Neutral Citation Number: [2014] EWHC 2194 (QB)
Case No: A40L5275
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
LEEDS DISTRICT REGISTRY

The Court House
Oxford Row
Leeds LS1 3BG

Date: 3 July 2014

Before :

His Honour Judge Behrens sitting as a Judge of the High Court in Leeds
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Between :

	BEECHAM PEACOCK SOLICITORS LLP	Claimant	
	- and -		
	(1) ENTERPRISE INSURANCE COMPANY PLC
(2) ISLE OF MAN INSURANCE LIMITED
(3) MOUNT GRACE INSURANCE LIMITED	

Defendants	

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David Lamb partner of the Claimant for the Claimant
Michael Ozon Director of Ozon Solicitiors Ltd for the First and Second Defendant
The Third Defendant did not attend and was not represented 

Hearing date: 9 June 2014
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Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

.............................

Judge Behrens : 

1	Introduction
1.	The Claimant (“BPL”) is a limited liability partnership. It is a successor practice of Beecham Peacock Solicitors (“BPS”) and as I understand it has assumed the rights and liabilities of that firm. 
2.	The First and Third Defendants are insurance companies trading out of Gibraltar. The Second Defendant is an insurance company trading out of the Isle of Man. All 3 insurers of underwriting after the event legal insurance (“ATE policies”). 
3.	BPS acted for a number of clients in respect of personal injury actions that failed. In each case it entered into a Conditional Fee Agreement (“CFA”) with the client. In each case the client entered into an ATE policy with one or other of the Defendants.
4.	In these proceedings BPL seeks to recover legitimately incurred disbursements incurred on behalf of its clients. The sums involved are significant. The total claim is £221,171.95 claimed as to £145,668.78, £47,081.73 and £28,421.44 from the First, Second or Third Defendants.
5.	The principal application before the Court is an application to strike out the claims on two main grounds. First it is said that as BPS was not a party to the insurance policies it has no right of action against the insurers. Second it is said that in breach of reg 4(2)(e)(ii) of the Conditional Fee Agreements Regulations 2000 (“the 2000 Regulations”) BPS failed to disclose its interest in recommending the contract of insurance.
6.	BPL seeks to meet these arguments in a number of ways. First it is contended that there is a direct right of action against the insurer. This is either as a result of a direct contract or by subrogation or restitution. If there is no direct right of action there is an application to join each of the lay clients as parties. Second it is said that there is no breach of reg 4(2)(e)(ii).
7.	In so far as the claim is not struck out there are a number of applications to be dealt with.
2	Summary Judgment/Strike out
8.	The principles applicable are summarised in the judgment of Lewison J (as he then was) in Easy Air Limited v Opal Telecom Limited [2009] EWHC 339 
i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 1 All ER 91;
ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8];
iii) In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman;
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10];
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;
vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.
9.	This approach was recently approved in the judgment of Floyd LJ in TFL Management v Lloyds TSB Bank plc [2014] 1 WLR 2006.
3	The Contractual Arrangements
10.	In order to understand the nature of the claim it is necessary to summarise the various contractual arrangements existing between the various parties involved.
3.1	Freeclaim IDC plc (“FIDC”)
11.	FIDC is described in the evidence as a “claims farming operation” based in Ashington Northumberland in respect of personal injury victims. It acted as agent for the Insurers for the purpose of managing and administering the ATE policies issued by the Insurers in respect of FIDC claims.
12.	The nature of the operation can be seen from the documentation issued to its clients. The letter which is written to the client sets out the service. In summary FIDC will
1.	select a specialist firm of solicitors from its panel to advise about the claim”
2.	provide a FIDC ATE policy to protect the client against liability for costs and any other expenses if the claim is unsuccessful.
3.	Arrange a variable rate bank loan to make sure that the solicitor can meet costs and expenses. There is a limit of £300 to cover the interest on the loan.
