This judgment was handed down remotely at 10.30am on 14 March 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
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LORD JUSTICE COULSON:
1.Introduction
- The issue in this second appeal is whether the Conditional Fee Agreement ("CFA") entered into between the respondent (the claimant in the original proceedings) and his solicitors Boyes Turner LLP ("BT") on 24 March 2015, had retrospective effect. Both the Costs Judge and Lavender J decided that it did. The appellants, who were the unsuccessful defendants in the original proceedings, challenge that conclusion.
2.Background
- This appeal can be seen as a final attempt by the appellants to avoid the cost consequences of what has been, for them, a disastrous piece of litigation. In 2015, the respondent, in his capacity as liquidator of MSD Cash and Carry PLC, commenced proceedings against the appellants (former directors and others concerned with the running of MSD) in the Business and Property Courts. The trial, before His Honour Judge Hodge KC, was concerned with allegations that the appellants had sought (through void dispositions, a false credit note and other illegitimate means) to diminish the assets available to the respondent. Judge Hodge found against the appellants, describing them as untruthful and dishonest witnesses and repeatedly making adverse findings against them (see the judgment at [2018] EWHC 1325 (Ch)).
- Judge Hodge KC subsequently ordered the appellants to pay the respondent's costs of the proceedings on an indemnity basis. This was because, as he put it, their conduct "both before and during the proceedings, has been so far outside the norm of commercial litigation in general that it is appropriate that the costs should be assessed on the indemnity basis": see [84] of his costs judgment ([2018] EWHC 4033 (Ch)). That decision was not appealed.
- The assessment of those costs was, however, a highly contentious affair. Numerous issues were raised before Costs Judge Nagalingam ("the Costs Judge"), which were heard over no less than seven separate hearings. The fifth hearing, on 20 September 2021, was taken up with the determination of the question whether the CFA was retrospective. The Costs Judge heard evidence from the respondent and from the relevant former solicitor at BT, Mr Branson.
- In his judgment of 3 December 2021 (SCCO ref: PN1904239) the Costs Judge concluded that the CFA was retrospective. He set out the evidence of the respondent and Mr Branson in some detail between [2]-[46]. He then set out Mr Dunne's submissions at [47]-[88], Mr Taussig's submissions at [89]-[124], and Mr Dunne's counter-submissions at [125]-[137]. He explained the reasons for his conclusion that the CFA was retrospective between [138]-[188]. Those reasons were based on the wording of the CFA and what he found, as a matter of fact, to be features of the past working relationship between the respondent and Mr Branson.
- Particularly important findings seem to me to be the following:
(a) The respondent had originally entered into a written retainer, by way of retainer letters dated 31 March 2011 and 28 March 2012, in respect of the claim against the appellants [156].
(b) There was also an oral agreement broadly to the effect that, in the event of no realisations from the assets, BT would either waive or reduce their charges. This could not be an oral CFA since a CFA has to be in writing [157].
(c) "Part of the background knowledge I find would have been available to the parties includes, in my view, the past working relationship of Messer's Ingram and Branson on behalf of their respective employers Grant Thornton UK LLP and Boyes Turner. I accept the evidence in this regard that these two persons had engaged in an established form of instructions which acknowledged that in certain classes of insolvency cases, namely where there had been an underlying fraud, the realisation of assets was necessary in order to fund both the insolvency proceedings and the associated legal fees. That background knowledge is relevant to the context within which the March 2015 CFA was entered into" [161].
(d) "Mr Ingram's evidence is that at all stages he as the Claimant understood the written CFA would be retrospective and that this was consistent with previous instructions of Boyes Turner, and consistent with a common pattern of work undertaken in insolvency cases where the instructed solicitor risked going unpaid or underpaid if assets in the insolvency could not be sufficiently realised" [167].
