Jones v Wrexham Borough Council
| Jurisdiction | England & Wales |
| Judge | Lord Justice Waller,Lord Justice Longmore,Lord Justice Hughes |
| Judgment Date | 19 December 2008 |
| Neutral Citation | [2007] EWCA Civ 1356 |
| Docket Number | Case No: A2/2006/2514 A2/2007/1275 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 December 2008 |
[2007] EWCA Civ 1356
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MANCHESTER COUNTY COURT
His Honour Judge Holman
4MA 70460
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Waller
Vice President of the Court of Appeal, Civil Division
Lord Justice Longmore and
Lord Justice Hughes
Case No: A2/2006/2514
And
A2/2007/1275
Nicholas Bacon (instructed by Messrs Birchall Blackburn Solicitors) for the Appellant
Jeremy Morgan QC (instructed by Messrs Beachcroft LLP) for the Respondent
Hearing date: 22nd October 2007
This court, differently constituted, has had to consider on a number of occasions conditional fee agreements (CFAs). By s.58 of the Courts and Legal Services Act 1990, as substituted by s.27(1) of the Access to Justice Act 1999 such agreements, to be enforceable had to be in writing; must relate to proceedings, which could be the subject of an enforceable fee agreement and had to comply with such requirements (if any) as might be prescribed by the Lord Chancellor. (See s.58(3)). The requirements of the Lord Chancellor were set out in the Conditional Fee Agreements Regulations 2000 (SI 2000 No 692). The unsatisfactory way in which satellite litigation had mushroomed with challenges to the enforceability of CFAs, by reference to those regulations, was spelt out in the judgment of the court, prepared by Brooke LJ in a decision dealing with a number of cases including Hollins v Russell and Sharratt v London Central Bus Company Limited and other cases [2003] EWCA Civ 718 [2003] 1WLR 2487.
As that history demonstrates, the challenges to enforceability by reference to the 2000 Regulations had been on the whole, not by the clients the regulations were designed to protect, but by defendants, who having accepted liability in the main proceedings then resisted liability under the order for costs in the claimant's favour. The court in the above decision sought to discourage the taking of technical points by defendants on the 2000 Regulations.
By Conditional Fee Agreement (Revocation) Regulations 2005 ( SI 2005 No 2305) all previous CFA regulations were revoked as from 1 November 2005, leaving parties from that date to enter into CFAs on the basis of the primary legislation. But as recognised in Garrett v Halten Borough Council [2006] EWCA Civ 1017 [2007] 1 WLR 554, despite the 2005 Regulations, there remained many points arising on the 2000 regulations by reference to CFAs entered into prior to 1 November 2005. That appears still to be the case.
This appeal is concerned with such a case. The defendants challenge the enforceability of a CFA, relying on a breach of the 2000 Regulations. The point taken is somewhat similar to the point taken in Garrett, i.e. that there was a failure to comply with Regulation 4(2)(e)(ii) relating to the requirement to inform the client of any “interest” the solicitors might have in recommending a particular insurer. Although Mr Bacon and those previously representing the claimant, seeking to uphold the validity of the CFA in this case, have sought to distinguish Garrett they have more significantly contended first before District Judge Fairclough and on appeal from the district judge's decision before His Honour Judge Holman that Regulation 4 had been disapplied by the Conditional Fee Agreement ( Miscellaneous Amendments) Regulations ( SI 2003 No 1240) (the 2003 Regulations) and the CFA with which we are concerned is a 'CFA Lite' within those regulations. By the 2003 Regulations the 2000 Regulations were amended so as to insert a regulation 3A in the following terms:—
“3A – (1) This regulation applies to a conditional fee agreement under which, except in the circumstances set out in paragraph (5), the client is liable to pay his legal representative's fees and expenses only to the extent that the sums are recovered in respect of the relevant proceedings, whether by way of costs or otherwise.
(2) In determining for the purposes of paragraph (1) the circumstances in which a client is liable to pay his legal representative's fees and expenses, no account is to be taken of any obligation to pay costs in respect of the premium of a policy taken out to insure against the risk of incurring a liability in the relevant proceedings.
(3) Regulations 2, 3 and 4 do not apply to a conditional fee agreement to which this regulation applies.
….
