Neutral Citation Number: [2008] EWHC 3147 (QB)
Case No: HQ07X03927
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 18/12/2008

Before :

THE HON. MR JUSTICE BLAKE
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Between :

	(1)	BRAY WALKER SOLICITORS (A FIRM)
(2)	BEVANS BRAY WALKERS LIMITED (T/A BEVANS)	Claimants	
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	CARLO MOISE SILVERA	Defendant	

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Nicholas Bacon (instructed by Bevans Solicitors) for the Claimant
Paul Staddon and Andrew Post (instructed by Jeffrey Green Russell Solicitors) for the Defendant

Hearing dates: 4th November 2008
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Judgment 

The Hon Mr. Justice Blake : 

Introduction
1.	In this action the claimants seek payment of their basic costs incurred when they acted as solicitors for the defendant in proceedings he brought for negligence and breach of contract against his former legal advisers. 
2.	The first claimant acted for the defendant from November 2003 until the end of April 2007 pursuant to a number of conditional fee agreements (one for each party sued) in respect of those proceedings. In April 2007 the first claimant joined a new enlarged legal firm and henceforth litigation was conducted by the same personnel but as members of the second claimant. The first claimant firm remained in existence and was responsible for the recovery of fees incurred before the date of what may loosely be described as a merger. The defendant was given the option of continuing the litigation in the underlying proceedings with the second claimant or instructing a new firm of solicitors and terminating the retainer with the first claimants. He elected to continue with the second claimants as his solicitors and in due course signed an agreement transferring the terms of the conditional fee agreements (CFAs) to the second claimants in respect of work done on or after the 1st May 2007. The CFAs were brought to an end in the last week of October 2007, and the retainer was subsequently terminated when the underlying proceedings had not come to a conclusion. The claimants promptly presented bills for payment for basic fees for some £350,000. These remained unpaid and when the present proceedings were issued a defence entered disputing liability. The claimants reserve the right to sue further for their success fees depending on the outcome of these proceedings.
3.	The defendant is an Italian national aged 64 and resident in Italy. He comes from an apparently wealthy family and had been a substantial businessman in the past. It seems that in the 1980’s he entered into a business relationship with one Jonathan Levene with whom he had entrusted a large sum of money for investment. Mr Levene is an English solicitor by training and business experience, but he has not practised in the UK since about 1995. He no longer resides in or visits the UK. He invested the defendant’s money in a joint venture with others. The details of the arrangements were somewhat obscure and controversial.  They involved corporate vehicles in Hong Kong, fictional names and undisclosed principals. One of the partners in this venture was murdered and the brother of the murdered man apparently ended up in possession of the assets of the joint venture. Mr Levene assisted the defendant to find English solicitors to sue the brother for an equitable interest in property and other assets in the UK, although they were apparently owned by a Hong Kong company. Two firms of solicitors, junior and leading counsel acted for the defendant. He incurred legal costs of some £400,000 of which something in the order of £380,000 had been paid before the litigation came to an end. He was unsuccessful in his claim. On the 16th April 2003 Mr Justice Ferris sitting in the Chancery Division dismissed it. He was highly critical of Mr Levene’s reliability as a witness of fact (see judgment in Silvera v Urquhart [2003] EWHC 809 (Ch) at [213] and [214]) and considered that he was a thoroughly untrustworthy witness who could not be relied on in respect of important matters and on many other matters was clearly trying to mislead the court or to withhold information. He was also critical of Mr Silvera’s evidence (ibid at [217]) concluding that he was quite content to lie or tell something less than the whole truth when he thought that this would be in his interests. These conclusions were based on a detailed assessment of complex inter-linking transactions between Mr Silvera and Mr Levene stretching back for some years.
4.	Mr Justice Ferris also made a number of trenchant and critical observations as to the conduct of Mr Silvera’s then legal team in respect of the substance of the claim, the choice of venue, and preparedness for trial. In the result Mr Silvera was ordered to pay the costs of the defendant in that action on an indemnity basis. The court was informed that this has been estimated at some £250,000.
The  defence
5.	The defendant disputes liability to the claimants for their fees on four grounds, two related to breach of the regulations governing CFAs at the time they were entered into and two alleging breach by the claimants of the terms of the retainer and CFA under which they were retained. Originally the allegation of breach of the regulations was only made in respect of the first three CFAs signed in November 2003 in respect of the underlying proceedings and not a further CFA signed in October 2005 in respect of a previous firm of solicitors who were to be joined in those proceedings. The claimants pointed out that this was peculiar as all the agreements were in similar form. It then emerged that the defendant’s present legal team had made a mistake about the date that the regulations ceased to apply to CFAs  and at the start of the trial permission was given to amend the defence to include all four CFAs.  Although the claimants were deprived of the advantage of a forensic comment, I concluded that there was no real prejudice to them in permitting this amendment, as they were well prepared to meet the same arguments in respect of the first three agreements. It was in the interests of justice to conclude to determination all relevant issues between the parties as efficiently as possible. As the narrative of events will reveal, this is a case about the costs of pursuing costs in unsuccessful litigation, and is a cautionary tale as to the perils likely to be encountered.
6.	The defendant’s four grounds can now be set out in greater detail as follows. It is alleged that:-
i) In breach of regulation 3 of the Conditional Fee Agreement Regulations 2000, the written terms of the CFAs did not set out reasons why a success fee of 75% had been chosen in addition to basic costs in the underlying proceedings.
ii) In breach of regulation 4 (2) (a) of the Regulations, the first claimants had failed to explain orally to the defendant the effect of the CFA and in particular the circumstances when the CFAs could be brought to an end by the claimants where there was an offer of settlement of the underlying proceedings that they considered reasonable. Further in breach of regulation 4 (2)(c) and (d) they had not explored either existing insurance coverage or after the event insurance as an alternative to a CFA.
iii) In breach of an agreement reached by the parties in written communications in October 2007, the claimants terminated the CFAs before the advice of an independent QC on the merits of a settlement offer had been obtained.
iv) In any event the first claimant could not sue under the CFAs for work it had done up to the 1st May 2007 because the arrangements whereby the conduct of the litigation came to be transferred to the second claimants amounted to an unilateral repudiation by the first claimant of its contract of retainer.
7.	The first, third and fourth of these defences depended on the court’s construction of the regulations and the documents in the case. The second turned on the resolution essentially of an issue of fact as to what was said in 2003 and 2005. 
The hearing of this action
8.	Unfortunately for the defendant’s legal team, on the day before the date listed for trial they received information that the defendant had been taken ill with chest pains on the way to the airport where he was being driven by his son. The matter of whether the trial should proceed in the absence of the defendant was first put back until the afternoon of the trial date to enable some further inquiries to be made. It was then put back for a further 24 hours for evidence to be put before the court and a number of cogent questions raised by the claimants to be addressed. The evidence presented to the court was wholly unsatisfactory to indicate reliably or at all: what illness the defendant was or may have been suffering from; where he had been treated, by who for what; whether he was fit to travel and if not when he might be, whether and/or when he could give evidence by video link. The claimants were highly sceptical as to this illness and as soon as they had been informed of it had asked for evidence that he had indeed booked his airline ticket to London and whether he had indeed been taken ill en route. None was forthcoming. The court refused the application for an adjournment. No other application was then made. 
9.	The court then heard from Mr Walker, the partner with conduct of the underlying proceedings, and his Italian assistant Filippo Petteni. There was only one witness for the defendant and that was Mr Levene.  He was unwilling to come to England to give evidence just as he had been in the proceedings determined by Ferris J. In those proceedings and in these, he gave his evidence by video-link. Technical glitches, problems about documents added late to the core bundles, as well as the diminished opportunity for assessment that video link provides made this less than ideal for a significant witness in the case, indeed the only live evidence called by the defence. There was however a considerable quantity of contemporaneous documents created that formed the essential background to the disputed issues of fact. 
10.	At the conclusion of Mr Levene’s evidence, an application was made without prior notice and without supporting reasons or further evidence for the court to receive Mr Silvera’s proof of evidence as hearsay evidence. In the light of the reasons given for the refusal of the adjournment and the difficulty in giving any weight at all to Mr Silvera’s untested assertions this application was also refused.
The retainer and the CFA
11.	The background to the first claimant firm becoming engaged to provide legal services for the defendant is a letter written by Mr Levene on the 7th July 2003 to Mr. Walker of Bray Walker.  It describes the outcome of the action tried by Mr Justice Ferris , the author’s view of the judgment as correct and the fact that Mr Levene himself was at risk of an application for costs by the defendant in those proceedings and his own need for representation to defend such an application. He mentioned the failures of the previous solicitors instructed by Mr Silvera. He encouraged Bray Walker to take on the case by the suggestion that “from the costs point of view this case could be of considerable benefit to the solicitor undertaking it”. In his oral evidence Mr Levene confirmed that he meant there were considerable financial benefits to the solicitor and he was not expecting Bray Walker to act pro bono.
12.	There was a subsequent phone call or calls, and on the 6th August 2003 Mr Walker wrote a letter to Mr Levene. By this time the context had shifted to Bray Walker acting for the defendant Mr Silvera. The following salient points emerge:-
i.	Mr Walker gave an initial view that there was evidence of negligence by the former legal team in the conduct of the previous proceedings.
ii.	He discussed the problem of damages, and observed that there was no guarantee that if the case had been properly prepared Mr S would have won but noted: 
“I suppose that we at least might get some of his fees back. That sounds better than nothing if he has spent the best part of £500,000”.