4.	charge the solicitor (a referral fee) £300 for this work.
13.	BPS were one of 4 firms of solicitors in the north east who were members of the FIDC panel of solicitors.
3.2	The variable rate bank loan
14.	The bank loan was governed by an agreement between FIDC, BPS and Hampshire Trust plc dated 18 December 2002. It is not necessary to refer to the agreement in detail. In the course of his submissions Mr Ozon drew my attention to recital C and clause 2.1 which make it clear that the lending is provided to the personal injury client and not BPS.
3.3	CFA
15.	I was shown a number of CFA’s made between BPS and its clients. Amongst the points made by Mr Ozon are the following:
If you lose you pay your opponent’s charges and disbursements. You may be able to take out an insurance policy against this risk.
Immediately before you signed this agreement we verbally explained to you the effect of this agreement and in particular the following:
In all the circumstances on the information currently available to us we believe that a contract of insurance with FIDC is appropriate. Detailed reasons for this are in Schedule 2
We confirm that we do not have an interest in recommending this particular insurance agreement.
16.	The Law Society Conditions (which were incorporated) include the following:
If you are insured against payment of these amounts by your FIDC insurance policy we will make a claim on your behalf and receive any resulting payment in your name. 
3.4	The ATE policies
17.	I was shown two of the ATE policies, one between the First Defendant and the client and the other between the Second Defendant and the client.
18.	Although the wording of the two policies is different the effect is substantially the same. 
19.	In the First Defendant’s policy the Insurer (subject to exceptions) agreed to indemnify the insured against, inter alia, own disbursements (as defined).
20.	The definitions make it clear that:
1.	The Insured is an individual who has entered into … a CFA with the Appointed Representative.
2.	the Appointed Representative is the panel solicitor (in this case BPS)
3.	Own disbursements means disbursements … reasonably and properly incurred by the Appointed Representative and/or the Insured in the conduct of the proceedings on behalf of the Insured.
21.	It is to be noted that although the wording is somewhat convoluted under clause 9 appears to exclude BPS’s right to enforce the agreement under Contracts (Rights of Third Parties) Act 1999 (“the 1999 Act”)
22.	In the Second Defendant’s policy the Insurer (subject to exceptions) also agreed to indemnify the insured against, inter alia, disbursements which the Insured had incurred (as defined).
23.	The Insured is defined as “the Claimant in the Proceedings”
24.	The Legal Representative is defined as “the solicitor appointed to act for the Insured …”
25.	Insured’s Disbursements is defined as meaning any payments reasonably and properly made by the Legal Representative on the Insured’s behalf to other persons in connection with the proceedings.
26.	There is no clause excluding the 1999 Act as in the First Defendant’s policy.
3.5	The Relationship Agreement.
27.	Each of the Insurers entered into a Relationship Agreement with FIDC. The Agreement involving the First Defendant is dated 1st September 2004. Under it FIDC was appointed as the insurer’s agent to promote market and perform the insurance services on behalf of the Insurer.
28.	Clause 12 deals with the payment of claims. Under clause 12.1 makes it clear that payment in respect of failed claims is subject to the terms, conditions and exclusions in the ATE policy.
29.	Appendix 3 is described as the Procedures Manual. In the Introduction it is stated that the Procedures Manual forms part of the contractual arrangements between the Insurer and the parties set out in the glossary. One such party is the panel solicitor.
30.	Section 4 paragraph 5 deals with failed cases. The panel solicitor must advise FIDC and the Insurer immediately of any failed case and provide reasons for the failure.
31.	Section 5 is headed Appointed Representative Procedures. The procedures are detailed and extend to some 7½ pages. They include an Introduction, detailed sections on Reporting Failed cases, Reports and Authorisation levels, Notification of Events (such as part 36 offers, a refusal by the Claimant to co-operate), Settlement Procedure, Recovery of Premium and disbursements, Payment Request Procedure and Additional Service Standards
32.	According to the Introduction it is imperative that the procedures are adhered to without exception. There is reference to a Relationship Agreement between the panel solicitor under which the rules are to be followed without exception. Any deviation may result in the panel solicitor being unable to obtain further underwriting.