- The appellants appealed the decision on retrospectivity and other aspects of the costs judge's conclusions on costs. The appeal was heard by Lavender J, sitting with Costs Judge Rowley (as he then was) as an assessor. Lavender J's judgment is at [2023] EWHC 3488 (KB). He upheld the decision of the Costs Judge on retrospectivity. The relevant part of his judgment is at [8]-[29]. Much of that part of the judgment is taken up with Lavender J's consideration of the appellants' arguments that the Costs Judge had failed to have regard or give sufficient weight to certain matters of fact. As to the CFA itself, Lavender J had no difficulty in concluding, very shortly at [28]-[29], that on its proper construction, the CFA was retrospective. It is the retrospectivity issue alone that is the subject of this second appeal.
3.The CFA
- The primary parts of the CFA relevant to the appeal were clauses 2 and 4.1 which provided as follows:
"2. What is covered by the Agreement
2.1 The Claim.
2.2 Any appeal made by the Client against an interim order during the proceedings.
2.3 Any appeal by the Defendant.
2.4 Proceedings to enforce a judgment, order or agreement.
…
4.1 Successful Claim
If the Client wins the Claim it will be liable to pay to the Firm, when sufficient funds have been realized from the Defendants or any third party on their behalf and if insufficient funds are recovered such payments will be in accordance with clause 15 of the Conditional Fee Agreement dated 17 November 2014 between David Ingram and John Briggs:
(i) the Basic Charges;
(ii) the Success Fee; and
(iii) any Disbursements."
- It is also important to identify some of the relevant definitions, set out in clause 1. These include:
""Basic Charges" means the charges of the Firm for the work done by the Firm for the Client In relation to the Claim as reflected in the Firm's standard terms of engagement letter, a copy of which has already been supplied to the Client.
"Claim" means the application by the Client in his capacity as Liquidator of MSD PLC against the Defendant in relation to MSD Cash and Carry Plc - in Liquidation in respect of which the firm has been engaged since 30 March 2012.
"Success Fee" means a percentage of the Basic Charges that the Firm will add to the Basic Charges if the Client wins the Claim. The amount of the Success Fee is shown in Schedule "A". Neither the amount of the Success Fee nor that of the Basic Charges or Disbursements is calculated or limited by reference to any damages or other sums recovered by the Client. The reasons for setting the Success Fee at the level referred to above are set out In Schedule "A"."
- During the course of oral argument, Mr Dunne, on behalf of the appellants, also drew our attention to clauses 6.1 and 15.1. and 15.2, which are in the following terms:
"6. The Firm's Responsibilities
6.1 The Firm will:
(i) always act in the Client's best interests in pursuing the Claim, subject to its duty to the Court and its professional obligations and duties;
(ii) subject to Clause 6.1(1), assist the Client, if requested, in obtaining Insurance in respect of Clause 5.1;
(iii) give the Client its best advice about whether to accept any offer of settlement;
(iv) explain to the Client the risks and benefits of taking any legal action; and
(v) give the Client the best information possible about the likely costs of the case.
15 Explanatory Matters
15.1 The Firm has already drawn to the Client's attention orally and in writing the effect of this Agreement and In particular the following matters:
(i) Public Funding (formerly known as Legal Aid).
The Firm has informed the Client that Public Funding is not available in respect of the Claim.
(ii) Liability to pay the Firm's costs and expenses
This has been explained by the Firm to the Client as set out in Clause 4.
15.2 The Client acknowledges that the matters referred to in Clause 15 have been explained orally and in writing by the Firm."
4.The Issues on Appeal
- The Grounds of Appeal were framed in the following terms:
(1) The judge was wrong to find that the conditional fee agreement signed between the Claimant and his solicitors on 24th March 2015 was expressly retrospective. The term as to retrospectivity was not express, clear or unambiguous.
(2) The judge was wrong to find that the combination of terms contained within the CFA was sufficient to amount to an express term on retrospectivity so as to disapply the presumption that a CFA will not be retrospective.
