the High Court has ruled.

His Honour Judge Monty KC granted an apeal by Express Solicitors of a decision by Deputy District Judge Walton allowing the firm a success fee of just £225 – half of that requested – and disallowing £675 claimed for an after the event insurance premium. In Duffield v VW Morrison Supermarkets Ltd the judge said the county court's decision was wrong and that the firm was entitled to deduct the full amount claimed. There was no doubt that the ATE insurance was reasonably entered into, he said. 

The ruling is the court’s latest attempt to clarify the position with regards to client damage deductions, and will be greeted with relief by PI firms.

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Express had represented a five-year-old boy through his mother acting as litigation friend after he was injured in a supermarket accident. The case settled for £2,250 and came before the court for approval. The mother confirmed she had made an informed decision to pursue the litigation and that she understood how the CFA operated and that an ATE policy would be taken out to guard against the risks of adverse costs. The funding arrangement limited deductions to no more than 50% of the damages and £1,125 was sought.

The county court judge said his focus was on the ‘broader picture’ and he opted to limit the success fee to 10% of the agreed damages. He further said it was difficult to see how it was reasonable to incur a premium for a costs-based insurance policy. He described the damages as having been 'eaten up' by disproportionate deductions.

On appeal, Monty said the judge’s approach to the calculation of the success fee was wrong, as he had equated it with the 10% uplift applied to damages in personal injury cases as established in Simmons.

Regarding the insurance premium, he said it ‘makes no sense’ to have allowed a success fee and refused to allow the deduction of the ATE. Monty added: ‘The judge seems to have started from the proposition that the total deductions sought were too high, and then fashioned a way of reducing them. That with respect was the wrong approach.’