33.	It is to be noted that under clause 3 of the Authorisation section authorisation is required from FIDC for any disbursement. 
34.	Furthermore under clause 1 of the Recovery of Premium section the panel solicitor is required to use its reasonable endeavours pursuant to its obligation to the client to recover the ATE Premium and any disbursements incurred on the Client’s behalf. This includes if deemed necessary by FIDC on behalf of the Insurer the commencement or continuation of detailed assessment proceedings or an appeal against any summary or other order or judgment.
35.	Under the Payment Request Procedure Section:
1.	the Panel Solicitor must notify FIDC of any failed case with reasons and (if requested) supply the Claimant’s full file of papers, full particulars of disbursements (and opponent’s costs) and disbursement vouchers.
2.	FIDC will recommend to the Insurer how the claim is to be dealt with.
3.	If the Insurer accepts FIDC’s recommendations the file will be returned to the panel solicitors together with the appropriate funds. The Insurer will remit to the panel solicitor sufficient funds to pay the Opponent its costs and disbursements.
4.	If necessary the Insurer may appoint a costs consultant to assess the claim.
36.	The Additional Service Standards section contains procedures on Medical Referrals. The panel solicitor is obliged to advise any third party that medical experts are to be instructed via an agency. The panel solicitor is required ensure that the medical experts nominated are appropriate and (if requested to do so by the Insurer) be in a position to justify the nomination of Specialists rather than General Practitioners.
4	Direct Claim by BPL/BPS
37.	For the purpose of this application it is to be assumed that the claims all relate to valid and reasonable disbursements incurred on behalf of clients in respect of failed claims. It is also to be assumed that the disbursements have been paid for by BPS and that there are no relevant exclusions in the policy which would entitle the Insurer to decline payment.
4.1	Payment under a direct contract
38.	Mr Ozon makes the point that there is no privity of contract between the Insurers and BPS. As the ATE policies make clear the obligation on the insurers is to indemnify the insured. The Insured is clearly defined in the policies. Furthermore the definition of disbursements in the policy includes the disbursements of “the Appointed Representative”. Thus there can be no doubt, as a matter of construction, that the insurance policy gives a right of indemnity to the client and not to BPS.
39.	This point is reinforced by the other documents referred to above. In particular the Law Society Conditions incorporated into the CFA make it clear that moneys received under the policy will be received in the name of the client. Clause 12.1 of the Relationship Agreement makes it clear that any payment made is subject to the terms of the ATE policy. 
40.	I agree with Mr Ozon that BPS was not a party to the ATE policy. However, I do not agree with Mr Ozon that it necessarily follows that there can be no direct cause of action by BPS against the Insurers. It seems to me that there are two causes of action which have realistic prospects of success.
The Direct Contract between BPS and the Insurers
41.	I have summarised the terms of the Procedure Manual. Whilst that document forms an Appendix to a contract between the First Defendant and FIDC it makes it clear that it forms part of the contractual arrangements between BPS and the First Defendant. Indeed the Introduction to Section 5 refers expressly to a Relationship Agreement between the panel solicitor and the Insurer. Whilst that document is not currently in evidence it can reasonably be expected to be available at trial. Equally there is a realistic prospect that evidence will emerge of an equivalent agreement  or contractual arrangement between the Second Defendant and BPS. There is in my view a realistic chance of BPS establishing that the terms of the Procedure Manual formed part of the contract between BPS and the Insurers.
42.	Under that Manual there are a number of quite significant obligations on BPS, more than enough to provide consideration for any obligations on the part of the Insurer. It is to my mind well arguable that the Payment Request Procedure summarised above carried with it an obligation by the Insurer to pay BPS. It is, to my mind, well arguable that such obligation is enforceable directly by BPS and its successor BPL.
