The new position on costs for infant approvals is unwelcome

Where a claim is made by, on behalf of, or against a child, 'no settlement, compromise or payment'¦ shall be valid'¦ without the approval of the court' (CPR 21.10). Infant approval hearings are an important safeguard for both children and those involved in litigation against them. They fulfil three functions:

• To ensure that, for whatever reason, the settlement has not been pitched too low.
• To give the court an opportunity to oversee the investment of the award.
• To protect the non-child party, by giving the proposed compromise legal certainty. Without an approval hearing, any settlement would effectively be provisional until the child reached 18.

Infant approvals are initiated using the Part 8 procedure. In all but the most straightforward cases, an opinion from counsel is sought and disclosed to the court to demonstrate that the settlement is appropriate. The child and litigation friend attend the hearing, usually along with counsel. The hearing is document-heavy (see box overleaf). At the hearing itself, the judge will ask the child a few questions about his injuries, and may also interrogate counsel on the appropriateness of the sum.

If the settlement is approved, the award will usually be invested by the court for safekeeping until the child reaches 18. Occasionally, if the sum is very small, it is paid out immediately for the litigation friend to invest privately. Interestingly, the court often accepts the submission that, where the family objects to interest on religious grounds, it is appropriate to pay out the entire sum so that it may be invested in a sharia-compliant account.

There has long been controversy over the position on costs for these hearings, and practice has varied from court to court. It is therefore no surprise that the Court of Appeal has stepped in, in Dockerill v Tullett [2012] EWCA Civ 184 and the linked appeals of Macefield and Tubridy.

Dockerill and Macefield concerned claims under £1,000. The principal issue was whether costs should be calculated under the fixed-costs regime under CPR 45 Part II or by detailed assessment in accordance with CPR 44.5. CPR 45 Part II only applies where: ''¦ if a claim had been issued for the amount of the agreed damages, the small claims track would not have been the normal track for that claim'. On one view, 'the claim' is the Part 8 proceedings, which are automatically treated as being allocated to the multitrack. On the other, 'the claim' is the claim that would have been issued but for the compromise '“ in other words, less than £1,000. Patten LJ found that the latter was 'clearly right' and so the costs fell for detailed assessment.

Case complexity

This raised a further question: how to carry out a detailed assessment where the underlying claim would have been small claims track. Patten LJ found that although the court should not simply impose small claims track costs, a judge ought to 'ask whether the damages claim and therefore its compromise was sufficiently complex as to have justified the engagement of solicitors beyond the production of a report on the merits of the settlement or in respect of any other step in the proceedings and to have scrutinised the bill on that basis'. This surprising comment suggests that litigation friends would be expected to conduct their own litigation in low-value infant approvals; certainly it is a strong pointer that costs recovery will now be generally limited to the costs of the advice on quantum.

Tubridy concerned an award over £1,000, and addressed the question of whether the cost of counsel's attendance at the hearing is recoverable. Under CPR 45.10(2)(c), disbursements are recoverable provided that the fees were 'necessarily incurred by reason of one or more of the claimants being a child or protected party'. At county court level, many judges were in the habit of holding that the simple fact that the litigant was a child automatically justified counsel's fees. Patten LJ took the view that this was not enough and 'for counsel's fees for attending a hearing to be recoverable there must, I think, be some complexity in the case'.

Tubridy is concerned with claims that fall under CPR 45 Part II. Many of those types of claims will now fall under CPR 45 part IV, aka the RTA protocol, which does make specific provision for £250 for the 'advocate's costs' of the hearing.

Although the general trend of these decisions is towards less legal support, they do not have any effect on the ongoing necessity to obtain counsel's opinion for the court. Patten LJ specifically dealt with this, stating that the costs of instructing counsel to prepare a settlement advice will remain recoverable 'because they are a specific requirement of part 21.10 proceedings'.

So, the position now appears to be:

• Award under £1,000 '“ costs technically subject to detailed assessment but generally limited to advice on quantum.
• Award over £1,000 '“ costs on fixed-costs regime. If under CPR 45 Part II, attendance by counsel only recoverable where there is 'some complexity in the case'. If under RTA protocol, £250 for counsel's attendance.

Squeeze on access to justice

This decision will be welcomed by defendant insurers. For everyone else, the consequences are stark:

• Solicitors may no longer be in a financial position to take on child cases under £1,000. This development may be seen as part of the general squeeze on access to justice, particularly in PI.
• The decision may provide an incentive for solicitors to settle such cases by way of 'parental indemnity' rather than at an infant settlement hearing. This attempts to circumvent CPR 21.10 by having a parent agree to indemnify the defendant if the child reaches full age and sues for a larger sum. The legal basis of such an agreement is dubious, and certainly reduces the protection of the child's interests.
• Of course, there will be a reduction of this work for the junior Bar, where infant approval hearings have been a welcome income stream.
• The decision is also unlikely to be welcomed by the county courts, adding yet more litigants in person to their lists. When hearings are straightforward, they can take a matter of minutes, but complications do regularly arise. On the day, birth certificates may be forgotten, awards may need to be renegotiated at the last minute, unexpected requests for payouts for football boots made, and so on. It is unclear how a litigation friend can be expected to deal with this, let along with robust questioning on the adequacy of the sum. What is certain is that either the number of adjournments will go up, or the quality of scrutiny of infant settlements will go down.

Patterson LJ cannot be criticised for his strict construction of the CPR. However, he is plainly aware of the potential problems, and has commented: 'If this produces a difficulty in practice then it will be for the Rules Committee to think again.' It is to be hoped that they do not delay too long.