(3) The judge erroneously treated the definition of "the Claim" and use of the word "Claim" in clauses 2 and 4 of the CFA as an express and unambiguous term on retrospectivity, notwithstanding the fact that the definition of "the Claim" could reasonably be interpreted as a pure description of the proceedings. The fact that the term "Claim" was capable of having more than one meaning ought to have led the judge to conclude that it was not an unambiguous term on retrospectivity.
(4) The judge failed to take into account (either sufficiently or at all) and failed to give proper weight to the "matrix of fact" which included clear evidence that the signatories to the CFA had no commercial imperative to sign a retrospective CFA.
(5) The judge failed to take into account at all or failed to give proper weight to the "matrix of fact" which included clear evidence of the fact that the solicitor had at no time explained (or even mentioned) to their client that the CFA was designed to have retrospective effect (in a clear breach of their regulatory duties). The judge was wrong to dismiss this highly relevant fact.
- I propose to deal with these issues in the following way. In Section 5 below, I deal briefly with the law as to the interpretation of contracts (because there was a difference between the parties' respective approaches); the few statutory provisions relating to CFAs'; and the authorities. In Section 6, I set out the proper construction of the CFA and address Grounds 1, 2 and 3 of the Appeal. In Section 7, I deal with the factual background and context of the CFA, and address Grounds 4 and 5 of the Appeal. There is a short summary of my conclusions in Section 8.
5. The Law
Contractual Interpretation
- The principles as to the construction of commercial contracts are too well known to be set out at any length here. In short, what matters are the words used, when seen in their contractual context and against their factual background: see Woods v Capita [2017] AC 1173 at [12]. Perhaps the most user-friendly summary of the principles to be derived from the wave of Supreme Court decisions on this issue in the last 15 years is that of Popplewell J (as he then was) in Lukoil Asia Pacific (PTE) Limited v Ocean Tankers (PTE) Limited ("Ocean Neptune") [2018] EWHC 163 (Comm) where he said at [8]:
"The court's task is to ascertain the objective meaning of the language which the parties have chosen in which to express their agreement. The court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. The court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to the objective meaning of the language used. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other."
The Formal Requirements of a CFA
- Section 59 of the Solicitors Act 1974 provides:
"[A] solicitor may make an agreement in writing with his client as to his remuneration in respect of any contentious business done, or to be done, by him."
That plainly covers work which had been carried out ("done") prior to the making of any written agreement. Section 58(3) of the Courts and Legal Services Act 1990 provides that a CFA must be in writing, but there is nothing in that section which qualifies the statutory provision in s.59 that an agreement, including a CFA, can cover work already carried out by a solicitor prior to the CFA.
Retrospective CFA's
- That CFAs could be retrospective was expressly confirmed by Christopher Clarke J (as he then was) in Birmingham City Council v Forde [2009] EWHC 12 at [123] where he said:
"Generally speaking parties are entitled to make, and often do make, an agreement which applies to the period before they made it. Section 59 of the Solicitors' Act 1974, which permits a solicitor to make an agreement for remuneration in respect of contentious business "done, or to be done, by him", contemplates a retrospective agreement …"
- Mr Dunne drew our attention to the particular term of the CFA in that case which defined "basic charges" as:
"These are for work done from when you first instructed us until this agreement ends. You are agreeing to pay us for work done before the signing of this agreement in consideration of our continuing to act on your behalf in connection with this case . . ."
He submitted that this was a clear clause providing retrospectivity, and he was critical of the CFA in the current appeal by comparison with that wording.
- Speaking for myself, I did not consider that submission very helpful because it seemed to fall squarely into the trap identified by Leggatt J (as he then was) in Tartsinis v Navona Management Co. [2015] EWHC 57 (Comm) at [62], when he said that it was:
"…seldom, if ever, helpful in deciding how to interpret particular contractual provisions to refer to a case in which a court has interpreted different provisions of a differently worded contract made in a different factual context."