43.	Thus I consider that there is a realistic prospect that a direct claim against the Insurers under the contract. There are good practical reasons for that course to be adopted especially in the case of disbursements paid out by the panel solicitor. It is to be recalled that such disbursements had the prior approval of FIDC as agent for the Insurers. 
The 1999 Act
44.	I agree that in respect of policies with the First Defendant BPS probably has no direct right to claim payment of its disbursements via the 1999 Act. I use the word “probably” because I had no detailed argument on clause 9 and, as I have noted the wording is convoluted. 
45.	The position is far less clear in relation to policies with the Second Defendant. Under s 1(1)(b) of the Act a third party may enforce a term of a contract if “the term purports to confer a benefit on him, but his right to do so is subject to s1(2) by which there is no such right if on a proper construction of the contract it appears that the parties did not intend the term to be enforced by the third party. The text books on the Law of Contract (such as Treitel at paragraph 14-092 and Chitty at paragraph 18-091) both suggest that the application of these sections gives rise to difficulty.
46.	BPL’s claim is in respect of disbursements incurred by BPS on the Insured’s behalf. It seems to me to be seriously arguable that this is a term which is intended to confer a benefit on BPS and that on a proper construction of the contract the parties did intend it to be enforced by BPS. 
47.	In the light of the difficult questions which may arise I regard the resolution of these issues as unsuitable for summary determination.
48.	In the course of his submissions Mr Ozon suggested that neither of these points were part of BPL’s case. I do not agree. Whilst I agree that the pleading is not detailed and might benefit from amendment the arguments are, in my view covered in paragraph 7 of the Reply. Paragraph 7(a) is sufficient to allege the right to enforce under the 1999 Act. Paragraph 7(e) specifically alleges a collateral contract between BPS and the Insurer.
49.	In the result I refuse to give summary judgment or to strike out the claim on the basis of lack of privity of contract. In the light of this conclusion questions of subrogation and restitution do not arise. However as they have been argued and as my conclusion may be wrong I shall express my provisional views.
4.2	Subrogation
50.	I provisionally agree with Mr Ozon that the doctrine of subrogation does not assist BPS. It may be that by paying the disbursements BPS acquired a right to be subrogated to the clients claim against the insurers. However that right would not give BPS the right to sue the Insurers in its own name. The right would be a right to sue in the name of the client. 
51.	Mr Ozon cited part of the speech of Lord Goff in The Esso Bernicia [1989] 1 AC 643, 662F – 663B:
I take the example of the crofters' claims, since these were the claims concentrated upon in argument - although B.P.'s claim, the subject of the arbitration award, is in fact very much more substantial. The primary submission of Mr. Cameron was that Esso was entitled to be subrogated to the crofters' claims in tort against Hall Russell, and further that Esso was entitled to pursue such claims against Hall Russell in its own name. In my opinion, this submission is not well founded.
In considering this submission, I proceed on the basis (which appears to have been common ground throughout the case) that there is for present purposes no material distinction between Scots law and English law. Now, let it be assumed that the effect of Esso's payment to the crofters was to indemnify the crofters in respect of loss or damage suffered by them by reason of the wrongdoing of Hall Russell. If such a payment were made under a contract of indemnity between Esso and the crofters, there can be no doubt that Esso would upon payment be subrogated to the crofters' claims against Hall Russell. This would enable Esso to proceed against Hall Russell in the names of the crofters; but it would not enable Esso to proceed, without more, to enforce the crofters' claims by an action in its own name against Hall Russell.
The reason for this is plain. It is that Esso's payment to the crofters does not have the effect of discharging Hall Russell's liability to them. That being so, I do not see how Esso can have a direct claim against Hall Russell in respect of its payment.
52.	In my view there can be no answer to that argument. The payment of the disbursements by BPS does not discharge the Insurers liability under the ATE policies. Thus there is no basis for a direct claim on the basis of subrogation.