iii.	He pointed out to Mr Levene who had not been litigating in the UK since 1995 that the CPR requires consideration of mediation and 	“this is the sort of case that calls out for mediation”.
iv.	He would submit the case to the legal aid authorities but expected that irrespective of means and merits that it would out of scope for public funding as it would be considered as a business case.
v.	 He noted with respect to CFAs:
“we have discussed the concept of Conditional Fees. I am not against it in principle. Again, nobody runs cases with insurance that have got less than 70% chance of winning”.

13.	A copy of that letter was sent to Mr Silvera on the same day as legal aid forms were sent out with an indication that if he had difficulties in understanding Mr Petteni would assist and translate for him.
14.	In respect of the reference to conditional fees, Mr Walker said in evidence that Mr Levene had apparently familiarised himself with the topic and was aware of the regulations when this was discussed. Mr Levene indicated that his knowledge was rudimentary and he thought it meant ‘no win no fee.’
15.	On the 14th August 2008 Mr Levene sent Mr Walker a very lengthy letter in which he asserted his view that the original litigation had good prospects of success if it had been conducted diligently. He was hopeful of success in Mr Silvera’s application for permission to appeal and thereafter a new trial.  At the end of the letter he indicated 
“Conditional fees. Surprise surprise in his position Mr Silvera is, I know, very flexible” 
This was a reference to the fact that Mr Silvera’s financial position was embarrassing as he had no funds to prosecute either an appeal, or a negligence action. On the 20th August Mr Silvera gave authority for Bray Walkers to discuss anything to do with his case openly with Mr Levene.
16.	There were clearly a number of telephone calls between the relevant parties in the late summer and early autumn. On the 3rd October Bray Walkers wrote a detailed letter to Mr Silvera as to the various course of action open to him in respect of:-
i)	pursuit of his appeal to the Court of Appeal from the judgment of Ferris J;
ii)	taxation of his legal bills by his former solicitors in the damages claim he lost;
iii)	negligence actions against his former solicitors and barristers in that action.
17.	The letter contains three references to conditional fees. At paragraph 17  it says:
“I know that Jonathan has explained to you about Conditional and Contingency fees. If you want further explanation please let me or Filippo Petteni know.”
    	In paragraph 19 he stated that he is prepared to consider acting in these cases on a CFA basis and invited consideration of the papers by counsel. At paragraph 20 he suggested that a face to face meeting would be a good idea when he could go through points of detail and also sort out the CFAs and the like.
The meeting on the 13th November     
18.	The meeting contemplated by the parties took place in Milan on the 13th November. It lasted from 9.15am to approximately 1.45pm with a break at mid-day. It worked through an extensive  pre-prepared agenda including finalisation of  CFAs that it was intended Mr. Walker and Mr. Petteni  would be bringing with them
19.	An attendance note of this meeting was drawn up by Mr. Petteni shortly afterwards. It appears that despite a reference in subsequent correspondences to this having been sent to Mr. Silvera there is no file note to confirm that it had been, and e-mails for this period are no longer available. There is a possibility that it may not have been sent. Mr. Petteni records an elaborate conversation where Mr Walker explained the risks and problems with the negligence claim and the difference between the lost costs of the claim and the loss of a chance of a success in the action itself.
20.	There is a very brief paragraph regarding explanation of the CFA in these terms:
“This was handed to all the parties. All relevant sections were explained and translated by FP when required by CS”. 
Mr Petteni explained the brevity of the note by the fact that Mr. Walker used the explanation of the CFA in the first part of the Law Society model agreement for personal injury claims which was the form being used by Bray Walkers.  He states that a number of blank copies were brought over and both Mr. Silvera and Mr. Levene had copies when the explanation was being given. The note indicates that at about the12.00 o’clock break Mr. Silvera and Mr. Petteni focused on the legal aid forms and CFAs to be completed and signed.  It continues that later in the discussion Mr Walker drew a distinction between contingency and conditional fee arrangements, pointing out that the latter only applied where there was litigation rather than a complaint.
21.	Mr. Levene drew up his own attendance note of the meeting that he sent to Mr Walker on 16th November by email. After a reference to the likelihood that the legal aid application would be turned down it reads:
“SW was prepared to act on a conditional fee basis which he said he needed to explain and then did so. He explained the financing charge and the success fee and that some or all of the success fee may be recoverable”.

