The High Court of Justice
On Appeal from Master O'Hare
The Issues: Mr. Nizami suffered whiplash injury from a road accident in 2003 and in February 2005 agreed to accept damages of £2,400 plus costs without proceedings being issued. In Part 8 proceedings, the defendant sought to challenge the CFA which Mr Nizami had entered into, on the grounds that his solicitors had not made BTE inquiries sufficient to comply with the regulations (which applied to CFAs entered into prior to November 2005).
Held: It was not necessary for a valid CFA to exist in order for a successful claimant to recover fixed costs or a success fee, because the indemnity principle did not apply to fixed costs under Part 45, and it was intended that those costs should be recoverable in a straightforward way without technical challenge and investigation in each instance. This did not apply to disbursements under the fixed costs regime however, because disbursements were not fixed, but had to be incurred on behalf of a client in order to be recovered.
Comment: Firms were previously concerned about challenges to their costs in respect of pre-November 2005 CFAs. It is clear from this decision that where fixed costs apply, base costs, the success fee and VAT are recoverable even if the CFA is defective, although disbursements could still be open to challenge under the fixed costs regime if a pre-November 2005 CFA is defective. Lengthy questionnaires from costs draftsmen on this subject should be resisted. See also Kilby v Gawith (2008) - Court of Appeal.