4.3	Unjust enrichment
53.	The basic elements of an unjust enrichment claim have recently been formulated at paragraph  of the judgment of Floyd LJ  in TFL Management v TSB Bank [2014] 1 WLR 2006:
The parties are agreed that, in general, in considering a claim for unjust enrichment four primary questions must always be considered, namely:
(i)	Has the defendant benefited or been enriched?
(ii)	Was the enrichment at the expense of the claimant?
(iii)	Was the enrichment unjust?
(iv)	Is there any specific defence available to the defendant such as change of position?
These are the questions posed by Lord Steyn in Banque Financiere de la Cite v Parc (Battersea) Limited [1999] 1 AC 221 at 227 A to B; see also per Lord Hoffmann at 234 C-D (“BFC”).  However, as Henderson J pointed out in Investment Trust Companies v HMRC [2012] EWHC 458 (Ch):
“the four questions are no more than broad headings for ease of exposition. They should not be approached as if they have statutory force.”  
54.	Mr Lamb submits that the Insurers have been enriched. He submits that they have avoided liability under the policies by refusing to honour their obligations under the policies with the lay clients. He submits that the enrichment was at BPS’s expense in that the release from liability was obtained by BPS’s payment of the disbursements.
55.	I provisionally do not accept these submissions. The crucial point as I see it is that the payment of the disbursements by BPS did not discharge the Insurers’ liabilities under the ATE policies. Indeed it was a condition precedent to such liability in that the policies precisely covered the Insured’s liability in respect of those disbursements.
56.	Thus the client is not discharged from his liability to reimburse BPS and the Insurers are not discharged from their liability to reimburse the Insured.
57.	It follows, in my view, that the Insurers have not been enriched and that any claim for restitution must fail. 
58.	Before leaving this, however, it is right to note that in paragraph 18-042 of Chitty there is reference to a situation such as this in one judgment in an Australian case. It was suggested by one judge that there might be a claim in restitution where premiums have been paid under a policy of liability insurance for the benefit of a third party and the insurance company had refused to pay the third party. It was, however, a single view not shared by the other members of the Court (see footnote 253). Furthermore as the authors point out the argument is of no avail to the third party where the insurer is willing to pay and the issue is merely whether the insurer should pay the third party or the insured. In such a case the insurer is not enriched.
5	The 2000 Regulations
59.	The relevant regulations are set out in paragraphs 1 – 4 of the judgment of Dyson LJ in Garrett v Halton Borough Council [2007] 1 WLR 554 and paragraphs 4 and 5 of the judgment of Sir Anthony Clarke MR in  Tankard v John Fredericks Plasticks [2008] EWCA Civ 1375. It is convenient to take them from the Tankard decision.
4.	The Regulations provide, so far as relevant, as follows:
“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 questions,
(e)	whether the legal representative considers that any particular method or methods of financing any or all of 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.
			
….”
(5)	Information required to be given under paragraph (1) about matters in paragraph (2) (a) to (d) must be given orally (whether or not it is also given in writing), but information required to be so given about matters in paragraph (2)(e) and the explanation required by paragraph (3) must be given both orally and in writing.
5.	It is common ground that the effect of section 58 of the Courts and Legal Services Act 1990, as substituted by the Access to Justice Act 1999, is that every CFA must comply with the Regulations and that failure to do so makes the CFA unenforceable, with the result that in such a case the CFA is unenforceable against the claimant, as the solicitors’ client, and the claimant cannot recover the profit costs and success fee as party and party costs from the defendant.  We understand that there is scope for dispute as to the recoverability of the ATE premium and disbursements, or some disbursements, but issues of that kind do not fall for determination in this appeal.
60.	The first sentence from paragraph 5 of the judgment reflects the decision in Garrett. However in paragraph 31 of Garrett Dyson LJ (giving the judgment of the Court) made clear that any breach of the regulations must be material. Trivial and immaterial breaches of the regulations do not amount to a failure to satisfy the conditions.
