Plevin v Paragon Personal Finance Ltd (No 2)
| Jurisdiction | England & Wales |
| Judge | Lord Sumption,Lady Hale,Lord Clarke,Lord Carnwath,Lord Hodge |
| Judgment Date | 29 March 2017 |
| Neutral Citation | [2017] UKSC 23 |
| Court | Supreme Court |
| Date | 29 March 2017 |
[2017] UKSC 23
Lady Hale, Deputy President
Lord Clarke
Lord Sumption
Lord Carnwath
Lord Hodge
Appellant
PJ Kirby QC
Thomas Bell
(Instructed by Harrison Clark Rickerbys Solicitors)
Respondent
Robert Marven
Andrew Clark
(Instructed by Miller Gardner Solicitors)
Heard on 6 February 2017
(with whom Lady Hale, Lord ClarkeandLord Carnwathagree)
On 12 November 2014, this court gave judgment dismissing Paragon's appeal and ordering them to pay Mrs Plevin's costs in the Supreme Court [2014] UKSC 61. Those costs were subsequently assessed by Master O'Hare and Mrs Registrar di Mambro in judgments given by them on 5 February 2015.
Costs in the Supreme Court were high, mainly because Mrs Plevin's solicitors were acting under a conditional fee agreement ("CFA"), with after the event insurance ("ATE"). They were assessed at £751,463.84, including £31,378.92 for the solicitors' success fee and £531,235 for the ATE insurance premium. It need hardly be said that these sums are wholly disproportionate to the relatively modest amount at stake, in the event just £4,500. This was a common feature of the costs regime introduced by the Access to Justice Act 1999, which ultimately led to its abrogation on the recommendation of Sir Rupert Jackson's Review of Litigation Costs (2010). Subject to transitional provisions, the 1999 costs regime was brought to an end with effect on 1 April 2013 by Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.
Rule 53 of the Rules of the Supreme Court provides for a party dissatisfied with an assessment of costs made at an oral hearing to apply for any question of principle arising from an assessment to be reviewed by a single Justice, who may refer the matter to a panel of Justices. Paragon applied for a review of the costs assessment on two grounds, both of which raise questions of principle. The first ground relates to the success fee. It is said that the CFA was made with the solicitors originally instructed by Mrs Plevin and was not validly assigned to the two firms who successively replaced them on the record. The second ground relates to both the success fee and the ATE premium. It is said that they were not recoverable, because they were payable under arrangements made by Mrs Plevin after the 2012 Act came into force. The application was referred to me as a single Justice. I referred it to the full panel which sat on the substantive appeal, because the second ground raised questions of some general importance. For the same reason, we are dealing with the matter by a formal judgment delivered in open court.
Mrs Plevin entered into a CFA with her original solicitors, Miller Gardner, on 19 June 2008. Subsequently there were two technical changes of solicitor. They were technical because they both arose out of organisational changes within the same firm. In July 2009, the partners of Miller Gardner reconstituted themselves as an LLP. This was done by appointing administrators of the old partnership, who entered into an agreement with a new firm, Miller Gardner LLP, transferring specified assets to it. In April 2012, Miller Gardner LLP transferred its business to a limited company, Miller Gardner Ltd, under an agreement in similar terms. The point taken by Paragon is that on neither occasion was the CFA validly assigned to the new firm. There was therefore, they say, no effective retainer at the time when costs were incurred in the Supreme Court. The costs judges rejected this argument. I can deal with this point shortly, for in my view it has no merit and was rightly rejected.
It is common ground that the CFA was in principle assignable. Paragon's argument is based on the terms to the two successive transfer agreements made between the successive Miller Gardner entities.
