Jones v Wrexham Borough Council
19 December 2007
[2007] EWCA Civ 1356; [2008] 1 WLR 1590
Citation: [2007] EWCA Civ 1356; [2008] 1 WLR 1590
Facts:
The claimant instructed solicitors in a personal injury claim just after the coming into force of the CFA (Miscellaneous Amendment) Reg. 2003, which introduced the "CFA Lite" regime into the 2000 Regulations. The solicitors sent the client a Rule 15 letter enclosing the CFA. The letter was counter-signed by the client 2 days after she had signed the CFA. The CA held that a fair reading of the letter was that the client would not be liable to the solicitors for any fees or expenses unless they withdrew instructions, that disbursements would be covered by insurance and if, for any reason, they were not, no liability for disbursements would fall on the client. It was accepted that, if the CFA were a CFA Lite, the obligations of the solicitor to give explanatory information to the client pursuant to Reg. 4 of the 2000 Regulations did not apply. Reg. 3A(1) CFA Regs. 2000, which created the Lite regime, provided, "This regulation applies to a CFA under which ... 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 costs or otherwise" (emphasis added).
The circuit judge had held that the CFA was not a CFA Lite and that there was a breach of Reg. 4, so the claimant launched two appeals, one in relation to the Lite point and the second in relation to the finding on Reg. 4.
The facts in relation to Reg. 4 were that the solicitor was on a claims management company's panel and had received this case from that claims management company. The standard CFA and Rule 15 letter prescribed by the claims management company required the solicitor to recommend the use of the tied ATE insurance policy. In fact the client had applied direct to the claims management company for insurance and a certificate had been issued before the case was referred to the solicitors. Nevertheless the solicitors used the standard CFA and Rule 15 letter recommending the policy. The solicitors had advised the claimant that they had no interest in doing so. Below the solicitor had put in a witness statement to the effect that he had, on one occasion, advised a client in a similar situation who had BTE insurance to rely on the BTE insurance and not use the ATE policy, and had done so without adverse impact on his status on the claims management company's panel.
Held:
(1) "Or otherwise" in Reg. 3A(1) was not confined, as the respondent submitted, to recovery by damages or other monetary award. The words were apt to include the situation where part of the solicitor's fees and expenses were covered by insurance.
(2) To the extent that the CFA document itself had features which were not "Lite" it was overridden by the Rule 15 letter. There was no statutory requirement for the CFA to be a single document. Both the letter and the agreement were signed by both parties. The fact that the client's signature to the letter post-dated that on the CFA was irrelevant as the client would have read the letter before she signed the CFA.
(3) The CFA was therefore a CFA Lite and Reg. 4 did not apply.
(4) However, the Court dealt with Reg. 4.
(5) The Court rejected the appellant's submission that the duty to advise under Reg.4(2)(e) did not apply where, as here, the insurance was "existing" by the time the solicitor was instructed. Reg. 4(2)(c), (d) and (e) applied cumulatively, whether or not insurance was in place.
(6) It was an obvious inference from the scheme documentation, including the Operations Manual which required solicitors to use the precedent CFA and Rule 15 letter, that if solicitor ignored these requirements and recommended a different policy, resulting in cancellation of the existing policy, considerable damage would be done to the solicitor's business relationship with the claims management company.
(7) The facts of the case were indistinguishable from Garrett v Halton BC [2007] 1 WLR 554 and, had Reg. 4 applied, the CFA would have been unenforceable.
Comment:
This follow-on from Garrett is of practical importance for a number of reasons, and each side in the costs war can take some comfort from it. (1) The finding that "or otherwise" can include insurance will send solicitors in potential trouble over their CFAs rushing to read the small print of their client care letters and CFAs to see whether an agreement which they never thought of as Lite might not be Lite after all. (2) The relaxed approach to the relationship between Rule 15 letters and CFAs will also reassure claimants' solicitors, though not all Rule 15 letters will have been signed by clients. (3) Defendants and insurers will be pleased to see the robust approach to evidence on the effect of panel membership for the purposes of Reg. 4.