In Hollins v Russell, the Court of Appeal made it clear that only a material breach of the Condition...
In Hollins v Russell, the Court of Appeal made it clear that only a material breach of the Conditional Fee Agreement Regulations 2000 would render a CFA unenforcable, although did not go on to give any specific examples of what would constitute such a breach. It merely ruled the breach had to have a materially adverse effect either on the claimant or on the proper administration of justice.
The Court of Appeal handed down its judgement in Spencer v Wood on 15 March 2004. The CFA stated the success fee was 75% and the reason for calculating it at this level was set out in the schedule. The schedule, however, made no reference to the proportion of the success fee relating to the cost to the solicitors of the postponement of payment of fees and expenses.
The risk assessment did say the postponement element was 50%. As a result, the CFA failed to comply with regulation 3(1)(b) as it was not clear what percentage of the success fee the claimant would have to bear. This breach had a materially adverse effect and the CFA was, therefore, unenforcable.
However, in Bowen v Bridgend County Borough Council, involving 11 housing disrepair cases heard by Master O' Hare on 25 March 2004, regulation 3(1)(b) had been breached but it was concluded the financial resources of the claimants were such that it was unlikely the solicitors would ever pursue them for any part of the success fee not recovered from the defendant.
There was, therefore, no adverse effect on the claimants. The CFAs were unenforcable, however, because the solicitor should have advised the claimants to seek legal aid, rather than enter into the CFAs, and a breach of regulation 4(2)(d) did have a materially adverse effect.
These cases demonstrate there is a fine line as to whether or not a CFA will be found to be enforceable. - Adam Lidster, BLM London.
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