61.	In Garrett  the Court of Appeal upheld the decision that the failure to disclose that the solicitor was on the Ainsworth panel amounted to a failure to disclose an interest. The relevant passages of the judgment are:
96	We turn, therefore, to consider whether the judge was right to hold that Websters acted in breach of regulation 4(2)(e)(ii) on the facts of this case.  As we have said, Mr Bacon submits that (i) there was no obligation on the solicitors to disclose any financial interest resulting from their membership of the Ainsworth panel, but (ii) if there was such an obligation, it was discharged in this case by informing Ms Garrett that they were on the Ainsworth panel.
97	We do not accept the first of these submissions.  There was a close relationship between Websters and Ainsworth.  Websters were dependent on Ainsworth for referrals of cases, although it is unclear to what extent.  As Mr Morgan points out, cases are the lifeblood of solicitors.  The profit generated by cases is likely to be of greater significance to solicitors than commissions paid on insurance premiums paid for ATEs in connection with CFAs.  The indirect financial interest in maintaining a flow of work through membership of a panel of solicitors is greater than the direct financial interest in commissions paid for insurance premiums.  The advice to use the Ainsworth insurance product came in a CFA that it had apparently supplied to its panel solicitors and which bore its livery.  As the judge pointed out at para 7 of his judgment on the application for permission to appeal the decision of the district judge:
	“But the crunch averment in the points of dispute was that failure to comply with recommending the NIG policy would lead to termination of panel membership, and I accept from the lack of response to that direct matter that it is a proper inference that in fact it would have done so, in the sense that the claimant solicitors, Websters, recommended to some clients to go elsewhere for their ATE insurance, then they would have been taken off the panel, or, as the deputy district judge put it slightly differently, “I am not satisfied that the claimant has established that the claimant solicitors have no interest in recommending this policy”.  Although not a direct financial interest, it would be a perfectly understandable indirect financial incentive, if by not recommending a particular policy, a solicitor was taken off a panel of solicitors where there was a not insubstantial amount of work fed through to them because they were members of that panel.”
98	Mr Bacon has not challenged this finding.  Accordingly, Websters did have a financial interest in recommending the NIG insurance to Ms Garrett.  Was there sufficient disclosure of that interest?  In our judgment, the judge correctly concluded that there was not. 
62.	In paragraphs 9 – 15 of Tankard Sir Anthony Clarke MR (also giving the judgment of the Court) considered the meaning of the word “interest” in more detail. After considering the decision in Garrett the conclusion is expressed in paragraphs 13 to 16.
13.	We do not think that the position of a solicitor is the same as that of a judge.  In the course of the argument Dyson LJ suggested that a test along the following lines would be appropriate.  For the purposes of regulation 4, a solicitor has an interest if a reasonable person with knowledge of the relevant facts would think that the existence of the interest might affect the advice given by the solicitor to his client.  We have considered the appropriate test in the light of the detailed submissions made to us and have concluded that such a test is appropriate because it is consistent with the language of regulation 4 construed with due regard to the legislative purpose, which is identified in Garrett as being that of protecting the solicitor’s client.  See also in this regard [90] of Hollins and [101] of Garrett.  
14.	As to language, regulation 4 is concerned with giving the client who is considering entering into a CFA sufficient information and advice to enable him to take a properly informed and considered decision.  He can only do so if he is given information and advice which are not in any way affected by the solicitor’s self-interest.  The particular context of paragraph (e) relevant to the question whether or not to enter into a CFA is whether the solicitor considers a CFA is appropriate and, if so, whether he considers that a contract of ATE insurance is appropriate and, if so, whether he or she considers the particular contract which is available under the ALP Scheme is in the client’s interest.  As we see it, the purpose of the regulation is to ensure that the solicitor acts and gives advice independently of his own interest.