22.	I am satisfied that both notes were contemporary records summarising part of a substantial meeting between the parties. Both notes indicate that an explanation of CFAs was given by Mr. Walker. Mr Levene’s notes show that the success fee was explained. Mr Petteni’s notes record that the CFA was handed out to all parties. It  is apparent from the text of the CFAs that were signed at this meeting (considered further below) that they provide a substantial explanation of what a CFA is, what it means to the client’s liability to pay his solicitor, in what circumstances and what amount. 
23.	There is a now a dispute between the parties as to what was said about CFAs orally at this meeting. Mr. Levene says that copies of the CFA were not handed to him for retention and he did not know what the material terms were until shortly before the parties were in dispute when the agreements were terminated. It is disputed that there was any detailed explanation of the terms of the CFA by reference to the written explanation in the document or otherwise. Mr Levene stated that he left the meeting unclear as to the distinction between contingency fees and conditional fees, and the definition of success in the CFA agreement that provided when a fee would be payable to the solicitors entering the agreement. He indicated in his evidence that he was under the impression that Mr Silvera would not have to pay any legal fees to his solicitor if he did not succeed in his negligence action against the previous legal team.
24.	 The defendant in reliance on the evidence of Mr Levene, the state of the documents and some answers in cross-examination submits:-
i.	There would not have been time at the meeting for there to have been a detailed explanation of CFAs as claimed by Mr. Walker and Mr Petteni because there were many other issues to discuss of greater concern to the defendant and Mr Levene.
ii.	If the document had been gone through line by line, various terms in the standard Law Society personal injury model that would not have been relevant to the proceedings for which the CFAs were contemplated would have been struck out.
iii.	There was insufficient explanation to Mr Silvera, an Italian national who had suffered a disabling accident to his eye shortly before the meeting to understand the nature of the arrangement that he was entering into.
25.	As regards what happened at this meeting, where there is a challenge to the evidence of Mr Walker and Mr Petteni, and a conflict between their evidence and that of Mr Levene I prefer the evidence on behalf of the claimants to that on behalf of the defendant.  Both Mr Walker and Mr Petteni gave evidence in a frank and open way, acknowledging certain shortcomings in the record keeping. Their evidence was consistent with the prior correspondence and both sets of attendance notes.  I will deal specifically with the issue of reference to insurance policies later in this judgment.
26.	I heard no evidence from Mr Silvera in circumstances where there was understandable suspicion about his ability or willingness to come to court. Mr Levene’s evidence must be treated with some caution where it is supporting the interests of Mr Silvera in the light of the entanglement of mutual interests and obligations referred to by Ferris J in his judgment and the conclusions he reached in circumstances where there was far longer opportunity to assess his reliability as a witness than was the case in the present proceedings. In particular, I reject Mr Levene’s evidence that he was never handed a copy of the CFA at the meeting and had no opportunity to check its terms. I am quite satisfied that the claimants regarded Mr Levene as an important figure in their dealings with the claimant; he was an experienced solicitor and a shrewd businessman who needed to kept informed and on board in the delicate early stages of this relationship.  They were conscious of Mr Levene’s longer standing relationship with Mr Silvera, and the opportunity he had to explain things and get the message over. From my assessment of Mr Levene I conclude that he was not the sort of man who would have signed an agreement unread for himself and his relationship with and concerns for Mr Silvera were such that he would not have permitted Mr Silvera to sign an agreement if he did not think it would be in Mr Silvera’s interest to do so. He would only have been able to form a judgement on those interests if he was personally well aware of what was in the agreement. I shall return to what is in the agreement later in this judgment.
27.	On the 19th November Mr Walker wrote a letter to Mr Silvera summarising a number of issues and confirming his willingness to act against the former solicitors, barrister and QC on a conditional fee basis under the three CFAs that had been signed. He also indicated a willingness to act against another firm of solicitors who had previously acted in an earlier stage of the unsuccessful agreement.  Subsequently in 2005 it was decided to join that firm to the proceedings and a fresh CFA was signed. There were further disputes about the circumstance in which this fourth CFA was signed. Again I prefer the evidence given on behalf of the claimants. A detailed review of the evidence is not needed. If the explanations given in 2003 were to be considered adequate to discharge the obligations under the CFA regulations then I would conclude that so would the explanations the claimants say were given in 2005. By contrast if the 2003 explanation were inadequate then so would those said to have been given in 2005.
The subsequent events
28.	It is possible to briefly summarise the salient events in the subsequent relationship as follows:
16th March 2004: The Court of Appeal dismissed Mr Silvera’s application for permission to appeal against the judgment of Ferris J. Mr Walker had secured counsel to act pro bono in this application.
24th November 2004: Part 8 proceedings brought against Mr Silvera’s solicitors in the action tried by Ferris J were disposed of by consent.
24th December 2004:  Pre-action protocol letters were served in respect of the alleged negligence of counsel and solicitors in that matter. In due course solicitors for both sets of insurers denied liability.
18th October 2005: There was a conference arranged in Rome with Mr Silvera, Mr Levene, Mr Walker and Mr Bourne counsel instructed to act in the negligence proceedings. Mr Bourne had agreed to act under his own CFA entered with the first claimant firm.  His written advice makes it plain that whilst there was a good claim for Mr Silvera to recover the legal fees he spent on his team in his unsuccessful action, the claim for a loss of a chance of success in that action was much more difficult to assess and depended on whether the claim could have been brought in Hong Kong as opposed to England and what a local expert would assess the prospects of success in recovery overall were. In due course two commercial QCs familiar with Hong Kong law and practice gave pessimistic assessments about the prospects of a successful action having been brought in Hong Kong as an alternative to the one brought in the High Court in England.
20th December 2005: The negligence proceedings were issued.
3rd July 2006: An application to strike out the negligence proceedings brought against counsel was dismissed.
January 2007: There was a stay in the proceedings to allow mediation between the parties.
13th March 2007: Following mediation there was an offer of settlement in respect of  all defendants for £250,000 all in.
11th July 2007:  This offer was increased to £225,000 plus the defendant’s costs to date in the wasted costs part of his claim. A similar offer was made by the former solicitors on the 16th July. So the value of the offers at this stage was some £450,000 plus a portion of Mr Silvera’s costs in pursuing these proceedings. Mr Bourne and Mr Walker advised Mr Silvera to accept these offers. In August a further offer of £40,000 was made by the first set of solicitors that Mr Silvera consulted in these proceedings.
31st August 2007: The defendant Mr Silvera indicated that he would not accept these offers. At this stage there was further investigation with a Hong Kong based solicitor seeking advice from a third QC practising in Hong Kong as to the prospects of both making an application to rectify the Hong Kong share register and orders as to the ownership of assets. Somewhat more favourable prospects were indicated than previously. Mr Silvera made a counter-offer for settlement of £1,250,000 plus an indemnity in respect of the adverse costs order made against him by Ferris J.
October 2007:  In the first week of this month, the solicitors acting for the insurers of the former legal advisers  made a final offer of £300,000 each plus a portion of costs, making a total of £600,000.
10th October 2007: Mr Walker advised Mr Silvera that these offers should be accepted and if they not he will terminate the CFAs. He identified a date of the 19th October 2007 for a final decision.
16th-18th October 2007: there was a meeting in Rome with one consequence being that the period before Mr Walker would terminate his CFA was extended to the 25th October.
19th October 2005: Counsel terminated his CFA with Bray Walker.
25th October 2007: Mr Walker terminated the CFAs. Following a meeting in London, fee invoices were delivered.
7th November 2007:  Mr Silvera terminated the second claimant’s retainer.
29.	It forms no part of the defence to this claim that either solicitor or counsel were negligent in advising Mr Silvera to accept the offers made. Indeed subsequent to the termination of retainer with the second claimants, Mr Silvera accepted a lesser offer to compromise these proceedings of £600,000 without the contribution to costs previously offered. There has been no party and party taxation of the claimant’s costs up to the date of the Part 36 offer, therefore. The defendant denies liability because the CFAs are unenforceable and there was otherwise a breach of the contract of retainer. It is necessary to look in a little more detail at the evidence said to found the breach of contract of retainer. 

The transfer of the litigation
30.	As summarised at the outset of this judgment on the 1st May 2007 the first claimant firm joined the second claimants in a new enterprise trading as Bevans. It is submitted on behalf of the defendant that this was not strictly a merger as the first claimant firm remained in existence for the purpose of collection of fees, although its staff were transferred to the second claimant for the purpose of future professional activity. 
31.	The defendant, presumably in common with all existing clients of Bray Walkers was sent a letter in the following terms:
“This is to confirm that I would like you to transfer my matters to Bevans Bray Walker Limited trading as Bevans together with any client account balances that you hold. 
or
This is to confirm that I would not like you to transfer my matter to Bevans Bray Walker Limited trading as Bevans. Please render your closing account and transfer my files to _____________________”
Complaint is made that this offered the defendant only two choices, whereas he should have had the option of staying with his existing solicitors and continuing the conduct of the litigation with them. No material difference in position or disadvantage to the defendant has been relied on in respect of moving his case to Bevans where it proceeded with the same team. Nevertheless it is submitted that this arrangement amounted to a breach of retainer. Bray Walker were no longer offering  to continue to act  for the defendant at a time when the litigation in which they were retained had not come an end and in circumstances outside those contemplated in the CFA. Reliance is placed on Cordery on Solicitors (last updated August 2008) at [301]
“A retainer is normally an entire contract under which the solicitor is to do certain work for the client and under the law of contract in the absence of agreement, he cannot seek any remuneration until that work has been completed or the retainer has been terminated in some other way.  Subject to the provisions of s.65(2) of the Solicitors Act 1974 in respect of contentious business and to any special agreement entered into with a client covering contentious or non-contentious business, a solicitor is not entitled to any payment on account of his costs other than disbursements. If a solicitor wrongfully terminates the retainer he is not entitled to any payment at all for the work he has done, either on a quantum meruit or any other basis.”