The 'Presumption' and The Alleged Need for Retrospectivity to be Express
- In many ways, the high watermark of the appellants' case was the obiter remark of Lord Neuberger MR in Motto v Trafigura [2011] 1WLR 657 at [61]:
"[A]lthough of course solicitors and their clients can agree terms otherwise … the natural presumption in a contract by which a person engages a solicitor to act for him must be, in the absence of such a term, that he is agreeing to pay for work done in the future, not for work already done."
- I have a certain amount of difficulty with this statement, which did not arise from the issues in the case, and which is not linked to any authority. Perhaps it is doing no more than noting that a contract of any sort is usually agreed at the outset of the relationship between the parties, rather than part way through. But even if, which I doubt, he was intending to suggest that there was some special presumption in law that a solicitor-client relationship is prospective only, Lord Neuberger made plain that that was subject to the obvious qualification that solicitors and their clients "can agree terms otherwise". That seems to me to recognise that, ultimately, these things are always a matter of contract.
- Mr Dunne also argued that any term as to retrospectivity had to be express. He derived this principle from Holmes v Alfred McAlpine Homes (Yorkshire) Limited [2006] 3 Costs LR 466 where the dispute was concerned, not with retrospectivity as such, but with the effect of backdating a contract. Stanley Burnton J noted at [19] that they were very different things. He went on to say:
"A properly drafted agreement would have borne the date on which it was executed, but would have expressly provided for its application to work done from the prior date agreed by the parties."
- Again, speaking for myself, this seems to offer rather scant support for an argument that a retrospectivity provision must always be express. Stanley Burnton J was talking there about a different topic (backdating), and simply expressing a view about what a properly drafted agreement might have said. Furthermore, for what it is worth, I note that the learned editors of Friston on Costs, fourth edition, at paragraph 29.129, note that retrospective effect may arise by implication, and cite in support of that proposition the decision in Northern & Shell PLC v John Laing Construction Limited [2002] EWHC 2258 (TCC) at [40(2)], upheld on appeal. I can see no reason why, as a matter of general principle, such a term could not be implied into a CFA, provided always that the necessary test for implication has been made out. But since implication does not arise in the present case, I need say no more about it.
The Difference between the Proper Construction of a CFA and Regulatory Breaches
- It is the appellants' case that BT were in breach of the relevant Code of Conduct because they failed to give advice to the respondent as to the costs consequences of his agreement to the retrospective CFA. Of course, there was a slightly artificial element to that argument, given that the respondent was, on the Costs Judge's findings of fact, entirely happy with the CFA and always understood that it was retrospective. But the point throws into relatively stark relief the potential difference between, on the one hand, the validity or effect of a CFA and, on the other, alleged regulatory breaches by the solicitors raised, not by the client, but the paying party, at the end of the case.
- In Garbutt v Edwards [2005] EWCA Civ 1206, the point was taken by the paying party that, because the solicitors had failed to advise the client about the estimate of costs, there was breach of the relevant Code, thus rendering the entire retainer unenforceable. That argument was rejected. At [31] Arden LJ said:
"In making these Rules, the Council of the Law Society is acting in the public interest…the inference I would draw is that the Code is there to protect the legitimate interests of the client, and the administration of justice, rather than to relieve paying parties of their obligations to pay costs which have been reasonably incurred."
She went on to explain why a breach of the Code did not render the whole contract unenforceable.
- I accept Mr Dunne's submission that Garbutt was a different case to the present appeal, not least because the appellants here are not arguing that the alleged failure on the part of BT rendered the CFA unenforceable. However, I consider that Garbutt is of some assistance, because it demonstrates the fundamental difference between arguments as to the validity or effect of the contract between the solicitor and client, and a breach of a regulatory Code, which might give rise to disciplinary proceedings.
6.The Proper Construction of the CFA
- I start with the proper construction of the CFA, applying the test summarised at paragraph 13 above. It is agreed that the CFA was made on 24 March 2015. It is also agreed – indeed, it is expressly recorded in the CFA – that BT had been working on the respondent's claim against these appellants since 30 March 2012. Did the CFA cover the work done by BT between those two dates?
