| COSTS — Detailed assessment — Conditional fee agreement — Conditional fee agreements made by claimants in personal injury actions without disclosure by solicitors of “interest” in after the event legal insurance recommended by solicitors— Defendants’ solicitors refusing to pay claimants’ costs on basis of failure to disclose interest — Whether membership of insurance scheme amounted to “interest” — Courts and Legal Services Act 1990, s 58(1)(3) as substituted by Access to Justice Act 1999, s 27(1) — Conditional Fee Agreements Regulations 2000 (SI 2000/692), reg 4(2)(c)(e)(ii)
Jones v Attrill; Hibberd v Michael Jane Hair & Beauty; Tankard v John Fredericks Plastics Ltd (Law Society intervening)[2008] EWCA Civ 1375; [2008] WLR (D) 383
CA (Sir Anthony Clarke MR, Dyson and Jackson LJJ): 11 December 2008
The purpose of reg 4(2)(e)(ii) of the Conditional Fee Agreement Regulations 2000 was to ensure that a solicitor acted and gave advice independently of his own interest. To determine whether, for the purposes of that regulation, a solicitor had an interest in recommending a particular insurance contract to his client, the test was whether a reasonable person with knowledge of the relevant facts would think that the existence of the interest might affect the advice given by the solicitor to his client, and if so, the interest should be disclosed.
The Court of Appeal so held, (1) allowing the appeal of the claimant, Mark Jones, against the decision of District Judge Dancey in the Southampton County Court on 25 February 2008, in favour of the defendant, Karl Joseph Attrill; (2) dismissing the appeal of the defendant, Michael Jane Hair & Beauty, against the decision of Costs Master Wright in the High Court of Justice Supreme Court Costs Office on 17 March 2008 in favour of the claimant, Yvonne Hibberd; (3) allowing the appeal of the claimant, Kier Tankard, against the decision of District Judge Sykes in the Liverpool County Court on 6 February 2008. In the first and third cases the judge held that the claimant’s solicitors were in breach of regulation 4(2)(e)(ii), the conditional fee agreement was unenforceable and no costs were recoverable from the defendant for part of the claimant’s bill of costs. In the second case he held that the claimant’s solicitors had no interest to disclose.
SIR ANTHONY CLARKE MR, giving the judgment of the court, said that in each of the three appeals the claimant claimed damages for personal injuries against the defendants and made a conditional fee agreement (“CFA”) with his or her solicitors. The claims against the defendants all succeeded, the defendants being held liable to the claimants in costs. The defendants said that the claimants’ solicitors were in breach of the Conditional Fee Agreement Regulations 2000 in that they failed to disclose to their client that they had an “interest” within reg 4(2)(e)(ii) and in consequence, the CFA was unenforceable against the claimants. If that were correct, the effect of s 58 of the Courts and Legal Services Act 1990, as substituted by the Access to Justice Act 1999, was that the claimant was not entitled to recover some or all of the costs claimed against the defendants. The issue was in reality between the claimants’ solicitors and the defendants or their insurers. The 2000 Regulations were repealed from 1 November 2005 by the Conditional Fee Agreements (Revocation) Regulations 2005 (SI 2005/2305) but there were a large number of disputes to be resolved under the 2000 Regulations. To determine whether, for the purposes of reg 4 of the 2000 Regulations, a solicitor had an interest in recommending a particular insurance contract the test was: would a reasonable person with knowledge of the relevant facts think that the existence of the interest might affect the advice given by the solicitor to his client. Reg 4 was concerned with giving the client who was considering entering into a CFA sufficient information to enable him to take a properly informed and considered decision. He could only do so if he was given information and advice which was not in any way affected by the solicitor’s self-interest. The purpose of the regulation was to ensure that the solicitor acted and gave advice independently of his own interest. The test satisfied that purpose because it ensured that any interest of the solicitor which might affect his or her advice was notified to the client. If a reasonable person with knowledge of the relevant facts would think that there might be such a risk, the client had to be informed of the interest. If such a person would think that there was no such risk, there was no need to communicate the alleged interest. Their Lordships considered the insurance scheme in question and concluded, applying the test set out, that none of the solicitors in the three appeals had an “interest” which ought to have been disclosed.
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Appearances: (1) Michael Pooles QC and Roger Mallalieu (Walton Mills & Co, Southampton) for the claimant and Jeremy Morgan QC and Alexander Hutton (Beachcroft LLP) for the defendant in Jones v Attrill; (2) Robert Marven (QM Solicitors, Liverpool) for the defendant and Benjamin Williams (Leigh Day & Co) for the claimant in Hibberd v Michael Jane Hair & Beauty; (3) Nicholas Bacon (Warner Goodman LLP, Southampton) for the claimant and Robert Marven (QM Solicitors, Liverpool) for the defendant in Tankard v John Fredericks Plastics Ltd. Richard Drabble QC and David Holland (Law Society) for the intervenor.
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