Costs

Conditional fee agreements - agreements to be disclosed to paying party - guidance to costs judges as to allegations of breach of conditions

Hollins v Russell; Tichband v Hurdman; Dunn v Ward; Pratt v Bull; Worth v McKenna; Sharratt v London Central Bus Co Ltd and other cases: CA (Lords Justice Brooke, Hale and Arden): 22 May 2003

The paying parties in a number of personal injury actions brought on the basis of conditional fee agreements (CFAs) appealed against costs orders made in five cases in county courts and three cases in the High Court , alleging breaches of the Conditional Fee Agreements Regulations 2000 made under section 58 of the Courts and Legal Services Act 1990 (as amended by section 27 of the Access to Justice Act 1999).

Richard Drabble QC and David Holland (instructed by the Law Society and Gruber Garrett) for the Law Society as intervening party for the claimant in the first case; Guy Mansfield QC and Nicholas Bacon (instructed by Coleman-Cutts and Amelans, Manchester) for the claimant in the second and third cases; Jonathan Dingle (instructed by The Stokes Partnership, Crewkerne) for the claimant in the fourth case; Nicholas Bacon (instructed by Irvings, Liverpool) for the claimant in the fifth case; Ian McLaren QC and Andrew Hogan (instructed by DLA, Manchester) for the defendants in the first five cases; Ian Burnett QC, Deborah Taylor and Benjamin Williams (instructed by Beachcroft Wansboroughs, Carters, Peterborough, and Vizards Wyeth respectively) for the defendants in the High Court cases; Timothy Charlton QC and Nicholas Bacon (instructed by Rowe Cohen, Manchester) for the claimants in the High Court cases.

Held, that the paying party should be protected by the indemnity principle; that a paying party could not be ordered to pay a receiving party more by way of costs than the receiving party was himself liable to pay and should be entitled to object to paying costs if they were made payable by a CFA which was not rendered unenforceable by section 58(1); that, where a success fee was claimed, the costs judge should order the receiving party to disclose the CFA pursuant to paragraph 40.14 of the costs practice direction in order to ascertain whether it was enforceable, but subject to the right of election whether to decline disclosure and instead to rely on other evidence; that a CFA would only be unenforceable if, in a particular case, the conditions applicable to it by virtue of section 58 had not been sufficiently complied with in the light of their statutory purposes designed to safeguard the administration of justice, protect the client, and acknowledge the legitimate interests of the other party to the litigation; and that immaterial breaches should not render a CFA unenforceable.