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Richards v Davis, Supreme Court Costs Office, 25 November 2005

14 December 2005
The issues

TAG Scheme – CFA Regulations 2000 Regulation 4 – Sarwar – ATE Policy – Whether There Was A Breach Of The Conditional Fee Agreements Regulations Where Claimant Had Not Been Asked To Produce His Motor Policy

The facts

The Claimant suffered his accident on 18th January 2001. Rowe Cowen wrote to him on 8th February 2002 telling him that they had been recommended by Accident Group to act on his behalf. In the usual way a copy of the documentation that he would need to sign and alerted him to the fact that a representative of the Accident Group would contact him by telephone very shortly to telephone him and arrange an appointment to see him to ensure that he understood the nature of the agreement. Suddenly he returned a solicitor practice Rule 15 letter together with a CFA agreement which he was asked to read before signing and return to the solicitors. The TAG representative saw the Claimant on 19th February 2002 when the Claimant signed a client care letter.

On the same day he signed the CFA.

The Claimant circled the relevant parts of the fact-find and oral explanation sheet he had been provided with to confirm that he did not have legal expenses cover. In fact he did have such cover through DAS. The Claimant asserted that there were multiple breaches of Regulation 4 in that the TAG representative could not provide further explanation because he was not allowed to depart from his script; that the client was told nothing of his potential liabilities in the event that a Part 36 Offer was not beaten; that there was no proper consideration as to whether the client was insured under a BTE policy; no explanation at all about other methods of financing the costs because of the unsatisfactory fiction that the client was already committed to TAG.

The decision

The Claimant argued that following the TAG mediation the Defendant’s case amounted to abuse of process. That could not be the case because the Defendant insurer concerned was not party to that mediation. The situation would have been different had a group litigation order been made but it had not been.

Following Sarwar solicitors were required to take active steps to check the BTE position before entering into a CFA. In this case neither the solicitors nor the TAG representative ever asked Mr Richards for sight of his motor insurance policy.

Neither the TAG representative nor the solicitors had considered whether the client’s risk of incurring liability of costs was insured against an existing contract of insurance. The solicitor had never read through the policy as was envisaged by Sarwar. The fact that the Claimant may deliberately or mistakenly have misled the solicitors in his reply to the questionnaire merely underlined the necessity for a solicitor to read through the policy. It was therefore a clear breach of Regulation 4(2) (c) in that the Claimant was never asked to produce his motor policy.

The protection afforded to the client was adversely affected and there was an adverse effect on the proper administration of justice when costs claimed were unnecessarily inflated by excessive claims for ATE premiums. The CFA was therefore unenforceable and nothing was recoverable under it. As to the ATE premium, although it was theoretically recoverable, the evidence was such that there was in existence a DAS LEI policy. Whether had proper investigation been carried out this policy would have been found to be appropriate was not a question now it was possible to answer. The Claimant had however previously made a claim under an existing DAS BTE policy – no effort had been made to consider the appropriateness of that policy – and therefore it was unreasonable and disproportionate to have taken out the TAG policy. The ATE premium was therefore not recoverable.

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