XDE v North Middlesex University Hospital NHS Trust [2020] EWCA Civ 543 (23 April 2020)

“This is a second appeal following the decision by Costs Judge, upheld by Jay J … to disallow on assessment certain “additional liabilities”, namely the success fees of solicitors and counsel and the ATE insurance premium… The appeal raises issues as to the reasonableness of the appellant’s decision to change funding from legal aid (which would not have given rise to these liabilities) to a CFA (which has done)…” [1]

“…in any comparison exercise, what might be said to be the elephant in the room needs to be addressed, namely the reason why the funding in this case took the course that it did, and then changed when it did. In my view, C lawyer had a very good reason for changing from a CFA to legal aid in 2007. Moving to legal aid, at the outset of a potentially complex case meant that, win or lose, C lawyer would be paid. That was a beneficial arrangement when a large but potentially difficult clinical negligence case was getting underway. 5 years, an admission of breach and many experts later, it would have become clearer that the claim was more likely to be successful. That may have seemed a good time for C lawyer to lose the restraints of legal aid and change to an arrangement that gave them a success fee as well. It is not therefore unfair to say that changing to CFA-lite at that point potentially allowed them to have their cake and eat it too…” [86]

“…in general terms, there is little to choose between legal aid funding, on the one hand, and a CFA-lite arrangement on the other. In disputes about the recoverability from the paying party of additional liabilities where the funding has changed from the former to the latter, what matters is the reasonableness of the decision to change funding. That inevitably highlights the actual reasons for the change. On the particular facts of the present case… the reasons for the change were unreasonable and disallowed the success fee and the ATE premium. Jay J agreed with that, and so do I…” [92]