32.	In the event the defendant agreed to the transfer of his case to Bevans and promptly signed the transfer agreement. This left the question of the transfer of the benefits and burdens of the CFA agreements. In due course, after some chasing from Mr Walker he also signed novation agreements in which Bray Walker are described as the transferors and Bevans the transferees and the 1st May 2007 was the transfer date. The following are the material terms:-
“3. Transferee’s undertaking
In consideration of the release by the Transferor contained in clause 4 of the Transferee undertakes to perform the Contract as from the Transfer Date and after that date to be bound by the terms of the Contract (in lieu of the Transferor) in every way as if it were a part to the Contract. 
4. Release of the Transferor
In consideration of the undertaking on the part of the Transferee contained in clause 3:
4.1 the Client releases and discharges the Transferor from all claims and demands whatsoever in respect of the Contract and accepts in lieu of the Transferor the liability of the Transferee under the Contract in respect of all claims, demands and liabilities arising from the Transfer Date onwards; and
4.2 the Client agrees to be bound by the Contract in respect of all obligations accruing from the Transfer Date onwards in every way as if the Transferee were named in the Contract as a party in place of the Transferor.”

33.	It is not necessary to speculate on what the position would have been had the defendant been unwilling for his case to be transferred to Bevans or to agree to the transfer of the CFAs. Doubtless if he had made counter-proposals they would have had to be considered. However the defendant was willing to have his case transferred to the new firm, and for the fees of that firm incurred after the transfer date to be payable under the terms of the CFAs entered into with Bray Walker. It is in those circumstances that the legal fees up to the 1st May are sued for by the first claimants which firm has remained in existence for amongst other things precisely this purpose; fees after the 1st May are sued for by the second claimants. 
34.	In my judgment, these arrangements provide no evidence of a breach of contract disentitling Bray Walker to their fees. The principle in Cordery can be simply stated as one cannot sue for what has not been performed. The passage cited makes plain that the principle itself is subject to “the absence of agreement” and “to any special agreement entered into with a client”.  Here there plainly was such an agreement or special agreement, with the effect that the retainer was not terminated but transferred and the client continued to get the benefit of the same legal services on a conditional fee basis as he had received from October 2003. I therefore reject the fourth basis of the defence to this proceedings summarised at [6] of this judgment above.
Agreement to suspend termination of the CFA
35.	In paragraph 23 of the amended defence it is asserted that on the 24th October 2007 Mr Walker offered to agree to vary the terms of the CFA and his earlier indication of an intention to terminate them on the 25th October and that this offer was accepted by Mr Silvera by an email sent on the 25th October. At one stage it seemed that there might be a further late application to amend the defence to plead an oral agreement on or about the 18th October to vary the terms of the CFA with respect to termination but this was not pursued.
36.	There was an extensive communication between Mr Walker, Mr Silvera and Mr Levene between the 17th and 25th October 2007, by meeting in Italy, letters emails and telephone calls. The time for acceptance of what was described as the final Part 36 offers in the negligence claim was due to expire imminently. Mr Walker and Mr Bourne had advised acceptance of these offers. Mr Silvera had been advised in writing and in conference that a failure to accept the offers would result in the termination of the CFAs with the costs consequences provided for in them. Junior counsel hitherto instructed had now given notice of termination of the CFA with effect from the 25th October. The CFAs did make provision for a second opinion in the event of the client disagreeing with his solicitor’s advice about acceptance of a settlement, although there was no obligation on a solicitor to accept this second opinion. 
37.	On the 22nd October 2007, in the first of three letters sent that day Mr Walker wrote to Mr Silvera about his understanding that the defendant was proposing to obtain independent advice from counsel with instructions drafted by Mr Levene. He further indicated that he was prepared to delay formally terminating his CFA until such an opinion was obtained and considered but “we need a clean cut off date”. He asked for confirmation of who was providing the opinion and that a copy of the instructions be disclosed to ensure that they were accurate and comprehensive. On the 23rd October Mr Walker sent Mr Silvera a further detailed letter pointing out the consequences of not accepting the Part 36 offer and the real risk that he would not recover in excess of it, if he continued the proceedings. At  paragraph (25) it was pointed if he continued with the action irrespective of the costs payable to the other side:
“You will have to pay fees to get someone to do it, and you will have to pay this firm’s costs and Robert Bourne’s fees before you get to trial. It is going to cost you money”.

38.	On the 24th October a further letter was sent by e-mail pointing out that there had been no response to the letter of the 22nd October and the conditions there set out for deferring formal notice of termination of the CFA. If Mr Silvera was not going to accept the offer, the letter asked him to respond to the three conditions set for deferral:  cut off date, disclosure of instructions, and identity of the person giving the opinion. It continued:
“If I do not receive a response to them by 6.00pm (London time) today then I shall arrange for a formal notice terminating the CFAs to be given tomorrow.”

39.	At 18.06 on the 24th October 2007  Mr Walker received an e-mail from Mr Silvera in the following terms: 
“…we meet on Friday (26th October). I have not had a chance to read your new letter completely but as for the second opinion I am not sure yet who can do this we are making enquiries and I will be pleased tell when I have confirmed this. Also of course you can see the instructions. As for the cut off date I think we can discuss in London”.