(5) A conditional fee agreement to which this regulation applies may specify that the client will be liable to pay the legal representative's fees and expenses whether or not sums are recovered in respect of the relevant proceedings, if the client –
(a) fails to co-operate with the legal representative;
(b) fails to attend any medical or expert examination or court hearing which the legal representative reasonably requests him to attend;
(c) fails to give necessary instructions to the legal representative; or
(d) withdraws instructions from the legal representative.”
The 2003 Regulations came into force on 2 June 2003. Some point is made by Mr Morgan QC for the respondents that it is simply a matter of chance if the 2003 Regulations do apply, since the CFA with which this appeal is concerned was one which was in a form produced in 2001 and which purported to be an agreement complying with the 2000 Regulations. The CFA was dated 19 June 2003 and was sent to Mrs Jones on 2 June 2003 under cover of what is known as the Rule 15 letter, and it thus was pure chance that the 2003 Regulations applied, if they do.
In one sense one sees the point being made by Mr Morgan but, since the 2003 Regulations were amending the 2000 Regulations, it seems to me no more than a forensic point to the effect that the solicitors may not have had the terms of the 2003 Regulations in mind but (if I may say so) I do not see where that takes Mr Morgan.
The appellants were successful in their contention that the 2003 Regulations applied before District Judge Fairclough, who delivered a judgment on 11 April 2006. In essence, he allowed reliance on what is described as the Rule 15 letter and reliance on the recoverability of disbursements under an insurance policy, so as to reach the conclusion that the CFA fell within the Regulation 3A. However, on appeal before His Honour Judge Holman the appellants were unsuccessful, the judge ruling that the letter was not an admissible resource when construing the CFA contract and also ruling that, if the fees could be met by insurance, it followed that the liability was that of the client, since an insurance company simply indemnifies the clients against a liability. It was for that reason that His Honour Judge Holman then went on to consider Regulation 4 of the 2000 Regulations and reached the decision that there had been non-compliance with Regulation 4 and that the CFA was unenforceable for failure to inform the client of an interest.
The main issue on the appeal before us is whether the CFA in this case fell within Regulation 3A, but before coming to that regulation I should set out briefly the background facts against which the issues on this appeal arise. In this case the claimant, a child, was injured on 1 September 2002. On 16 May 2003 her mother entered into a loan agreement and insurance policy with Claims Bureau UK (CBUK). The certificate of insurance covers the pursuit of a personal injury claim arising out of the accident and, provided that the appointed representative should be a panel solicitor of CBUK, to be advised. There was a limit of indemnity of £25,000. CBUK referred the matter to Birchall Blackburn, a panel solicitor. The solicitors wrote to Mrs Jones on 2 June 2003 confirming acceptance of instructions and setting out in detail what is commonly known as the client care letter, written pursuant to Rule 15 of the Law Society's Solicitors' Practice Rules. The letter requested the signing of a CFA, which was a document of some five pages, referring to and incorporating a further five pages of Law Society conditions. The Rule 15 letter recommended the insurance with CBUK for the reasons set out in the CFA. By the terms of the CFA it was stated that CBUK “litigation insurance cover is only made available to you by solicitors who have joined the scheme.” But by the final term of the CFA the solicitors stated “We confirm that we do not have an interest in recommending this particular insurance agreement.”
Was the CFA within the Regulation 3A?
This is the first occasion on which this court has had to consider the 2003 Regulations. Indeed it is striking that in Garrett reference was made to the fact that by the date of that decision the 2005 Regulations had come into effect and to the fact that the decision was still important because of the number of outstanding disputes relating to CFAs under the 2000 Regulations. No mention, however, was made of the 2003 Regulations at all. As we are advised by Senior Costs Judge Hurst, who, as so often has been the case, has helpfully assisted this court in its deliberations, that is because solicitors have not often intended, at least with any deliberate intent, to use the 2003 Regulations. Why that is we are not clear and perhaps it matters not. But it seems probable that following Garrett a number of CFAs were at risk if Regulation 4 of the 2000 Regulations applied and that has led to consideration as to whether some CFAs were actually within Regulation 3A, inserted by the 2003 Regulations.
The background to the 2003 Regulations was explained by the then Master of the Rolls, Lord Phillips of Worth Matravers in speeches that he...
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