Forde v Birmingham City Council
| Jurisdiction | England & Wales |
| Judge | Master Campbell |
| Judgment Date | 30 April 2008 |
| Neutral Citation | [2008] EWHC 90105 (Costs) |
| Date | 2008 |
| Year | 2008 |
| Docket Number | Case No: CC 0607674 |
| Court | Senior Court Costs Office |
[2008] EWHC 90105 (Costs)
IN THE SUPREME COURT COSTS OFFICE
ON TRANSFER FROM THE BIRMINGHAM
COUNTY COURT
Clifford's Inn, Fetter Lane
London, EC4A 1DQ
Master Campbell, COSTS JUDGE
Case No: CC 0607674
Mr Roger Mallalieu (instructed by McGrath) for the Claimant
Miss Kerry Bretherton (instructed by Mirza Ahmad, Chief Legal Officer) for the Defendant
Hearing dates: 14,15,19 and 21 February 2008
Closing submissions 6 March 2008
This judgment concerns further preliminary issues about costs which have arisen during the course of housing repair litigation between Birmingham City Council (“the Council”) and its tenants. Although the Claimant in the present case is Miss Rose Forde (“Miss Forde”), in reality the dispute is between the Council and her solicitors, McGrath, about what sums, if any, are payable by the Council to McGrath for costs under the terms of a consent order sealed on 7 June 2006 (“the order”). The reason for this is that the litigation was funded by two Conditional Fee Agreements (“CFAs”) made between Miss Forde and McGrath on, respectively, 16 March 2005 (“CFA I”) and 5 April 2006 (“CFA II”). For its part, the Council contends that each CFA is unenforceable and that by operation of the indemnity principle, under which costs recoverable by a receiving party are limited to those which he is liable to pay his own solicitor, there are no costs for the Council to indemnify and accordingly its liability for any costs arising under the terms of the order is nil (see Gundry v Sainsbury [1910] KB 645).
The following are the preliminary issues with which the court was concerned during four days of argument:-
“ Issue 1
1.1 Is the second Conditional Fee Agreement unenforceable because it concerns matters contained within the first CFA?
1.2 Was it reasonable for the Claimant to enter into the second Conditional Fee Agreement? If not, what is the effect of this?
1.3 Is the second CFA unenforceable because it is retrospective?
Issue 2
Was there undue influence? If so, what is the effect of that upon:
the first Conditional Fee Agreement
the second Conditional Fee Agreement
the success fee
inter parties costs
Issue 3
If the second Conditional Fee Agreement is enforceable can this agreement be retrospective?
Issue 4
What period is covered by the second Conditional Fee Agreement?
Issue 5
Can the success fee be retrospective?
Issue 6
Is the success fee valid and/or reasonable?
Issue 7
If the second Conditional Fee Agreement is not enforceable at all or for limited periods, is the first Conditional Fee Agreement valid?”
At the hearing, Mr Roger Mallalieu appeared for Miss Forde and Miss Kerry Bretherton, in succession to Mr Mark Friston, represented the Council. Miss Bretherton relied on a skeleton argument lodged by Mr Friston on 17 June 2007, together with her own skeleton dated 4 January 2008, which raised further issues. On behalf of Miss Forde, Mr Mallalieu lodged a skeleton argument on 17 June 2007 and additionally served a supplemental skeleton on 11 February 2008 in reply to Ms Bretherton's skeleton, to which she responded the following day. In total, the five skeleton arguments ran to 90 pages, in addition to which the parties relied on the following witness statements:-
| 14 June 2007 | Graham James McGrath (McGrath 1) for Miss Forde |
| 18 July 2007 | Katherine Sally Priest (Priest 1) for the Council |
| 29 October 2007 | Katherine Sally Priest (Priest 2) for the Council |
| 29 October 2007 | Elizabeth Hilary Homfray for the Council |
| 29 October 2007 | Lisa Catherine Morgan for the Council |
| 21 November 2007 | Graham James McGrath (McGrath 2) for Miss Forde |
| 18 January 2008 | Katherine Sally Priest (Priest 3) for the Council. |
Both Mr McGrath and Ms Priest were cross-examined on their witness statements (who both gave their evidence truthfully and to the best of their knowledge). Mr Mallalieu had no questions for either Miss Homfray or Miss Morgan, but evidence was given by Anthony David Bennett Cox, a Senior Legal Adviser employed by the Legal Services Commission (“LSC”) in a witness statement dated 15 February 2008 about which he was questioned by both counsel. I also heard from Ian Heathcock, a senior case worker employed by the LSC, in compliance with a witness summons served on him by the Council on 14 January 2008. The parties had also agreed a paginated bundle of documents, (“the bundle”) to which I shall refer. Having heard argument I reserved judgment.