40.	It is submitted on behalf of the defendant that this e-mail was a response accepting Mr Walker’s terms for deferral of termination of the CFAs and that there was therefore a contractual variation of the terms of the CFA that precluded the termination previously contemplated.  It is submitted that Mr Silvera’s computer print out shows that this message was sent at 17.02 hours Italian time (16.02 London time) and thus within the 18.00 deadline. Ignoring the apparent failure to send a message that actually reached Mr Walker in London by 18.00 hours, whatever the explanation for that may be, in my judgment, the email can in no way be said to have met any of the three conditions set for deferral of termination of the CFA. At best it was a proposal to continue to explore the option of a second opinion, with no intimation of a timetable for actual delivery, as opposed to yet further discussion. It was or should have been apparent to Mr Silvera that time was of the essence, having regard to the expiry of the Part 36 offer on the 25th October, the withdrawal of the barrister instructed for trial, and the need to proceed to trial with a fresh team if the matter was not to be settled. No instructions for a second opinion had even been drafted or submitted for review. No lawyer, either barrister or solicitor had been identified for giving the opinion. Most significantly there was no intimation at all as to when any of this would be done or a time-table that addressed the urgent considerations set out in the correspondence. 
41.	I, therefore, reject the third head of the defence as set out at [6] of this judgment above. This leaves the case under the regulations for consideration.
The Regulations
42.	By the terms of s.58 (1) and (3)  Courts and Legal Services Act 1990 as amended by s.27  Access to Justice Act 1999 a  CFA is unenforceable unless it is writing, relates to proceedings for which CFAs are permitted and complies with such requirements if any as may be prescribed by the Lord Chancellor.
43.	From the 1st April 2000 for a period of over five years, the Conditional Fee Agreement Regulations 2000 (SI 2000/692) regulated CFA cases. As the Court of Appeal has explained in the cases of Hollins v Russell and others  [2003] 1 WLR 2487 and  Garrett v Halton Borough Council [2006] EWCA Civ  1027  [2007] 1 All ER 147 they have proved to be a trap for the unwary and a fruitful source of dispute. Defendants often resist the payment of any legal costs let alone a success fee by reference to some breach of the requirements of the regulations, even though there has been honest, competent and successful conduct of a claimant’s case under a CFA. 
44.	It is clear from the principles established by these cases that fees cannot be recovered under a CFA unless there has been substantial compliance with the duties set out in the Regulations, and substantial compliance is not to be judged by whether there has been actual loss or prejudice caused to the client. An implicit agreement not to enforce a defective part of the contract that fails to comply with the regulations will not save the enforceability of the contract as a whole
45.	In the present case, the material duties are set out in Regulations 3 and 4 which so far as is material read as follows:- 
“3.   (1) A conditional fee agreement which provides for a success fee – 
(a) must briefly specify the reasons for setting the percentage increase at the level stated in the agreement, and
(b) must specify how much of the percentage increase, if any, relates to the  cost to the legal representative of the postponement of the payment of his fees and expenses. 
4.   (1) Before a conditional fee agreement is made the legal representative must – 
	(a) inform the client about the following matters, and
(b) if the client requires any further explanation, advice or other information about any of those matters, provide such further explanation, advice or other information about them as the client may reasonably require. 
(2) Those matters are – 
(a) the circumstances in which the client may be liable to pay the costs of the legal representative in accordance with the agreement,
(b) the circumstances in which the client may seek assessment of the fees and expenses of the legal representative and the procedure for doing so, 
(c) whether the legal representative considers that the client’s risk of incurring liability for costs in respect of the proceedings to which agreement relates is insured against under an existing contract of insurance,
(d) whether other methods of financing those costs are available, and, if so, how they apply to the client and the proceedings in question,
(e) whether the legal representative considers that any particular method or methods of financing any or all of those costs is appropriate and, if he considers that a contract of insurance is appropriate or recommends a particular such contract – 
(i) his reasons for doing so, and
(ii) whether he has an interest in doing so.
(3) Before a conditional fee agreement is made the legal representative must explain its effect to the client.”
									(emphasis supplied)
46.	It is alleged that the CFAs entered into between Bray Walker and Mr Silvera are unenforceable because:-
i) the reasons  for setting the success fee at 75% were not  stated in the agreement;
ii) there was no discussion of whether the costs of the negligence action could be born by a contract of insurance;
iii) there was no sufficient oral explanation given of when the success fee would be payable, and in particular it was not pointed out to Mr Silvera at the relevant time that he could have to pay the basic fee and success fee, even though he only succeeded in recovering the whole or part of his previous legal costs in the proceedings tried by Ferris J and did not recover anything for loss of the chance of success in that action.
The terms of the CFA:
47.	As has been noted previously the CFAs used by Bray Walker in 2003 and 2005 were the model Law Society agreements for personal injury claims with some deletions and adaptations. The model agreement is a 12 page document.  It takes the form of a preamble that advises the client that it is a legally enforceable contract that should be read carefully. The parties and the date of the agreement then follows filled in, in manuscript. There is then inserted in manuscript what is covered by this agreement, the names of each of the three lawyers being sued (one for each agreement) and the claim is described as “for damages for breach of contract alternatively negligence arising out of advice given”. There then follows explanatory text in comparatively jargon-free format that continues for four pages with the headings:  what is not covered by this agreement, paying us, basic charges, how we calculate our basic charges, success fee, value added tax, Law Society conditions, and other points. I will refer to the above as the first part of the agreement which is followed by the signature of both parties, above the line that states “I confirm that my solicitor has verbally explained to me the matters in paragraphs (a) to (e) under other points”. There is a separate signature of Mr. Silvera relating to this confirmation, and a counter-signature from Mr Walker to the same effect.
48.	At this point the agreement, moves into what I will describe as part two and introduces two schedules covering the following topics: success fee, insurance policy and then under Law Society conditions  there are eight sub headings including an explanation of terms.  The most relevant sub-headings to the present case are ‘4. What happens if you win?’  ‘5. What happens if you lose?’, ‘7. What happens when this agreement ends before your claim for damages ends?’  In the present case not only has Mr Silvera signed the agreements in the two places indicated above, he has also initialled every page on the bottom right. I am satisfied from the oral evidence in the case and the signatures and initials on each page that the whole of this agreement was brought to the attention of Mr. Silvera.
49.	It is now necessary to set out the material terms of the 2003 Agreements that may throw light on the resolution of the dispute relating to breach of the regulations.  In part one of the agreement at the end of the first page is a summary of what the essence of the agreement is. It is in the following terms:-
	“Paying Us
If you win your claim, you pay our basic charges, our disbursements and a success fee. The amount of these is not based on or limited by the damages. You are entitled to seek recovery from your opponent of part or all of our basic charges, our disbursements, a success fee and insurance premium. Please also see conditions 4 and 6.
It may be that your opponent makes a Part 36 offer or payment which you reject and, on our advice, your claim for damages goes ahead to trial where you recover damages that are less than that offer or payment. We will not add our success to the basic charges for the work done after we received notice of the offer or payment. 
If you receive interim damages, we may require you to pay our disbursements at that point and a reasonable amount for our future disbursements. 
If you receive provisional damages, we are entitled to payment of our basic charges our disbursements and success fee at that point.
If you win but on the way lose an interim hearing, you may be required to pay your opponent’s charges of that hearing. Please see conditions 3(h) and 5.
If on the way to winning or losing you win an interim hearing, then we are entitled to payment of our basic charges and disbursements related to that hearing together with a success fee on those charges if you win overall.
If you lose, you pay your opponent’s charges and disbursements. You may be able to take out an insurance policy against this risk. Please also see conditions 3(j) and 5. If you lose, you do not pay our charges but we may require you to pay our disbursements. 
If you end this agreement before you win or lose, you pay our basic charges. If you go on to win, you pay a success fee. Please also see condition 7(a).
We may end this agreement before you win or lose. Please also see condition 7(b) for details.”
								(emphasis supplied)
50.	From the above, it is in my judgment reasonably clear, that this agreement was a more subtle one than would be adequately explained by the phrase “no win no fee”. It should have been clear to the ordinary reader that some payments (whether disbursements, basic fee or basic fee plus success fee) may be due to his legal advisers under the agreement in a number of distinct circumstances and a success fee may be payable even if there was no complete success in the claim.
51.	On the third page of the first part of the agreement  the success fee is stated to be “75% of our basic charges” with the following printed text thereafter:
“The reasons for calculating the success fee at this level are set out in Schedule 1 to this agreement. 
You cannot recover from your opponent the part of the success fee that relates to the cost to us of postponing receipt of our charges and disbursements (as set out at paragraphs (a) and (b) at Schedule 1. This part of the success fee remains payable by you.”

52.	 Schedule 1 in  the second part of the agreement repeats that the success is set at 75% out of a maximum of 100%  and continues:
“The percentage reflects the following:
(a)	the fact that if you win we will not be paid our basic charges until the end of the claim
(b)	our arrangements with you about paying disbursements
(c)	the fact that if you lose we will not earn anything
(d)	out assessments of the risks of the case. These include the following:  
(e)	any other appropriate matters
The matters set out at paragraphs (a) and (b) above together make up [5%] of the increase on basic charges. The matters at paragraphs (c) (d) and (e) make up [70%] of the increase in basic charges. So the total success fee is [75%].”

