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Myatt & Others v National Coal Board, 12 August 2005

8 November 2005
The issues

Costs – CFA – Sarwar – Conditional Fee Agreement – Whether CFA Was Enforceable – Whether There Was A Breach Of Regulation 4(2) CFA Regulations 2000

The facts

Four Claimants were employed by the Defendant and each suffered from noise induced hearing loss. Each case was settled for less than £5,000.00 with an agreement that the Claimant’s costs would be paid by the Defendant. The Claimants had entered into CFA’s with Ollerenshaw and orders were made in the Warwick County Court for a Detailed Assessment of those costs. Subsequently the matter was transferred to the Supreme Court Costs Office. The matter came before the Costs Judge on a preliminary issue as to whether or not the CFA in each case was unenforceable by reason of a breach of Regulation 4(2)(c) CFA Regulations 2000. Regulation 4(1) provides:- “Before a conditional fee agreement is made the legal representative must:

a) Inform the client about the following matters and;
b) If the client requires any further explanation, advice or other information about any of those matters, provide such further explanation, advice or other information about them as the client may reasonably require”.

Regulation 4(2) provides those matters are:-

c) “Whether the legal representative considers that the client’s risk of incurring liability for costs in respect of the proceedings to which the agreement relates is insured against under an existing contract of insurance”

Ollerenshaw had industrial disease claims referred to it by Beresford’s Solicitors LP. Beresford’s took initial instructions from the Claimant and the questionnaire was completed. On receipt of the fully completed questionnaire Ollerenshaw would take over the conduct of the claim. Fee earners at Ollerenshaw concerned in the claim in these cases, one gave evidence of the two and one did not. The one who gave evidence stated that she followed the firm’s standard pre conditional fee agreement procedure. This involved an initial telephone call to the client. Fee earners would go through the no win no fee oral advice check list with the client on the telephone. The fee earner would then have to complete a form confirming that certain matters had been explained to the clients, namely what constituted a win and what constituted the firm’s fees and costs; the circumstances in which costs and fees became payable; the client’s right to seek Detailed Assessment of costs; details of pre-existing legal expenses insurance and other methods of funding the claim. The client would be asked whether he has credit cards and motor insurance policy or a household insurance policy or trade union membership which would entitle him to legal expenses insurance in respect of the claim for noise induced hearing loss.

A bundle of paperwork was sent to the Claimants. A client care letter in each case referred the Claimant to the possibility of legal expenses insurance and asked the Claimant to check the policies that they had to see if they had that type of cover. The Claimant was asked to sign a form confirming that these matters had been considered and that they had no other legal cover.

It also asked them to check whether they or anyone in their household or the driver in any car which they were a passenger at the time of any road traffic accident had any pre-purchased legal expenses insurance. The Defendant argued that following Sarwar it was good modern practice to invite clients to bring with them any relevant motor insurance policies or to develop a standard form of letter requesting sight of these documents in advance of any first interview. They argued that the greater the proposed premium the greater the duty on the solicitors to carry out proper investigations. They submitted that there was no evidence that the client had had any warning of the proposed telephone call or the desirability of having available to them any insurance policies belonging to him or a member of the household. The view was the proper question was to ask clients whether they had or anyone in their household had credit cards, motor policies or household policies or Trade Union membership and if the answer to that question was yes, that the solicitors should then have asked to see the documents.

The decision

The client had been asked whether they had credit card insurance policies or Trade Union membership which would entitle him to legal expenses insurance in respect of the contemplated claim i.e. a claim for noise induced hearing loss against their former employer, the National Coal Board.

The client was being asked to interpret what could have well been complex documents. Being unsophisticated, it would have been an inadequate enquiry and not have been compliant with Regulation 4(2) (c).

There was the additional difficulty that one of the fee earners gave no evidence at all of the communication with the client.

These matters gave rise to a genuine compliance issue. At the very least the clients should have been asked to send the relevant policy documents or copies of them to the solicitors for the solicitors to inspect.

It appeared likely, although there was no evidence one way or the other that the solicitors gave no warning to the Claimants that they would be interviewing them on the telephone and that they should have any relevant documents to hand.

The Court was also not satisfied that the solicitors had in fact asked about relevant documents belonging to other members of the client’s household.

The ATE premiums were high when seen in the light of the size of each claim. More thorough enquiries should have been made by the Solicitors about the possibility of BTE insurance which would have made the ATE insurance and CFA success fees unnecessary.

The preliminary issue had to be answered to the effect that the CFA in each of the four cases was unenforceable by reason of a breach of Regulation 4(2) (c) CFA Regulations 2000.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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