Thousands of costs cases could be affected by a Court of Appeal ruling earlier this year which established that the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulation 2008 applied to conditional fee agreements (CFAs).
In the case of Cox v Woodlands Manor Care Home Ltd the failure to attach a notice of cancellation to the CFA meant the costs were assessed at nil.
The full ruling is awaited, but a briefing produced by the defendant’s solicitors, BLM, explained that it was an employer’s liability case where the claimant recovered £100,000 plus costs. Due to the nature of her injuries, her solicitors attended her at home to take initial instructions.
BLM argued that the absence of the notice of cancellation meant the CFA did not comply with the 2008 regulations and, therefore, the contract was unenforceable between the claimant and her solicitor. Applying the indemnity principle, this should mean the costs recoverable must be assessed at nil.
At the first detailed assessment, the claimant and her solicitor submitted witness evidence stating that their intention was for the CFA only to come into effect once the legal expenses insurance enquiries had been completed. District Judge Britten accepted this.
But HHJ Denyer QC granted a subsequent appeal, holding that the district judge had erred in finding that the CFA came into effect at any date other than the date it had been signed. This ruling was subsequently upheld by the Court of Appeal, meaning that the costs remained irrecoverable.
BLM went on to say: “Within the judgment, the Court of Appeal confirmed that the 2008 regulations apply to cases funded by CFAs between solicitors and their clients. The judgment confirms that solicitors satisfy the description of ‘trader’ and their client’s would be classed as ‘consumers’, under the terms of the 2008 regulations. As such, the decision will apply to all CFAs entered into between solicitors and their clients between 1 October 2008 and 13 June 2014 [when new regulations came into force].”
BLM said, “thousands” of costs cases could be affected: “It is possible that a significant number of contracts made in the home do not comply with the 2008 regulations. This would include CFAs, as in this case, and credit hire agreements. The Court of Appeal acknowledged the regret of the decision contained within HHJ Denyer QC’s judgment, but such was the unsympathetic and strict application of the 2008 regulations, a decision in the alternative was not possible.”