53.	The defendant submits that this explanation fails to comply with the duty imposed by regulation 3(1)(a) above. This is primarily because it does not explain the assessment of risks. Nothing is inserted after the pro forma words “these include the following”. It is the assessment of risk that is the single most important consideration in fixing the rate of the success fee.  Factors (a) to (c) are common to every CFA; only factor (d) has the bespoke element of the particular success fee related to the particular litigation risk in the case.  It is pointed out that the regulation requires explanation of the success fee at the level stated in the agreement, and not just general factors that apply to all CFAs. It is only the cogent assessment of risk of the litigation in the particular case that explains the major part of the success fee at 70%.  The Law Society assumes that the agreement will be hand crafted to address these issues by the insertion of the phrase “these include the following”.  It is to be inferred that the drafter of the model agreement inserted these words because they were considered to be necessary to comply with the regulation, but as they have been left blank in the three 2003 agreements, the duty under the regulation has not been complied with. The defendant points to the contrast with the CFA entered into between Bray Walkers and Mr Bourne, that contains a detailed assessment of the risks of the individual case.
54.	This submission is supported by two further considerations in the case.  First, it is apparent from the history of the professional relationship, Mr Walker’s assessment at the time and his oral evidence at trial, that there were also seen to be two elements to this litigation. There was what Mr Walker described in his evidence as the small claim, namely the recovery of Mr Silvera’s legal fees in the unsuccessful action tried by Mr Justice Ferris, where the prospects seemed good at around 80% of establishing liability against the barristers and 70-75% against the solicitors in the light of the judge’s critical comments at trial concerning the quality of the legal preparation. 
55.	The second element was the big claim, the loss of the chance of successful litigation in the Hong Kong action if it had been brought at an appropriate time in an appropriate format. This was a much more speculative and risky proposition. There was a question of Hong Kong law whether either Mr Silvera or Mr Levene could apply to rectify the share register; whether this needed to be done within a certain period of time; whether such a time had already expired or was expiring when the former solicitors had been instructed; whether the fact that Mr Levene had started proceedings in Hong Kong but had not pursued them was a weighty consideration against negligence by the former solicitors; if an application were still possible when the former solicitors were instructed whether there were discretionary factors against rectification; whether the case for rectification could be made out in the light of the unsatisfactory nature of the evidence given at trial  and so on.  It was clear that Mr Walker always thought this part of the claim was weak. He estimated in his evidence at trial that at the time of the CFA he thought that the prospects were at best 50% and in the region of 40-50% because there was too were too many unknowns. That assessment was born out by  the subsequent events already noted.
56.	Mr Walker explained that he adopted a single rate for the success fee to combine these two elements, what he termed a blended fee, but the fact that the 70% risk element was a blended fee was not explained in writing in schedule 1 explanation of the success fee. It was further suggested that it was not sufficiently explained orally (to be considered below) and the inference was that if it had been clearly and unambiguously set out Mr Silvera would have had had brought to his attention the real risks of continuing with the risky part of the claim when a satisfactory settlement had been received on the sounder part of the claim.
57.	The second and related consideration is the fact that the learning on CFAs demonstrates that there are twin considerations behind the CFA regulatory regime as it existed at the time: consumer protection for the client and the interests of justice limb for the opposing party who have to pay a success fee at the end of the litigation. If the reasons for the success fee are not spelt out in the agreement itself (that the opposing party is required by the regulations to be able to see) then there is scope for unscrupulous practice in inserting over-inflated and under-reasoned success fees. It is the contemporaneous assessment of risk that is important (see Costs Practice Direction section 11.7 CPD 44.PD.5). 
58.	Reference is further made to Cook On Costs 2005 where at page 581 a ready reckoner of appropriate success rates suggests that a case with a 80% prospect of success should lead to a success fee of 25%, and a 70% success fee would only be appropriate for claims with under 60% prospects of success. A claim with merely a 50% prospect of success would justify the maximum 100% success fee.
59.	These were cogent submissions at the real heart of the defence response to this claim, and they did not depend on the evidence of Mr Levene for their efficacy. 
60.	Mr Bacon, for the claimants, in response submitted first, that the regulations only required reasons to be given for setting the success fee at the rate identified and not reasons for the assessment of risk behind the success fee. If Parliament had required this to be done it could have said so. Second, an anodyne list of reasons could fulfil the obligation under the regulations and there was no statutory requirement to address risk at all. Third, a regulation interpreted as requiring an assessment of risk would open up fresh issues as to how much information on risk was to be supplied, with the prospects that even more CFAs would cease to be enforceable despite the fact that they were seen as an important vehicle of increasing access to the law. Fourth, the consumer protection element of the regulations should be seen in the context of the duty to orally explain certain matters under Regulation 4 and the client’s right to an extended oral explanation of anything that was reasonably required to produce clarity. The need for such further explanation would in turn depend on the solicitor client correspondence and attendance notes where the risks of the litigation could be more satisfactorily explored than in a contract. Finally, the interests of justice limb were satisfied by the paying party’s right to dispute the quantum of basic or success fee on taxation. A solicitor that failed to explain in taxation a contemporaneous assessment of risk by reference to any material in existence at the time (contract, attendance note, correspondence, advice or other memo), may lose the ability to charge a success fee at all, but should not be at risk of failing to recover a basic fee  for work properly done. If a success fee is discounted or could not be recovered from the opponent, the CFA itself makes plain (see “4. What happens if you win”) that the client is no longer responsible for paying the contractual success fee.
61.	Before resolving the dispute as to the sufficiency of the written explanation of the success fee, it is convenient to set out the other material parts of the CFA and the evidence relating to supplementary oral explanations.
62.	In part two of the CFA, the client would have had explained in writing the following further facts and issues. The standard terms read as follows:
•	“4. What happens if you win?
•	If you win:
o	You are then liable to pay all our basic charges, our disbursements and success fee – please see condition 3(n).
o	Normally, you will be entitled to recover part or all of our basic charges, our disbursements and success fee from your opponent. 
o	If you and your opponent cannot agree that amount, the court will decide how much you can recover. If the amount agreed or allowed by the court does not cover all our basic charges and our disbursements, then you pay the difference.  
o	You will not be entitled to recover from your opponent the part of the success fee that relatives to the cost to us of postponing receipt of our charges and our disbursements. This remains payable by you.
o	You agree that after winning, the reasons for setting the success fee at the amount stated may be disclosed:
i.to the court and any other person required by the court;
ii. to your opponent in order to gain his or her agreement to pay the success fee.

