Wigg & Co - unenforceable
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contention that Solicitors who support an unsuccessful impecunious
Claimant under a Conditional Fee Agreement may be personally liable for
the Defendant's costs as maintainers of the litigation is still awaited.
Reasons for holding Claimant's Conditional Fee Agreement to be
unenforceable see Decision of Costs Judge Master Rogers in the case of
Woods -v- Chaleff and Others SCCO Reference PRO108754, 0108755.
Section 58 of the Court's and Legal Services Act 1990 referred to
together with Conditional Fee Agreements Regulations 1995.
Reference was also made to wording of Conditional Fee Agreements
Regulations 2000 although it was the 1995 Regulations which applied in
It was considered whether Rule 3 (9) of the CPR might provide an escape
route for the Claimant but this was restricted to sanctions imposed by
any "Rule, Practice Direction or Court Order", and did not
extend, nor indeed could it extend, to a Statutory Instrument.
It was also held that Conditional Fee Agreement between Solicitors and
Counsel could not be considered independently of the Regulations and the
agreement as between Solicitors and Counsel was also unenforceable.
The Costs Judge held that at the time that Counsel's Conditional Fee
Agreement was entered into it was not permissible to enter into such an
agreement at Common Law.
See also Nicola Bowen -v- Bridgend County Borough Council", and 10 other cases against the Defendant on 25th March 2004, SCCO reference 0309853 concerning Consent Orders made in housing disrepair cases, which were treated as informal test cases. All these cases were funded by way of a CFA agreement claiming a 100% success fee, supported by an after event insurance policy, issued by "Fast Track Indemnity Limited". The 6 points which were common to all cases
(i) The enforceability of the CFA's,
(ii) The effect in these cases of Legal Aid,
(iii) The amount of success fee on profit costs,
(iv) Questions of proportionality,
(v) The recoverability of the fees paid to "Fast Track Litigation Services Limited" for the housing reports, video evidence, and risk assessment reports and, lastly,
(vi) The fees paid for surveyors reports, also the recoverability of VAT on invoices issued by the company or firm variously described as "Street Legal UK", the figure for "Street Legal UK" and "Street Legal UK Limited".
CFAs - Champerty
Benain (UK) Ltd v Davies Middleton & Davies Ltd TCC NLJ 23 April
2004. There was no requirement in S58 of the 1990 Act or in the
Conditional Fee Agreements Regulations 2000 (S12000 No 692) that
prohibits the determination of the amount of uplift subject to its
maximum of 100% by reference to the amount recovered. Equally there is
no expression exclusion from the scope of S58 of a CFA whereby the
lawyer would recover some part of his client's winnings. The requisite
conditions remain satisfied even if the percentage uplift was calculated
by reference to the amounts recovered provided only that it did not
Liability of Litigation
See Pinco v Phillips ChD 16 September 2003. A clear distinction was to
be drawn between disinterested, in the sense of commercially
disinterested, funders on the one hand and those interest stood to be
advanced by a successful outcome of the litigation on the other and a
funder who had interest in the outcome may be ordered to pay costs of
Liability of Litigation
See Arkin v Borchard Lands Ltd, Zim Israel Navigation Co Ltd &
Others and Managers and Processors of Claims (Part 20 Defendants) (2002)
EWHC 2844 (COMM). A professional funding company entered into a funding
agreement with the Claimant whereby it funded the employment of expert
witnesses. The funder relied upon a decision of the Court of Appeal in
Hamilton v Al Fayed (2) 2003) 3 All ER 641 and R (Factortane Ltd) v
Transport Secretary (No 8) (2003) QB381 which they maintained clarified
the main principles relevant to the exercise of the Court's discretion
to make a costs order against a non-party funder. The objective of
providing access to the Courts to impecunious Claimants has now been
given much greater weight than previously relative to other
countervailing aspect of public policy. It would seem that those who are
supported by funders who are impecunious have a very distinct advantage.
Those who may sue are on a hiding to nothing - they get no costs if they
win and they pay the other party's costs if they lose.
The judgment of Mr Justice Colman leaves the impecunious Claimant and
his professional funder with the luxury of having no exposure to the
Defendant's costs, see Arkin v Borchard Lands No 2) (2003) WHC 2844 (COMM)
(23/LLP4). In this case the success Defendants brought an action against
Managers and Processors of Claims Ltd (MPC) under S59 of the Supreme
Court Act 1981 seeking recovery of their costs. Under S51 the Courts
discretion may be exercised to award costs. MPC were the professional
insurers of the Claimant. Neither the Claimant nor MPC took out after
the event (ATE) insurance which would have provided for all costs to be
paid including those of the Defendant. The Claimant's Counsel and
solicitors had signed a separate agreement with the Claimant to work on
a conditional fee basis. This CFA allowed them a 100% uplift on their
costs if they succeeded on the Claimant's behalf. The MPC/Claimant
agreement provided for MPC to receive 25% of damages up to £5m and 23%
of damages in excess of £5m. The Defendants have been given leave to
appeal to the Court of Appeal and a decision is awaited. Having regard
to this decision made it will be interesting to see whether attempts
will be made to obtain costs order against ATE Insurers whose policies
frequently ensure that they retain some control over litigation
proceedings. If actual control/interference is established then it is
likely that the agreement will be held to be illegal regardless of the
needs of access to justice.
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