THE FACTS
Birmingham City Council has a very large housing stock which it rents to tenants of modest means. Historically, the Council has acknowledged that it has had a poor record in housing disrepair and that in many cases, tenants have been compelled to bring claims in order to relieve continuing disrepair. Many tenants have instructed McGrath, an established legal practice which specialises in housing disrepair claims. Litigation between the Council and its tenants can arise if breaches of the terms of the landlords' repairing covenants occur. In this event, it is open to the tenant to claim damages and/or specific performance in the County Court under s.11 of the Landlord and Tenant Act 1985. The tenant can also bring a statutory claim under s.82 of the Environmental Protection Act 1990 in the Magistrates Court. If proved or admitted, the magistrates must make an order requiring the landlord to carry out works to put the property in a fit state and to specify a timetable for doing so.
In the present case, Miss Forde suffered the effects of disrepair at 120 Quinton Road, Harborne, Birmingham, where she resided under a tenancy commenced in 1996. Between August 2001 and February 2002 she complained, inter alia, about problems with her specially adapted shower unit which had led to penetrating damp affecting the floor and walls in her kitchen and on the ceiling underneath her bathroom. She consulted McGrath Environmental Partnership (an entity in the McGrath group of solicitors) which advised her to issue s.82 proceedings. On 19 June 2004 a nuisance order was made by the Magistrates Court which required Miss Forde to vacate the premises whilst repairs were carried out. Subsequently, she notified the Council of a civil claim pursuant to s.11 and proceedings were issued on 22 February 2006. Terms of settlement were agreed on 8 June 2006 under which the Council would pay Miss Forde £5000 in full and final settlement of her s.11 claim together with her costs of the action to be assessed if not agreed. On 21 September 2006 McGrath served Notice of Commencement of detailed assessment under Civil Procedure Rule (“CPR”) 47.6. The firm's bill sought profit costs of £12,671.84 (inclusive of a success fee of £5,430.79), disbursements of £285 and vat of £2217.57, total £15,174.41. It is common ground that the damages have been paid but, pending the assessment, the costs have not.
THE CONDITIONAL FEE AGREEMENTS
CFA I: McGrath and Miss Forde entered into CFA I on 16 March 2005. The terms relevant to the issues I have to decide are the following:
“2. What is covered by this agreement
(a) proceedings brought by you against your Landlord or former landlord, Birmingham City Council arising from your tenancy and/or occupation of a dwelling house owned by your landlord and based upon breach of contract and/or a tortuous act and/or based on proceedings under the Landlord and Tenant Act 1985 and/or the Defective Premises Act 1972 and/or such other defendant against whom you have a cause of action but not including any claim based upon personal injury …
3. What is not covered by this agreement
Any appeal by your opponent against an order made in the County court, except an interim appeal where we advise you in our absolute discretion in writing that it should be opposed because you have a reasonable chance of success.
Any appeal you make against an Order made in the County court, except an interim appeal which we in our absolute discretion advise should be pursued because you have a reasonable chance of success …
4. Paying us
If you win your claim you pay our charges and expenses as set out in paragraph 5 below save where ‘reduced charges’ are due in the circumstances set out below …
We may end this agreement before you win or lose. Please see paragraph 9 for details.
Charges and Expenses
Our charges are based on the time we spend dealing with your case.
We are obliged by Law Society Rules to give you the best estimate that we can for our overall charges and expenses.
Our current estimate is that our fees are likely to be between £1,200 and £1,500 if your case does not proceed to trial, and between £1,800 to £2,200 if a trial proves necessary …
8. Reduced Charges
… [if] you are successful in recovering money from your opponent, but it is not possible to either agree that your opponent will pay your legal costs and expenses or alternatively the court does not make an order that your opponent pays your legal costs and expenses, you will only be liable to pay either the amount we would normally charge you under clause 5 above or the amount calculated in accordance with the formula below, whichever is the lower [original emphasis] figure:
If the amount of compensation recovered is £3000 or less, we will limit our charges to £1,000 plus VAT plus the full amount of any expenses incurred.
If the amount of compensation recovered is more than £3000 then we will limit our charges to no more than one third of the total compensation recovered (to which VAT will be added). Therefore this formula operates as a cap on our charges in these circumstances. Again the full amount of any expenses incurred will also be payable.
9. Ending the Agreement before your claim for compensation ends
(b) paying us if we end this agreement
(i) we can end this agreement if you do not keep...
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