o	If the court carries out an assessment and disallows any of the success fee percentage because it is unreasonable in view of what we knew or should have known when it was agreed, then that amount ceases to be payable unless the court is satisfied that it should continue to be payable.
o	If we agree with your opponent that the success fee is to be paid at a lower percentage than is set out in this agreement, then the success fee percentage will be reduced accordingly unless the court is satisfied that the full amount is payable. 
o	It may happen that your opponent makes an offer that includes payment of our basic charges and a success fee. If so, unless we consent, you agree not to tell us to accept the offer if it includes payment of the success fee at a lower rate than is set out in this agreement. 
o	If your opponent is receiving Community Legal Service funding, we are unlikely to get any money from him or her. So if this happens, you have to pay us our basic charges, disbursements and success fee.
•	You remain ultimately responsible for paying our success fee.”
o	(emphasis supplied)
7. What happens when this agreement ends before your claim for damages ends?
(a) Paying us if you end this agreement
	You can end the agreement at any time. We then have to right to decide whether you must:
•	Pay our basic charges and our disbursements including barristers’ fees when we ask for them; or 
•	Pay our basic charges, and our disbursements including barristers’ fees and success fees if you go on to win your claim for damages. 
(b) Paying us if we end this agreement
(i) 	We can end this agreement if you do not keep to your responsibilities in condition 2. We then have the right to decide whether you must:
•	Pay our basic charges and our disbursements including barristers’ fees when we ask for them; or 
•	Pay our basic charges and our disbursements including barristers’ fees if you go on to win your claim for damages.
(ii)	We can end this agreement if we believe you are unlikely to win. If this happens, you will only have pay our disbursements. These will include barristers’ fees if the barrister does not have a conditional fee agreement with us. 
(iii)	We can end this agreement if you reject our opinion about making a settlement with your opponent. You must then:
•	Pay the basic charges and our disbursements, including barristers’ fees;
•	Pay the success fee if you go on to win your claim for damages.
If you ask us to get a second opinion from a specialist solicitor outside our firm, we will do so. You pay the cost of a second opinion. 
 (emphasis supplied) 
63.	In my judgment these written terms, if drawn to the client’s attention in the way that Mr Walker says they were,  would have alerted the reader to the fact that legal fees would be payable under the contract if the agreement ended before the litigation did. Mr Walker’s evidence on the point, which I accept, is that he used the terms of the agreement as the check-list for his oral explanation to Mr Silvera before the agreement was signed. He accepted that the attendance note does not detail the content of the explanations given at the time but suggests that the written terms of the contract itself indicates them. There were parts of the standard form that related to personal injuries work that were irrelevant and could and should have been deleted. 
64.	He described to the court taking the client through basic fee, disbursements, success fee and explaining the difference between a contingency fee which would be calculated by reference to a percentage of the damages recovered and a CFA where the success fee was calculated by reference to a percentage uplift on basic fees. He remembered using pieces of paper to calculate some examples of net recoveries. He said that he had explained to Mr Silvera that no matter how small the award might be in his favour he would have to pay a basis fee and a mark up of 75% and he did so by hypothetical calculations of various levels of recovery on a piece of paper. He could not remember whether he explained the mark up by using the phrase “blended rate” but indicated that the explained the 75% rate  in the following way:
“the normal range for a case like this will be 50 and 100% mark-up. This is a complicated case risk factors. I suggested 75% and that was 70% risk and 5% deferment factors and that was one rate to cover the whole claim. …We did not distinguish between the big claim, the loss of chance claim, and the small claim, the wasted costs claim….I do not think that anything else was said at that stage about the success fee.”

65.	Mr Walker agreed in cross-examination that he did not give a specific explanation of a blend of the two risk factors and that even if only a modest amount was recovered in respect of the small claim and nothing in respect of the big claim the client was still going to have to pay not only the full basic charge but a success fee of 75%. He accepted that when the CFA was signed there was no discussion about the prospects of an offer of settlement on the small claim but none on the big claim. This is what happened subsequently.

Conclusions on compliance with the regulations
Regulation 3(1)
66.	In my judgment, there is no literal breach of Regulation 3 (1)(a)   because an explanation for setting the success fee at 75% has been given and the element represented by deferment  has been identified. To this extent the problems discussed in Garrett v Halton BC do not apply.  I do not accept Mr Bacon’s most radical submission that any explanation given will comply with the regulation. The regulation requires brief explanation for the level specified in the agreement rather than for CFAs generally. I conclude that it requires the reasons in the particular case and all such reasons to be stated. Nevertheless, in my judgment, all the reasons for setting the success fee at 75% were briefly adverted to, including the risks in the contemplated proceedings. 
67.	I readily accept that it is good practice for some brief description of the risks to be set out in the CFA itself. The Regulation 3(2) duty to require the client to consent to the disclosure of the CFA to the paying party rather assumes some information of value as to how the risk was assessed will be found in the CFA itself rather than in data extraneous to it (which in any event the client may be unwilling to permit to be disclosed). 
68.	However, this court is concerned with the construction of regulations that has already been recognised to operate harshly on solicitors who permit technical failures of compliance with regulatory duty to slip into CFAs. It is not concerned with a declaration as to best practice generally. A failure to achieve best practice does not of itself make the fee agreement for the conduct of the case unenforceable. If it had been mandatory to explain the risk assessment as opposed to identify that the risks of the claim were part of the reasons for setting the success fee at the level it has been, Parliament would have said so. I remind myself of what  Brooke LJ giving the judgment of the court said in Hollins v Russell [2003] EWCA Civ 718 [2003] I WLR 2487  at [224]
“The court should be watchful when it considers allegations that there have been breaches of the regulations. The parliamentary purpose is to enhance access to justice and not to impede it, and to create better ways of delivering litigation services, not worse ones. These purposes will be thwarted if those who render good service to their clients under the CFAs are at risk of going unremunerated at the culmination of the bitter trench warfare that has been such an unhappy feature of the current litigation scene”.

69.	In my judgment, the client is protected from an oppressive contract even if the details of the risk are not spelt out. First, he can exercise his rights for an extended explanation under Regulation 4 if he requires it. Second, if the paying party were to be able successfully to challenge at taxation the success fee at all or the percentage uplift adopted in the contract the client would not be liable for the contractual success fee (see [60] and [62] above). 
70.	It is not necessary to decide whether if the Part 36 offer had been accepted in October 2007 the paying party would have been liable for 70% success fee on top of the basic fee in respect of the wasted costs part of the claim (as opposed to the loss of chance part of the claim). Here the Part 36 offer of costs was quite specifically limited to Bray Walker’s costs on the “small” claim and not the “big” claim.  However, I consider it is likely that a costs judge would disallow a success fee of 70% on the claim that was settled with costs where the assessment of the claimant’s solicitor was that the prospects of success were as high as 80%. There was no contemporary assessment of the degree of risk for this part of the claim, and the indications are that such risk was comparatively slight. It is quite possible that the costs judge would disallow any success fee where there was no contemporary evidence as to what the solicitor considered the effective rate of success was at all in respect of the part of the claim relevant to the taxation hearing (see the judgement in Hollins v Russell at [80]). In this case the claimant is suing for his basic fees and not his success fee and nothing in this judgment is designed to give any encouragement to make a further claim for a success fee on the facts of this case.
71.	However, where there has been literal compliance with the requirements of the regulations, and where the client is protected from oppression by other duties under the regulations and in effect the reverse of the indemnity principle in respect of disputed success fees (i.e.  only liable to pay what the court would enforce against the paying party) I see no reason to read  the reference to substantial compliance in Hollins v Russell to permit by purposive interpretation a more extensive duty as a pre-requisite to enforcement than the draftsman has specified. There is accordingly no breach of the regulations and this part of the defence also fails.
Regulation 4 (2)(a)
72.	 Mr Bacon points out that in Hollins v Russell at [145] to [153]  the court concluded that  the terms of the Law Society model agreement that had won an award for Plain English  themselves met the substance of the Regulation 4 (2) duty of oral explanation  of the five specified matters. Finding as I do that the terms of the CFA were explained orally to Mr Silvera by reference to the standard agreement, it is likely that the conversations that Mr Walker and Mr Pettini  explained had happened in respect of  all the CFAs signed in this case would be a sufficient compliance with that duty.
73.	I accept that Mr Silvera was an Italian national whose English would not have been sufficient to comprehend even the plain English in the agreement, but these were not documents sent by post or completed in the abstract. There was a face to face meeting with an Italian speaking lawyer and fellow national on hand to translate and explain. Mr Silvera was not a naïve or inexperienced person. He was a seasoned businessman who already had had extensive (if unhappy) experience of the English legal system. He further had the assistance of his associate and former solicitor Mr Levene who the court finds was an astute, worldly-wise and inquisitive solicitor with an eye to detail when that suited him. The initial meeting was for some four hours and extended to an assessment of the case that might be brought, the present problems of the client, and the nature and meaning of the CFA agreement that was the only means available to Mr Silvera whereby he could instruct English solicitors to promote and protect his interests in respect of the fiasco of the previous case.
74.	The high point of the defence case on breach of regulation 4 (2)(a) was the answer recorded at [64] above. It was submitted that the failure to explain that a blended rate had been used in the calculation of the success fee and the failure to address the hypothesis of a Part 36 offer on the small claim with no offer on the big claim did not fulfil the duty under the regulations. 
75.	I accept Mr Bacon’s submission that the regulation requires an oral explanation of the circumstances when the client may be liable to pay the costs of the legal representative under the agreement rather than an exploration of hypothetical situations that might arise in the litigation. The agreement itself and the oral explanation grounded in the agreement explain the various trigger events: success, fault by the client, termination by the client or termination by the solicitors. Success was clearly defined in terms of any recovery under the claim. Mr Silvera knew that the claim had two elements wasted costs and loss of a chance. If Mr Petteni’s attendance note of the meeting is broadly accurate, as I find it is, Mr Silvera would have known at the time that the CFA was entered into that Mr Walker considered that the chances of success on the costs claim were much clearer and higher than on the loss of chance claim. I conclude that there is no duty laid down in the regulations to explain potential offers by the opposing side in respect of part of the claim. The present claim is by no means unique in having more than one head of potential damages, and differing prospects of success in respect of different heads. A construction of the regulation that required as a minimum condition of enforcement, explanations of impact on the conditions for payment of costs of a variety of offers or none on different heads of the claim would be unduly complex.
76.	I find that Mr Silvera was alerted orally and in writing to the liability to pay his own side’s costs in the event of an offer of settlement that the solicitors and counsel considered satisfactory but he did not. Whether he chose to give attention to this matter the court cannot say. It may be that he was focusing on the undoubtedly welcome news that although he could not put a firm of solicitors in funds and had no apparent means of financing further litigation, he was leaving the meeting with solicitors promising to act for him.  Certainly  subsequently in the relationship he appears to have made no protest of ignorance or misunderstanding when he was warned in direct terms by Mr Walker  what the costs consequences of a failure to settle the case would be.
77.	On the 23rd August 2007 Mr Walker wrote:
“Under the terms of the CFA if the client does not accept advice from counsel or solicitors or refuses to accept an offer that has been made which the lawyers advised is reasonable …the lawyers can terminate the agreement. If we do so you will have the option of instructing somebody else either on a CFA or paying privately.  You will still be liable for our base costs up until the date of termination but not the mark up”.

