Jones v Caradon Catnic Ltd
8 December 2005
[2005] EWCA Civ 1821; [2006] 3 Costs LR 427
Citation: [2005] EWCA Civ 1821
Facts:
A CCFA provided that the solicitor should carry out a risk assessment and that the amount of the success fee should not exceed 100%. In this case the solicitor carried out a risk assessment which provided for a success fee of 120%, and that was the success fee shown in the document retained on the solicitor's file and claimed by the solicitor until shortly before a hearing for directions as to a preliminary issue on breach of the statutory scheme. The solicitor then accepted that the success fee was capped at 100%. The defendant argued that there was a breach of the indemnity principle and, having failed before the district judge and on appeal to the circuit judge, obtained permission to appeal to the Court of Appeal.
Held:
(i) Notwithstanding the 100% cap in the CCFA itself, there was a clear breach of the Act and the CFAs Order 2000 in having a statement of a success fee which exceeded 100%.
(ii) There was no materially adverse effect on the client, as there were no circumstances in which the client would have had to pay the success fee. Accordingly this was not a case in which the Court's attention should be devoted to consumer protection or client protection.
(iii) It was a case in which attention should be devoted to the administration of justice. It was possible that the other side might not have an eye on the limit on the statutory scheme, though the Senior Costs Judge, acting as assessor, advised the Court that this was highly unlikely. Also with problems of this kind one ran into the difficulty that there had to be a preliminary issue which held up the smooth running of the case contrary to the overriding objective and took up resources of the court unnecessarily. If the Court were to hold this breach immaterial the Act and the Order would be to a considerable extent rendered a dead letter because any breach would, on the claimant's argument, be immaterial.
(iv) On any showing this was a more serious breach than the trivial breaches set out in Hollins and Tichband.
(v) Per Laws LJ: the concept of materially adverse effect must not be allowed to undermine the force of the Act. If the Court were to allow so stark a departure from the 100% maximum specified in the Order it would be acting against the grain of the policy objectives of the Act.
(vi) The appeal would be allowed.
Comment:
The decision is an important one as the Court adopted a less liberal approach to the construction of CFAs than in Hollins. In particular the Court held that there was a breach of the indemnity principle despite apparently finding that there was no materially adverse effect on the client and appears to have followed the approach of Samonini to the administration of justice.
Jeremy Morgan QC and Vikram Sachdeva acted for the respondent.