A senior judge has voiced concerns about no-win, no-fee solicitor agreements after a court heard that a legal dispute over who caused a school dining room flood by banging a nail into a pipe was estimated to have cost more than £200,000.
Appeal court judge Lord Justice Rix said he was "concerned" about the "disproportionate" legal costs and "concerned" that it was "another case" where the existence of a no-win, no fee agreement had made it "practically impossible" to settle.
A judge had ordered a construction firm to pay the school more than £27,000 damages, following a trial in January.
Lord Justice Rix raised concerns in a written judgment after the Court of Appeal was asked to rule on disagreements over who should pay which legal costs.
Lord Justice Rix, who had sat with Lord Justice Tomlinson and Sir Mark Waller at the appeal court hearing in London in November, said litigation had "effectively" been between two sets of insurers.
He said legal action began after a flood in the dining hall at Epsom College, a private school in Epsom, Surrey, in 2006 and the school's insurers' solicitors had worked on a no-win, no fee agreement - an arrangement also called a conditional fee agreement.
The school blamed a construction firm which had worked in the hall in 2003 - claiming that a worker had "negligently" driven a nail through a water pipe.
Bisley Construction, which was now in liquidation and had been renamed Pierse Contracting Southern, had disputed the claim - saying its staff had not worked on "the relevant pipes" and the nail had probably been driven in by someone else.
The school had won £21,000 damages - plus £6,000 interest - following the trial. By the end of the trial the school's costs were estimated at £165,000 and the construction firm's at £60,000, the appeal court heard.
"It is an unhappy story: although not as unhappy as it might have been had it involved uninsured litigants," said Lord Justice Rix. "I am concerned at the costs in this case. The school's estimate that on its side alone it has incurred £165,000 ... is deeply worrying. It is also worrying that no attempts appear to have been tried, despite the offers which the school was repeatedly making, at finding some common ground, as might have been achieved with the aid of a mediator."
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