The operative clause of the 2009 transfer agreement was Clause 2.1, which transferred ten categories of asset to the new firm "to the intent that the Buyer shall from the Transfer Date carry on the Business as a going concern." The only relevant category of assets for present purposes is "the Work in Progress". This is defined in Clause 1.1 as meaning "all partly completed goods or services allocated by the Seller or the Administrators to the Contracts." "Contracts" means "the contracts, instructions, orders and engagements placed with the Seller … by its clients insofar as they have not been fully performed by the Transfer Date." Paragon's argument is that "Work in Progress" includes only work already done at the transfer date. It does not, they say, cover further work on the same matter done thereafter. If this were correct, it would mean that the only right of the successor firm was to bill the clients for work done before the transfer date, leaving them with no solicitor to act for them other than the defunct shell of the old firm. This plainly cannot have been intended. The point about work in progress is that it is in progress, and Clause 2.1 expressly transfers the work in progress "to the intent that the Buyer shall from the Transfer Date carry on the Business as a going concern."
The relevant provisions of the 2012 transfer agreement are substantially the same, except that the words just quoted are absent. However, the intention that the practice should be carried on is equally plain.
It is right to add that even if the argument were sound, it would lead nowhere. Shortly after each transfer, on 30 July 2009 and 30 April 2012, the new firm wrote to Mrs Plevin informing her about the change, referring to the CFA and saying that they would "continue to represent you on the same terms and conditions as previously." Mrs Plevin plainly assented to that by continuing to instruct them.
Section 27 of the Access to Justice Act 1999 amended the Courts and Legal Services Act 1990 by inserting new sections 58 and 58A. These authorised conditional fee agreements between litigants and their legal representatives, which might include provision for a success fee. Section 58A(6) provided that rules of court might provide for the success fee to be recoverable as costs. Section 29 provided that where ATE insurance was in place against the risk of incurring liability for costs, rules of court might provide for the premium to be recoverable as costs. Rules of court were subsequently made requiring both the success fee and the ATE premium to be included in the costs awarded to a party. At the relevant time the rules were contained in CPR Part 44. These arrangements were abrogated by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 ("LASPO"). The Act amended the Courts and Legal Services Act 1990. Section 58A(6) of the Courts and Legal Services Act 1990 (as amended by section 44(4) of LASPO) now provided that a success fee may not be recoverable as costs. Section 58C(1) (as amended by section 46(1) of LASPO) made similar provision for ATE premiums, except that their recovery in clinical negligence actions might be authorised by regulations. These changes came into force on 1 April 2013, subject to transitional provisions. It is on the transitional provisions that the present issue turns.
The CFA originally agreed with Miller Gardner in 2008 covered all proceedings up to and including the trial, and all steps taken to seek leave to appeal from an adverse result at the trial. On 8 August 2013, the Court of Appeal having given leave to appeal from the dismissal of Mrs Plevin's case by the trial judge, she and Miller Gardner entered into a deed of variation extending the CFA to cover the conduct of the appeal. On 3 January 2014, the Court of Appeal having allowed the appeal and given leave to appeal to the Supreme Court, there was a further deed of variation extending the CFA to cover the appeal to the Supreme Court.
LASPO section 44(6) provides that the amendment of the 1990 Act to prevent the inclusion of a success fee in the assessed costs
"does not prevent a costs order including provision in relation to a success fee payable by a person ("P") under a conditional fee agreement entered into before the day on which that subsection comes into force ("the commencement day") if
(a) the agreement was entered into specifically for the purposes of the provision to P of advocacy or litigation services in connection with the matter that is the subject of the proceedings in which the costs order is made, or
(b) advocacy or litigation services were provided to P under the agreement in connection with that matter before the commencement day."
Paragon's case is that in relation to the proceedings in the Court of Appeal and the Supreme Court the variations of August 2013 and January 2014 were new agreements entered into after 1 April 2013 for the provision of litigation services after that date. They were not therefore covered by the transitional provisions of section 44(6) of LASPO. This is in my judgment a bad point. The "matter that is the subject of the proceedings" means the underlying dispute. The two deeds of variation provided for litigation services in relation to the same underlying dispute as the original CFA, albeit at the appellate stages.
It follows that unless the effect of the deeds was to discharge the original CFA and replace it with new agreements made at the dates of the deeds, the success fee may properly be included in the costs order. Whether a variation amends the principal agreement or discharges and replaces it depends on the intention of the parties. To establish a discharge and replacement, "there should have been made manifest the intention in any event of a complete extinction of the first and formal...
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