- I consider that the answer to that question is Yes: the CFA was plainly retrospective. The CFA was concerned primarily with the work – the work by BT - which it covered. Clause 2.1 provided that the work that was covered was BT's work on the Claim. The Claim was defined as the respondent's claim against the appellants which had been in existence since before the CFA was agreed. No division was made in the CFA between different elements of the work that had been done by BT in the past or would be done in the future: on its face, the CFA covered all the work done and to be done in respect of the Claim. However, for clarity, the CFA reiterated the fact that the work done or to be done on the Claim was indivisible by stating expressly (in the definition of the Claim) that this work went back to 30 March 2012. So there was no division between one type of BT's work on the Claim and another, and there was no temporal distinction either: it was all covered by the CFA.
- In this way, I consider that anyone reading this CFA would have understood that it was retrospective because it covered – without distinction – the work done on the Claim from 13 March 2012 up to the date of the CFA, and all the work to be done on the Claim thereafter.
- The Costs Judge's conclusion as to the construction of the CFA can be found at [178]-[179] in these terms:
"178 Further, "the Claim" is referenced under the definition for "Basic Charges", which "means the charges of [Boyes Turner] for the work done by [Boyes Turner] for the Client in relation to the 'Claim' as reflected in [Boyes Turner's] standard terms of engagement letter…". I note that in direct contrast with counsel's earlier CFA, there is no express term that the solicitor CFA covers only work which post-dates the CFA, and there is no reference to work 'to be' done. The CFA simply permits remuneration for work done by the solicitor where that work relates to the 'Claim', with no distinction drawn between past work and future work.
179. When additionally taking into account the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of entering into the CFA, I consider the CFA to expressly provide for retrospective application to costs incurred since 30 March 2012."
- I agree with that analysis. Mr Dunne argued that the Costs Judge was wrong because there had to be clear language to differentiate between the work done prior to the CFA and the work done thereafter. I disagree with that in principle – there are no rules that the drafting of a CFA has to follow a particular form - but I consider that in any event the work on the Claim did not require to be differentiated any further than it was, because it was plain that all BT's work on the Claim, from the beginning, was covered by the CFA.
Ground 1: Clarity
- Mr Dunne suggested that the provisions of the CFA were not clear and unambiguous, and were in some way insufficient to allow the court to construe them as retrospective in effect. I had originally understood Ground 1 to be a continuation of the appellants' argument below that, because there was no provision in the CFA which expressly used the word "retrospective" (or something very like it), the CFA could not be retrospective. That argument was dismissed both by the Costs Judge and by Lavender J. To the extent that it was pursued on appeal, I too would dismiss it as wholly unarguable. The question is what the words mean in their context. As I have said, there is no requirement that any particular form of words must be used; there is certainly no requirement that, for a CFA to be retrospective, the word "retrospective" must be used. For example, it was not used in Forde, yet Mr Dunne accepted that the clause in that case was clear enough.
- This was not really a case in which, save for the point addressed under Ground 3 of the Appeal, the appellants put forward an alternative construction of the relevant provisions. Instead, they sought to argue that there was a particularly high hurdle for the respondent to overcome in successfully asserting retrospectivity and that, if the appellants could demonstrate any doubt about the relevant provisions, or any faint suggestion of an absence of clarity, that was sufficient to show that the hurdle had not been surmounted. The basis for this proposition was that, in some way, different rules of interpretation applied to a CFA because of i) the presumption (paragraphs 18-19 above); and ii) the requirement for an express term (paragraphs 20-21 above).
- But as I have demonstrated in those paragraphs, at the very least the presumption can be negated by an agreement to the contrary, and the requirement for an express provision is itself doubtful, and cannot in any event import some different rule of interpretation: something is either express or it is not. When Parliament considered CFAs', the only requirement was that they be in writing (see paragraph 14 above). No special or different rules as to their interpretation were imposed. I therefore agree with Mr Warnock KC that the ordinary principles of construction must apply to this CFA, just as they would to any commercial agreement. The court has to construe the terms following the test set out in paragraph 13 above.
