Kerry Underwood

CONDITIONAL FEE AGREEMENTS AND THE CORRECT OPPONENT: MORE CONFUSION

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In Malone v Birmingham Community NHS Trust [2018] EWCA Civ 1376 (19 June 2018)

the Court of Appeal allowed an appeal by a claimant against a first instance decision that the Conditional Fee Agreement was ineffective as the wrong defendant had been named and thus, due to the indemnity principle, there was no liability on the losing defendant to pay costs.

This was a personal injury action and the relevant part of the Conditional Fee Agreement provided that it covered:

 

All work conducted on your behalf following your instructions provided on [     ] regarding your claim against Home Office for damages for personal injury suffered in 2010.”

 

In the event the claim succeeded against Birmingham Community NHS Trust, and not the Home Office, although there had been uncertainty about who was responsible for the claimant’s medical care as he was a prisoner.

The Court of Appeal, in allowing the appeal, accepted that, on the facts of the case, the reference to “Home Office” described the instructions received, rather than the work to be done, and related to past instructions, rather than future work.

 

The Court of Appeal considered the Supreme Court decision in

 

 Wood v Capita Insurance Services [2017] UKSC 24

 

to the effect that context is a useful tool for determining the objective meaning of words, where, as here, the drafting was so poor.

There was no commercial reason to limit the claim to a particular defendant, nor was it in the interests of the parties to do so, especially given the uncertainty as to the correct defendant.

The decision, fair on the facts, does not actually deal with the position where the wrong defendant is named, as compared with stating what work is covered.

In that scenario there remained conflicting decisions and my advice to never name the defendant remains –

see my blogs –

CFAS: NEVER NAME THE DEFENDANT! (1)

CFAS: NEVER NAME THE DEFENDANT! (2)

 

In particular the Court of Appeal here distinguished the decision in

 

Law v Liverpool City Council [2005] EWHC 90020 (costs)

 

rather than overruling it.

 

 

“31. The defendant places considerable reliance on the decision of HHJ Stewart QC (as he then was) in Law v Liverpool City Council [2005] EWHC 90020 (costs), as did the judges below. In that case the CFA was stated to cover: “Your claim against Liverpool City Council for damages for personal injury suffered on 26th March 2003”. Proceedings were brought against the Council as the occupier of the property where the injury was suffered and a defence was served. Subsequently the Council stated that the property had been transferred shortly prior to the accident to a housing association, which was then added as a second defendant. The claim continued against both defendants and was settled by them, with both defendants acknowledging liability in principle for costs, subject to any points about the CFA. The housing association contended that as the CFA had never been varied to include it, there was no CFA in relation to the claim against it.

 

 

  1. HHJ Stewart QC held that the claim against the housing association was not covered by the CFA. His stated starting point was that a CFA which covers a claim against one defendant cannot be construed to encompass a claim against another defendant. He said that the fact that parties are often added to claims should be dealt with by careful drafting of the CFA or by appropriate amendments.

 

  1. There are a number of obvious differences between that case and the present one. In particular: (i) the wording used was more specific and restrictive – “Your claim against Liverpool City Council…”; (ii) there was no apparent careless drafting; (iii) the Council was an appropriate defendant; (iv) the Council remained a defendant up to and including settlement. It is also to be noted that the argument that the wording used was meant to be merely descriptive rather than prescriptive does not appear to have been raised. HHJ Stewart QC’s starting point bypassed that issue. In any event, little assistance is to be derived on issues of construction such as this from different cases, on different facts, involving materially different wording.”

 

 

Thus, contrary to what has been reported, this decision clouds, not clarifies, the issue.

 

Unsurprisingly, the ever astute Simon Gibbs, in his blog has got it right:

 

 

The impact of this decision is likely to increase, rather than decrease, the level of satellite litigation generated where the incorrect opponent is named in a CFA. The decision gives significant encouragement to paying parties that such a challenge may fall into the Law v Liverpool City Council category, whilst offering a glimmer of hope to receiving parties that the full factual matrix will be found to be favourable to them.”

 

 

Comment

 

How about a Supreme Court Diktat that a statement in a Conditional Fee Agreement that it covers “your personal injury matter” shall be deemed sufficient. That still leaves the paying party able to challenge costs on the usual grounds, of necessity, reasonableness and proportionality etc., but avoids these sterile, technical challenges.

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Written by kerryunderwood

July 11, 2018 at 9:57 am

Posted in Uncategorized

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