15.	In our judgment, the test identified above satisfies that purpose because it ensures that any interest of the solicitor that might affect his or her advice is notified to his or her client.  If a reasonable person with knowledge of the relevant facts would think that there might be such a risk, the client must be informed of the interest.  If such a person would think that there was no such risk, we cannot think that the draftsman of the Regulations can have intended that the alleged interest should be communicated.  The client would himself have no interest in being told about it.  His or her only interest would be in being informed of matters which might affect the solicitor’s advice or judgment in a manner adverse or potentially adverse to the client.                           
16.	That approach is in our opinion consistent with the approach in Garrett.  It is also entirely consistent with the natural meaning of the language used in paragraph (e) and has regard to the purpose of the Regulations.  Nothing more is needed to protect the client.
63.	In paragraphs 17 to 26 the court sought to apply the test to the facts of that case. In paragraph 17 it made clear that membership of a panel would necessarily amount to an interest. In paragraph 18, 20 and 21 the court distinguished Garrett:
18.	The facts of these cases are very different from those in Garrett because the nature of the ALP Scheme and the nature of the panel here is very different from the Ainsworth panel.  The reasons why the court held that Websters had an interest were that (i) there was a close relationship between the solicitors and Ainsworth; (ii) the solicitors were dependent on Ainsworth for the referrals of cases, although it was acknowledged that it was unclear to what extent; (iii) the profit generated by cases was likely to be of greater significance to solicitors than commissions paid on insurance premiums; and (iv) failure to comply with recommending the policy would lead to termination of panel membership, which would result in the loss of “a not insubstantial amount of work fed through … because of [membership] of that panel”.
20.	By contrast, on the facts of the ALP Scheme here, as set out in the summary quoted above, the position was significantly different.  Although it was (and remains) a membership scheme, the nature of the relationship between Accident Line and the solicitors was quite different from that between Ainsworth and Websters and, in any event, these are not cases where referrals played anything like the same part in the solicitors’ business as they did in Garrett: see [97] immediately before the above quotation.  In our view, it is clear in all three cases now under appeal that the overriding consideration was the quality of the Accident Line ATE policy.  That was why the solicitors subscribed to the scheme and recommended the policy to their clients.  They kept the scheme under review and only renewed their membership of it if they regarded it as in their clients’ interests to do so.
21.	No-one has suggested that there are any defects in the scheme, including its element of ATE insurance.  The scheme has throughout been approved by the Law Society.  We refer to particular aspects of the scheme below, notably in connection with referrals and rebates, but viewed as a whole, we have reached the conclusion that, in the absence of particular facts, such as, say, very significant dependence on the scheme for a firm’s revenue (which would have to be examined on the facts of the particular case), there is no conflict of interest between the client and his or her solicitors if the test set out above is applied.  
64.	In paragraph 18 of his witness statement in this case Mr Lamb says:
FIDC were specialists in providing insurance cover in disease claims. Prior to becoming a member of the FIDC panel [BPS] conducted personal injury claims for many Claimants who had contracted industrial diseases under CFA’s. We canvassed the market for insurance products that were suitable for such clients. In our judgement the FIDC insurance product was at the time, the best product available on the market, and we formed that view having considered numerous alternative products. We started using the insurance policy for all our disease work and after some time doing so we were invited to join the FIDC panel and agreed to do so. We were able therefore to recommend the policy to our clients irrespective of whether thy had been introduced to us by FIDC or had come to us by another route. The work that was introduced to us by FIDC was not a large proportion of our overall work, our main source of work was major Trade Union clients. We would in fact decline to act for Trade union clients who may have been referred to us by FIDC because they would have been able to rely on their Trade Union membership to support their claims. The overriding consideration in providing the FIDC policy was the quality of the ATE policy and we only maintained our membership of the FIDC panel because we regarded it  in our clients interests to do so and so that we could offer the product to all of our clients a matter which we believed to be in their interests.