- I acknowledge that in certain circumstances, solicitors have specific duties to advise those who qualify as consumers of their rights, and this may sometimes have an effect on the construction of the retainer. It may be for that reason that, on occasion during his oral submissions, Mr Dunne replaced the word "client" with the word "consumer". He was asked if this nomenclature had any legal significance in this case. He accepted that it did not. This was unsurprising: it was agreed that the respondent was not a consumer within the meaning of the Consumer Rights Act 2015 ("CRA 2015"), which in any event did not apply to this CFA, because it was entered into before the CRA 2015 came into force.
- For all these reasons I would dismiss Ground 1 of the appeal. The words used make plain that the CFA was retrospective.
Ground 3: The Definition of "the Claim"
- I said that there was one exception to the general position that the appellants' case as to construction relied on the alleged height of the hurdle the respondent had to overcome, rather than on an alternative reading of the relevant provisions. That exception was encompassed in the appellants' suggestion that "the Claim" as defined in the CFA could reasonably be interpreted as a pure description of the proceedings, rather than fixing the date for when chargeable work under the CFA was carried out. This gives rise to Ground 3 of the appeal and it is convenient to deal with it next.
- In my judgment, the definition of "the Claim" in the CFA was not simply a description of the proceedings. If it was intended to be descriptive only, the definition would have ended after the reference to the parties. Alternatively, it could simply have referred to the claim number, because – as Mr Dunne confirmed – the claim had been issued by the date of the CFA. The words "in respect of which the firm had been engaged since 30 March 2012" were not descriptive of the Claim against the appellants: they were dealing with something else entirely, namely the work that had been done by BT since March 2012. That was nothing to do with a description of the Claim; it was all to do with the work done by BT. Moreover, I do not consider that the appellants' alternative interpretation (if that is what it is) is even arguable. There was therefore no ambiguity. I would therefore reject Ground 3 of the Appeal.
Ground 2: The Alleged 'Combination of Terms'
- I note that Lavender J reached the same conclusion as to the retrospectivity of the CFA by interpolating the definitions into clauses 2 and 4.1 of the CFA. He said at [28]-[29]:
"28 I turn now to the construction of the CFA. In my judgment it is legitimate to read clauses 2 and 4.1 of the CFA as if they included the relevant definitions in place of the defined terms. In particular I have found it helpful to set out clause 4.1 omitting certain words which are irrelevant for present purposes, but including the definition in place of the defined term "basic charges" and, in that definition, including the definition rather than the defined word "claim". Read in that way, clause 4.1 provides as follows:
"If the Client wins the Claim it will be liable to pay to the Firm . . .
(i) the charges of the Firm for the work done by the Firm in relation to the application by the Client in his capacity as Liquidator of MSD Plc against the Defendant in relation to MSD Cash and Carry Plc in Liquidation in respect of which the Firm has been engaged since 30 March 2012 . . ."
29 When clause 4.1 is read in that way it is clear that the CFA is intended to apply to all of the work done by Boyes Turner on this matter since they were first engaged on 30 March 2012. I do not accept Mr Dunne's submission that the CFA was unclear or ambiguous. It may be that Boyes Turner were in breach of their professional obligations, in that they did not advise the claimant adequately as to the effect of the CFA and, particularly, its retrospective effect, but that does not affect the meaning of the CFA."
- I respectfully agree with those paragraphs. It is often helpful when considering commercial agreements with defined terms to consider the individual clauses with those defined terms spelt out within them. There is nothing difficult or complicated about that exercise. When utilised here, this approach also demonstrates that the CFA was – and was always intended to be – retrospective. For what it is worth, I consider that it gives rise to a provision that is not so very different from the one in Forde that Mr Dunne was so keen on.