78.	On the 1st September 2007, there was another warning that a refusal to accept a reasonable settlement offer could lead to termination of the CFA with a consequent need to privately fund or re-negotiate costs. There were further warnings of termination of the CFA’s throughout October before the notices to do so were given (including that quoted at [37] above). The consequences of a termination in such circumstances had been clearly spelt out in the written terms of the CFA signed and initialled by Mr Silvera, the oral explanations given with the assistance of an Italian speaking lawyer, and the letter of the 23rd August 2007. None of this seems to have elicited any protest or request for further explanation. It is very difficult to imagine that at any time during this relationship Mr Silvera or Mr Levene can have thought that Mr Walker was going to terminate the agreement and walk away without seeking any remuneration for his efforts over four years to obtain compensation.
Regulation 4 (2) (c ) to (e)
79.	This leaves the allegations that the duty to explore litigation with insurance or other methods of financing the claim was not performed. This is a largely of question of fact. The defence is pleaded in the same terms with respect to both existing insurance and after the event insurance:
“No such consideration was explained to or undertaken with the Defendant. No steps were taken with the Defendant to investigate whether he could avail himself of other methods of financing”.

80.	  By way of background the CFA itself records that insurance had been discussed. Under part one “other points”  there was a manuscript insertion (see words in square brackets) to the effect that “we believe a contract of insurance with [an insurer of good standing] is appropriate. Detailed reasons are set out in schedule 2”. Schedule 2 does not identify an insurer and Bray Walker was not purporting to offer a tailor made insurance packet or give advice on the insurance market. The regulations did not require them to. 
81.	I conclude that there must have been some mention of insurance for this term to have been inserted. The minute of the meeting prepared by Mr Pettini notes:
“SMW then explained after the event insurance and explained what was required i.e. barrister had given a 75% chance of winning. This was expensive but it would (sic) still might well prove less expensive than having to pay the costs if one lost”

82.	This memorandum does not suggest that inquiries were addressed to pre-existing insurance policies and there was no pro forma check list used The question of insurance does not seem to have been pursued thereafter. Mr Walker’s witness statement indicates that 
“I asked him whether he (Mr Silvera) had any insurance policies and whether any of them included before the event or after the event legal expenses claims …Carlo said they did not. I asked him to check and he said that he did not. I also asked him if he wanted to apply for legal insurance and he said that he did not”

83.	This account was challenged in cross-examination, but Mr Walker adhered to it. In this he was supported by Mr Pettini who remembered translating some of this part of the conversation into Italian and confirmed that Mr Silvera was asked twice about insurance and his reaction was along the lines of you’ve already asked me. It is unfortunate that there is no written record of this exchange, but I have previously accepted the evidence of Mr Walker and Mr Pettini as honest and reliable and see no reason to disregard it on this question. Mr Pettini acknowledged that his memorandum is not as detailed on the particulars of the CFA and the surrounding issues as it could have been.  I prefer their evidence to that of Mr Levene who denied that insurance had been discussed at all.
84.	I have to decide in the context of the facts of this case whether the level of inquiry indicated by Mr Walker is a sufficient discharge of the duty under the regulation 4(2) (c).
85.	There was no reason to believe that the costs of the litigation could be met under an existing contract of insurance. This was not a case of purchase of a product by credit card, or a dispute arising out of risks that are normally or regularly insured such as motor accidents or home contents insurance. There was no membership of a trade association or union that might have proved a relevant avenue to explore. I observe that in Garrett v Halton [2006] EWCA Civ 1017 [2007] I  All ER  147 at [74]  Lord Justice Dyson said:
“the nature of the claim may be relevant. If the claim is one in respect of which it is unlikely that standard insurance policies would provide legal expenses cover, this may be a further reason why it may be reasonable for the solicitor to take fewer steps to ascertain the position than might otherwise be the case.”

86.	In my judgment, if the client or the context suggests that the litigation costs might be covered by a pre-existing policy of insurance entered into directly or indirectly, there is a clear duty to investigate the matter with appropriate scrutiny. It does not require detailed inquiry into something that there is good reason to believe does not exist, particularly in the case of an experienced businessman who approaches the solicitor for a CFA because he takes the view that there is no other way of funding future legal costs after he has litigated a substantive claim in the UK without the benefit of insurance and that is the source of his predicament. It has never been suggested throughout the history of the case that there was some avenue that could or should have been explored that might have been an alternative to a CFA. I conclude that there has been no breach of regulation 4 (2) (c) and (e).  The solicitor gave his opinion on after the event insurance because after inquiry there was no basis for any belief that an existing contract of insurance might have covered the risk. 
87.	As to regulation 4 (2)(d) the question of legal aid was discussed and legal aid forms completed, but for understandable reasons advice was given that it was unlikely to be within scope because the dispute relate to investment business.
88.	There was accordingly no breach of either of the Regulation 4 duties and this head of the defence also fails.
Result:
89.	In the event I conclude that the claimants have satisfied me that they have made out their claim for the recovery of their basic fees due under the contract set out in the CFAs. The defendant has failed to satisfy me that the contract was unenforceable by reason of non compliance with the regulation or any other pleaded reason. There will accordingly be judgment for the claimants. I trust that counsel will be able to agree the relevant orders.