Practice and Procedure


PUBLISHED May 22, 2003

The Court of Appeal gave guidance on the interpretation of ss.58 and 58A Courts and Legal Services Act 1990 and regs.2, 3 and 4 Conditional Fee Agreements Regulations 2000 SI 2000/692.Appeals heard together by the Court of Appeal from the decisions of county court judges and the Supreme Court Costs Office relating to aspects of the new conditional fee agreement ('CFA') regime which came into effect in April 2000 under the Conditional Fee Agreements Regulations 2000 SI 2000/692. Because of the prevalence of challenges by defendant liability insurers to CFAs on the ground that they did not comply with the regulations and because of demands by defendants to see claimants' CFAs during costs assessment proceedings, the Civil Appeals Office brought together a number of appeals raising important points of practice. The appeals raised three distinct issues: (i) the circumstances in which a court should put a receiving party in detailed assessment proceedings to its election, so that it had to choose whether to disclose its CFA to the paying party or to endeavour to prove its claim by other means; (ii) the proper construction of the words "satisfies all of the conditions applicable to it" in s.58(1) Courts and Legal Services Act 1990 and whether any costs or disbursements were recoverable from a paying party in the event of non-compliance with the regulations; and (iii) whether in particular cases the requirements of reg.2, 3 and 4 of the regulations had been complied with.HELD: (1) The paying party should be entitled to object to paying costs which he had been ordered to pay if they were made payable by a conditional fee agreement which was not rendered enforceable by s.58(1) of the 1990 Act (Bailey v IBC Vehicles Ltd (1998) 3 All ER 570 distinguished). Where there was a CFA a costs judge should normally exercise his discretion under the Costs Practice Direction and the procedure in Pamplin v Express Newspapers Ltd (1985) 1 WLR 689 so as to require the receiving parties (subject to their right of election) to produce a copy of the CFA. The CFA could if necessary be edited to remove confidential information. Attendance notes prepared by the receiving party's solicitors showing compliance with reg.4 should not ordinarily be disclosed. (2) A CFA was a contentious business agreement to which s.60(3) Solicitors Act 1974 applied. If the solicitor could not enforce the agreement against his client, then the amounts provided for in the agreement were not payable by the client at all and could not be recovered from the other side. The key question in considering whether a CFA satisfied all the conditions applicable to it within s.58(1) of the 1990 Act was whether they had been sufficiently complied with in the light of their purposes. If a particular departure from a regulation or requirement of the section had a materially adverse effect either upon the protection afforded to the client or upon the proper administration of justice, then the conditions had not been satisfied. Materiality would depend on the circumstances of the case. There was no distinction in this respect between the requirements in reg.2, 3 and 4. (3) In Worth v McKenna and Pratt v Bull the decisions of Judge Cotterill and Judge Marshall-Evans QC that the CFA entered into by the receiving party need not be disclosed to the paying party were wrong and were set aside and the defendants' appeals were allowed. (4) In Hollins v Russell and Tichband v Hurdman (2002) LTL 4/11/2002 Judge Holman and Judge Tetlow were wrong to hold that the CFAs did not comply with the regulations and were unenforceable for that reason. Any departure in those cases from the requirement of reg.2(1)(d) to specify the amounts payable or the method of calculation had no materially adverse effect on the protection provided for the client or the administration of justice. The allegation of failure to comply with reg.3(1)(b) in Tichband also failed. The claimants' appeals in Hollins v Russell and Tichband v Hurdman were allowed. (5) In Pratt v Bull, Dunn v Ward and Sharratt v London Central Bus Co Ltd (No.1) (2003) LTL 16/5/2003 allegations of non-compliance with reg.4 failed. (6) The defendant's appeal in Dunn v Ward was dismissed. Regulation 4(2)(e)(ii) only required a solicitor to state whether he had an interest in recommending a particular CFA if he did have such an interest and not if he did not. The solicitors had complied with the requirements of reg.4(5) to explain the effect of the CFA in writing to the client. (7) In Sharratt the reg.4 information was given to the claimants by someone who qualified as the "legal representative" for the purposes of that regulation. The person who actually gave the reg.4 advice did not have to be someone who was qualified to conduct litigation services. In principle a solicitor could delegate his reg.4 responsibilities to, in this case, a representative of The Accident Group Ltd, while remaining professionally responsible for the performance of that person. The defendants' appeal in Sharratt was dismissed.Judgment accordingly.* On 25 June 2003, the Court of Appeal gave judgment on costs. On the basis that costs of arguments that failed should not be disallowed as the case was highly complex and all arguments warranted full examination by the Court, the issue of costs would be looked at as a whole. In Hollins v Russell, the claimant was entitled to costs throughout, ?7,500 on account of costs and the rest to be determined at detailed assessment. In Tichband v Hurdman, the claimant was entitled to costs throughout and indemnity costs from the date on which a letter of offer could have been sent in, £1,000 on account of costs and the rest to be determined at detailed assessment. In Dunn v Ward, the claimant was entitled to costs, £20,000 on account of costs and the rest to be determined at detailed assessment. In Pratt v Bull, the costs before district judge level to await final determination by assessment and Pratt to have costs before the circuit judge and the Court of Appeal from September 6 2002 because if the offer made had been accepted, all additional costs would have been saved. In Worth v McKenna, the district judge's order to be set aside and the matter to go back to the district judge.

[2003] EWCA Civ 718