- Ground 2 of the appeal is, however, a complaint about this part of Lavender J's interpretation of Clause 4.1, and his interpolation into it of the relevant definitions. Mr Dunne submitted that, in order to find that the CFA was retrospective, "you cannot piece it together from the various definitions". That was an echo of his skeleton argument, and his reference to a "combination of terms". I reject that submission. The exercise does not involve piecing anything together: there are terms of the CFA that use certain definitions, something that is common to just about every commercial contract. Lavender J simply read the clause with the definitions included, and it provided a clear answer to the central issue of interpretation. That was entirely legitimate. I therefore reject Ground 2 of the appeal.
- For those reasons, therefore, I would reject Grounds 1, 2 and 3 of the Appeal, concerned with the words themselves. The interpretation of those words is a simple and straightforward matter which gives rise to a perfectly sensible result. Does the factual matrix or knowledge of the parties affect or make any difference to that conclusion?
7.The Factual Matrix/Knowledge of the Parties
General
- I have summarised and/or set out the factual findings made by the Costs Judge at paragraph 6 above. They include the clear statement that the respondent always understood that the CFA would be retrospective and that this was consistent with the previous dealings between himself and BT. The appellants cannot go behind those findings of fact. In my view, those findings only support what I consider to be the proper construction of the CFA.
- Although I address below the two Grounds of Appeal that go to the factual matrix, I should make two things clear at the outset. Whilst evidence as to factual matrix can sometimes be admissible as to the knowledge of the parties at the relevant time (see Chartbrook v Persimmon Homes [2009] 1 AC 1101 at [42]), it is important that the proper limits of this rule are understood. There were times when the appellants' counsel appeared to be suggesting that the respondent's state of knowledge (and in particular, on their case, what BT did not tell him) somehow overrode the express words of the CFA. Although at the outset of the hearing, Mr Dunne made but then disavowed such a submission, Ms Gopal (who dealt with Grounds 4 and 5) said in terms that, if the respondent had not been separately advised as to the retrospective effect of the CFA, that was a relevant part of the factual matrix, and meant that the CFA could not be retrospective. Such an approach to contract construction is, with respect, misconceived: not only is it contrary to the authorities summarised in paragraph 13 above, but it would open the floodgates for anyone with a contract they no longer wished to be bound by to argue that some event (or non-event) during negotiation had the effect of negating the express terms that had been agreed.
- This point about the factual matrix is linked to what I consider to be the surprising latitude granted to the appellants at the original hearing before the Cost Judge, at which he permitted them to adduce all sorts of oral evidence as to the discussions/negotiation of the CFA, and the parties' understanding both before and after the CFA came into effect. It clearly came as something of a surprise to Lavender J, who made the point that, in his view, some of this material was inadmissible (see [24(3)] of his judgment). He is now criticised for that. Whilst I would agree with the appellants that it is perhaps too late now to seek to apply retrospectively the proper limits on evidence of this kind (particularly, as is explained below, because it makes no difference to the outcome of this appeal), I entirely agree with Lavender J's reservations. I would not like it to be thought that I condoned the very generous approach to the factual matrix which the appellants have sought to rely on at all three hearings concerned with the retrospectivity of the CFA.
Ground 4: Particular Elements of the Factual Matrix
- Ground 4 of the Appeal suggests that other aspects of the relevant factual matrix included the following (which the Costs Judge and Lavender J wrongly ignored or to which they failed to give sufficient weight):
"a. The solicitor was already acting under a contract of retainer prior to the CFA being signed.
b. The parties to the CFA did not know that an oral CFA was impermissible when they entered into the written CFA. Accordingly, there was no commercial requirement or necessity for the CFA to be retrospective."
(See paragraph 63 of the appellants' skeleton argument).
- I reject this submission for a variety of reasons. First, I consider that both the Costs Judge and Lavender J had regard to these matters. The Costs Judge expressly referred to both the original retainer and the limits of the oral agreement at [156]-[161]. What weight he gave to a state of affairs that was, on his findings, superseded by the CFA, was entirely a matter for him.
