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Thornley v Lang, Newcastle County Court, 14 March 2003

14 March 2003
The issues

Costs – CFA – success fee.

The facts

The Claimant was a member of the Trade Union and a bus driver and had a claim for personal injuries following a road traffic accident. His action was compromised in the sum of £2,349.67 plus reasonable costs. Part 8 proceedings were issued in respect of the costs. The costs sought included a 20% success fee pursuant to a Collective Conditional Fee Agreement between the Solicitors and the Union. The Defendant argued that the Claimant had never agreed to pay the success fee and that pursuant to the Indemnity Principle, the success fee was not recoverable as costs. The District Judge found that the Collective Conditional Fee Agreement Regulations 2000 applied to the agreement and that the success fee therefore was recoverable.

The Defendant Appealed.

The decision

1. There was an agreement between the Union and the Solicitors providing for a
20% success fee.

2. A Client Care letter had been sent by the Solicitors to the Claimant stating that
the Claimant was liable for his legal costs and potentially those of the other side but providing an indemnity to him from the Union.

3. Putting aside the issue of enforceability of a Conditional Fee Agreement under
Section 58 of The Courts and Legal Services Act 1990, the Claimant was otherwise under an obligation to pay that success fee because “the factual matrix” of the client care letter could be construed to include the 20% success fee.

4. However, any Conditional Fee Agreement purporting to involve the Claimant fell foul of Section 58. Although the Client Care letter might have constituted a contract in writing, it failed to comply with Regulations 2, 3, 4 and 5 of the Conditional Fee Agreements Regulations 2000 and was therefore unenforceable. Consequently, the success fee as costs would offend the Indemnity Principle.

5. However, Section 58A(6) introduced into the 1990 Act by Section 27 of the Access to Justice Act 1999 provided that if in any proceedings a Costs Order was made in favour of a member the costs payable to him might include “an additional amount in respect of any provision made by or on behalf of the body÷” The effect of Section 58A(6) of the 1990 Act and Section 30(2) of the 1999 Act says that the costs orders that they provided for could be made notwithstanding that such orders might infringe the Indemnity Principle and therefore provide an exception to the rule to the Indemnity Principle.

6. Whilst there was no enforceable Conditional Fee Agreement to which the Claimant was a party, no argument has been put that the Collective Conditional Fee Agreement between the Union and the Solicitors was other than in conformity with the Collective Conditional Fee Agreement Regulations.

Appeal dismissed

Comments

This would appear to be a rather unfortunate coach and horses driven through the Collective Fee Agreement Regulations as far as the paying party is concerned.

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