65.	Mr Ozon submitted that the facts of this case were closer to Garrett than to Tankard. He drew to my attention the very small number of cases involved in Tankard. He suggested that there were a large number of FIDC referrals to BPS even though there was no evidence of the actual figures.
66.	The analysis in Tankard makes it clear that the question of whether the solicitor has an interest is dependent on the facts of the individual case. Whilst I accept that this case is not on all fours with Tankard it is equally not on all fours with Garrett. To my mind the question whether a reasonable person with knowledge of the relevant facts would think that the existence of the interest might affect the advice given by the solicitor to his client is not one which can be determined summarily without a full trial. It is not a case where I can reject the factual assertions made by Mr Lamb in his witness statement. In my view BPS’s argument has a realistic prospect of success.
67.	Finally I note from paragraph 5 of Tankard that there may be an argument that even if the CFA is unenforceable the solicitor may be able to recover disbursements. I have heard no argument on this and am thus not in a position to comment further. It may however provide an additional reason for a trial. This is, after all, a case about disbursements.
68.	I accordingly dismiss the application for summary judgment.
6	Other applications
6.1	Joinder of the clients
69.	I did not hear full argument on this aspect of the case. It is in any event not clear how far BPL wishes to pursue it in the light of the decisions set out above.
70.	If BPL does wish to pursue it I currently have concerns as to whether the individual clients have in fact authorised the application. It may be that BPL can compel them to join in the proceedings as a result of the payment of the disbursements. That does not mean that their consent is not required. Secondly there may be limitation problems.
71.	For these reasons I am not in a position to deal with the application.
6.2	Relief from sanctions
72.	The history of the proceedings is set out in the witness statement of Mr Lamb dated 14th April 2014. I do not intend to lengthen the judgment by setting it out in detail. In summary:
1.	Detailed directions were given by consent on 5th July 2012. These provided for a stay until 1st October 2012, and mediation; disclosure by 19th November 2012, and witness statements by 14 January 2013.
2.	the Mediation did not take place mainly it appears because of a dispute between the Defendants with the result that Mr Ozon ceased to be able to act for all three Defendants. The Court was notified of this on 10th October 2012.
3.	A CMC was listed in Newcastle for 19th December 2012. It was vacated by the Court. Mr Lamb was led to believe that it would be relisted. He wished the case put back on track but still believed that ADR was possible.
4.	On 25th February 2013 Mr Lamb wrote to the Court asking for the CMC to be reinstated. It was not. In June 2013 the case was transferred to Leeds. Eventually a CMC was listed and heard on 28th March 2014 at which time there were indications that there would be the application for relief from sanctions and/or strike out.
73.	It is plain that neither side has given disclosure. No witness statements have been filed.
74.	In my view this is a case where both sides are in default. It is a case where difficulties have been caused by the internal strife between the Defendants and the failure by the Court to list the CMC despite a number of requests from Mr Lamb. As Mr Lamb points out in paragraph 22(a) of his witness statement a major reason for non compliance with the agreed July directions was that he believed that the Court would be relisting the CMC 
75.	I am not satisfied that the Defendants have been prejudiced by any delay. Mr Ozon suggested that he would not now get help from FIDC but that difficulty is as a result of the internal dispute and was already in existence in October 2012. Whilst the actual application for relief from sanctions was not made until after the hearing on 28th March 2014 it is to be noted that the Defendants are also in breach and have made an equivalent application. Furthermore, as Mr Lamb points out a CMC was listed for 19th December 2012 and he hoped to sort out matters then. It was not his fault that it was not listed until March 2014. 
76.	There is now a body of case law on the amended provision of CPR 3.9. I take into account the importance of orders being obeyed. However in all the circumstances of this case where both sides are in breach of the same order and there are good reasons for the delay I am satisfied that it is appropriate for there to be relief from sanctions. It would be quite unjust to prevent BPL pursuing its case.