- The appellants' submission is that these matters demonstrated that there was no commercial imperative in agreeing to the CFA. Leaving aside the fairly obvious riposte that it is not for a third party to the CFA to tell the parties to the CFA whether it was or was not commercially necessary for them to enter into it, this point was expressly dealt with by Lavender J in his own judgment at [26]:
"The defendants submit that the existence of an informal and unwritten, and therefore unenforceable, conditional fee agreement in the period from March 2012 to March 2015 was a powerful fact militating against the construction of the CFA as retrospective, since it shows that in the minds of the claimant and Mr Branson, who appear to have been unaware that such an agreement was unenforceable, they had no need to make the CFA retrospective. I do not accept that submission, primarily because I consider that the question of whether the CFA was retrospective can be determined by the words of the CFA itself, but also because the written CFA had to be retrospective if a success fee was to be charged in respect of work done before it was made, so there was an objective reason for the parties to agree to make the CFA retrospective if they so chose."
Again, I respectfully agree with that analysis. It might fairly be added that the CFA also gave the respondent a proper degree of certainty about his liability for fees.
- Most important of all, perhaps, is the simple answer to Ground 4: that, on the Costs Judge's findings, it made no difference that there was an existing retainer and/or that the parties did not know that an oral CFA was impermissible. He found that this was the way these parties had worked before, which was entirely consistent with a CFA being agreed at a later date that was retrospective. In that way, as both the respondent and BT understood, the CFA superseded whatever had happened prior to its agreement, and covered all the work done on the Claim prior to its signing.
- For those reasons, I would dismiss Ground 4.
Ground 5: The Alleged Breach of BT's Regulatory Duties
- Ground 5 of the Appeal suggests that the Costs Judge and Lavender J failed to take into account the fact that the solicitor had at no time explained or even mentioned that the CFA was designed to have retrospective effect. It is said that this was a clear breach of their regulatory duties, and the judge was wrong to dismiss "this highly relevant fact".
- I make a number of observations about this submission. First, this argument was not pleaded. Secondly, a finding that BT were in breach of their duties was not sought from the Costs Judge. Thirdly, it was not therefore a finding that he made. The appellants appear to be asking this court to make a finding of fact de novo. It is quite wrong on a second appeal to ask this court to make contentious findings of fact which were not sought below. I would decline to do so.
- Secondly, even if it were right, the point is a factual irrelevance. On the Costs Judge's findings, the respondent always understood that the CFA would be retrospective because that is how it had worked before. At its highest, therefore, the complaint is that the Costs Judge failed to find as material the fact that BT failed to advise the respondent of something of which he was already aware. That cannot affect the construction of the CFA.
- Thirdly, even if it were right, the point is a legal irrelevance. As explained at paragraphs 22-24 above by reference to Garbutt, even assuming that there had been a pleaded and established breach of the relevant Code (and/or the term of the CFA which incorporated the Code) that would, at most, give rise to a disciplinary claim in the hands of the respondent. It again could have no effect on the proper interpretation of the CFA, much less comprise a basis on which the ordinary meaning of the words can be reversed (see paragraph 42 above).
- Lavender J expressly made the point about the difference between what the CFA meant and whether there may have been a breach of any Code at [29]: see paragraph 36 above. Again I consider that he was right. The appellants cannot avoid the obvious consequences of the CFA simply because – on this assumption - BT did not tell the respondent in express terms that the CFA was retrospective.
- For these reasons, therefore, I would reject Ground 5 of the Appeal.
8. Conclusions
- For the reasons that I have given, I consider that, on its proper construction, the CFA was retrospective; the factual matrix and the findings of the Costs Judge only support that conclusion; and there is nothing in the authorities which requires a different decision. If my Lady and my Lord agree, I would dismiss this appeal.
LORD JUSTICE BAKER:
- I agree.
LADY JUSTICE ASPLIN:
- I too would dismiss the appeal for the reasons given by Coulson LJ.
