Costs News

10 December 2015
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Court of Appeal gives broad meaning to definition of ‘win’ in CFA

The Court of Appeal has found that a claimant won her case for the purposes of her conditional fee agreement (CFA) even though the defendant, which paid her damages, was not named in it.

Last week’s decision in Linda Engeham v (1) London & Quadrant Housing Ltd (2) Academy of Plumbing Ltd (in voluntary liquidation) – with a bench made up of the Master of the Rolls, Lord Dyson, with Lords Justice Floyd and Simon – has so far only been published on Lawtel.

The second defendant was appealing against a decision that the outcome of the claimant's personal injury action was a win for her within the terms of the CFA she had made with her solicitors.

She brought the claim after her bathroom ceiling fell on her. She initially intended to sue the first defendant, her landlord, and this was recorded in the CFA, but the second defendant was later identified as a potential party.

The claim was pursued against both defendants and was settled against them under a Tomlin order on payment of £10,000 by the second defendant plus costs to be assessed if not agreed. The claimant sought to recover her costs from the second defendant.

Principal Costs Officer Lambert found that the CFA did not cover the claim against the second defendant and the costs claim was therefore disallowed for breach of the indemnity principle. Master Haworth upheld that decision. Judge Mitchell in the Central London County Court, sitting with the then Senior Costs Judge, Master Hurst, overturned it on appeal, holding that the claimant had derived benefit from the claim irrespective of who had to pay. Therefore, she was liable for her solicitors' costs under the CFA and entitled to recover them from the second defendant.

The Court of Appeal found that it was not realistic to say the claimant had not won. The Lawtel report said: “The parties could not have contemplated that only the first defendant could pay. The Tomlin order was an agreement to pay damages for the purposes of the CFA. It was not relevant that it was the second rather than the first defendant paying. The county court had been correct to allow the claimant to recover her solicitors' costs from the second defendant. Appeal dismissed.”

Matthew Hoe, partner and head of costs litigation at Taylor Rose Law, the solicitors acting for the second defendant, said: “We are disappointed that the Court of Appeal construed the Law Society standard CFA ‘win’ clause so widely that damages from any person were enough to amount to a win against the defendant named in the CFA. The working understanding of practitioners had been for the narrower view that there must be an agreement to pay by or award against the named defendant – which is, of course, what normally happens. 

“Several county court cases on similar points now appear doubtful. Cases where the claimant’s solicitor does not have a CFA identifying the correct or all defendants do pop up from time to time, and those solicitors may now be comforted that they have a chance of recovering at least some costs. Paying parties might be more cautious about what costs terms are agreed when not all defendants are paying.”

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