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Ibbertson v Sampson(1) & MFI & Howdens Joinery(2), Supreme Court Costs Office, 30 January 2009

20 April 2009
The issues

Costs – CFA – insurance – Conditional Fee Agreement Regulations 2000 Reg 4(1) – reasonableness of instructing London solicitors.

The facts

The Claimant had an accident when she was a passenger in a car driven by the First Defendant. The claim was settled without the issue of proceedings in March 2007 when the Claimant accepted £100,000.00. The Defendant agreed to pay the Claimant’s costs. The matter proceeded to Detailed Assessment. The Claimant’s solicitors, Pattinson & Brewer, acted under a Conditional Fee Agreement dated 21st January 2005. Pattinson & Brewer recommended an insurance policy to cover the Defendant’s costs provided by Freeclaim IDC. Costing £418.95, including IPT. They recommended the policy as having competitive premiums and providing an appropriate level of indemnity cover. The Claimant was told by letter that Freeclaim referred cases to Pattinson & Brewer but that this had not influenced the firm’s recommendation to take out this particular policy. The issue for the Costs Judge was whether the Claimant’s solicitor acted in sufficient compliance with Regulation 4 of the CFA Regulations 2000. Regulation 4 requires a legal representative to inform a client and, if the client required any further explanation, to provide advice or other information about any of those matters and in particular as to whether or not the legal representative considered any particular method or methods of financing any or all of the costs to be appropriate and if he considered that a contract of insurance was appropriate or recommended a particular such contract and, in particular, as to his reasons for doing so and whether he had an interest in doing so.

The decision

In Tankard v John Fredericks Plastics Ltd, the Master of the Rolls had made it clear that the solicitor had to disclose to the client the true nature of his interest in recommending the insurance so that the client could make the necessary informed decision. This would entail explaining to the client the nature of the benefits to the solicitor in receiving recommendations from Freeclaim IDC. In this case there had been no full disclosure of interest.

The witness statement from the Claimant firm was very short. It did not set out in detail the nature of the relationship between the firm and Freeclaim IDC, as would have been expected. If there was in fact no relationship other than the fact of recommendations without any quid pro quo, this should have been in the witness statement. On the evidence, this particular client was very cautious about entering into the CFA and had required detailed explanations about its terms and effect. It was therefore even more important that a full disclosure should have been made to her to enable her to make an informed decision as to whether any interest which her solicitor had in recommending the particular insurance, would affect their ability to act for her without any conflict of interest.

The receiving party had argued that the breach of Regulations had no material affect on the protection afforded to the Claimant. This was rejected. The Master of the Rolls had made it clear in Tankard that the Regulations had to be construed in a way that would ensure that the solicitor disclosed to the client a true nature of his interest in recommending the insurance so that the client could make the necessary informed decision. Failure to make a proper disclosure could not be considered to be de minimus or an immaterial breach. For these reasons the CFA dated the 21st January 2005 was unenforceable.

The Claimant lived on the Isle of Wight. Pattinson & Brewer were based in the West end of London and charged London rates. There was no evidence before the Costs Judge as to why a London solicitor was instructed. The Costs Judge would have expected the Claimant or her solicitor to set out the reasons in a witness statement as to the facts surrounding the instruction of London solicitors. The test was whether or not the Claimant acted reasonably in not instructing local solicitors. Although this was a serious case, there were many solicitors in the Southampton area and the South of England that dealt with high value personal injury claims and in the absence of evidence to support the Claimant’s submissions that she acted reasonably in instructing London solicitors, it was unreasonable to do so and were the matter to have proceeded further, the hourly rates that would be allowed would be based on those relevant to a firm of solicitors based in the Southampton area.

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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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