Case No: PL 303919
SCCO Ref: DOFL 0405618
BAILII Citation Number: [2005] EWHC 90001 (Costs)
IN THE HIGH COURT OF JUSTICE
SUPREME COURT COSTS OFFICE
FROM THE ILFORD COUNTY COURT
Clifford’s Inn, Fetter Lane
London, EC4A 1DQ
Date: 19 January 2005
Before :
CHIEF MASTER HURST, SENIOR COSTS JUDGE
ON APPEAL FROM PRINCIPAL COSTS OFFICER O’RIORDAN
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Between :
 	MAURIZIO SAMONINI	Claimant	
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	LONDON GENERAL TRANSPORT SERVICES LTD	Defendant	
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Mr D. Adamson (instructed by M P Jones & Co) for the Claimant
Mr S. Chawatama (instructed by Kennedys) for the Defendant
Hearing date : 2 December 2004

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Judgment

Chief Master Hurst 
 
BACKGROUND
1.	This is an appeal by the Claimant against the decision of Principal Costs Officer O’Riordan at a detailed assessment on 28 August 2004 in which he disallowed all the Claimant’s costs on the basis that there was not enough evidence to show that proper enquiries had been made by the Claimant’s legal representatives before the after the event insurance policy had been taken out and the conditional fee agreement entered into. The Costs Officer was also persuaded that there had been a breach of the relevant CFA Regulations, that the CFA was therefore unenforceable and no costs were recoverable.
2.	This appeal is brought in accordance with CPR 47.20. Rule 47.23 provides that on an appeal from an authorised court officer the court will re-hear the proceeding which gave rise to the decision appealed against and make any order and give any directions it considers appropriate. The Claimant’s skeleton argument sets out the basic premise of the argument on appeal: 
"Mr O’Riordan stated that insufficient LEI checks had been carried out. This is not correct and the statements of Michael Jones and Maurizio Samonini are relied upon."
3.	Mr Adamson relies on those statements, both of which are dated 10 September 2004, neither of which were before the costs officer when he conducted the original assessment. I will return to those statements in a moment. 
4.	Mr Chawatama argues that there has been a breach of Regulation 4(2)(c) of the Conditional Fee Agreements Regulations 2000 and that therefore under Section 58 of the Courts and Legal Services Act 1990 the CFA is unenforceable. The fact that subsequent evidence has disclosed that the Claimant had no before the event insurance is, in his submission, immaterial.
THE LAW
5.	Section 58 of the Courts and Legal Services Act 1990, so far as relevant, states:
"(1)	A conditional fee agreement which satisfies all of the conditions applicable to it by virtue of this section shall not be unenforceable by reason only of its being a conditional fee agreement; but … any other conditional fee agreement shall be unenforceable.
…
(3)	The following conditions are applicable to every conditional fee agreement:
…
(c)	it must comply with such requirements (if any) as may be prescribed by the Lord Chancellor."
6.	Those requirements as set out in the Conditional Fee Agreements Regulations 2000 and include, under the heading "Information to be given before conditional fee agreements made":
"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 clients risk of incurring liability for costs in respect of the proceedings to which the agreement relates is insured against under an existing contract of insurance; 
(d)	whether other matters 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 of 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."
7.	In Hollins v Russell (and other appeals) [2003] EWCA Civ 718; [2003] 1 WLR 2487 CA, the Court of Appeal explained:
"107.	The key question therefore is whether the conditions applicable to the CFA by virtue of Section 58 of the 1990 Act have been sufficiently complied with in the light of their purposes. Costs Judges should accordingly ask themselves the following question: 
"Has the particular departure from a Regulation pursuant to Regulation 58(3)(c) of the 1990 Act or a requirement in Section 58, either on its own or in conjunction with any other such departure in this case, had a materially adverse effect either upon the protection afforded to the client or upon the proper administration of justice?"
If the answer is "yes" the conditions have not been satisfied. If the answer is "no" then the departure is immaterial and (assuming there is no other reason to conclude otherwise) the conditions have been satisfied."
8.	In relation to after the event insurance the Court of Appeal stated:
"114	… ATE insurance premiums are recoverable as costs in any proceedings irrespective of whether or not there is a CFA between the receiving party and her legal representatives. The client’s liability to pay the insurance premium arises from the contract of insurance, not from her contract with the legal representative. It arises whether or not there is a CFA and whether or not the CFA is enforceable … It would appear therefore that there is no bar to the recovery of the ATE insurance premium as costs whatever may be the bar to the recovery of the lawyers’ charges and success fee."
9.	The court went on to deal with an alleged breach of Regulation 4(2)(c) where the paying parties argued that there was a breach because the client had not been informed that the risk of incurring a liability for costs, in respect of proceedings to which the agreement related was insured against under an existing contract of insurance. The court found that attendance notes dealing with this issue should not ordinarily be disclosed. The court found that it was sufficient to satisfy Section 58 that the solicitor had discussed the matter with the client and had formed a view on the funding options. The court pointed out that the recovery of the insurance premium is an entirely separate matter from the enforceability of the CFA. 
10.	Mr Chawatama argues that it is clear from the witness statements now produced that no, or no sufficient, enquiries had been made by the solicitors as to the existence of before the event insurance. He argues that there has been a departure from the Regulations and that this has had a materially adverse effect upon the protection afforded to the client and upon the proper administration of justice. He suggests that there were clear potential disadvantages under the CFA for the Claimant, not least because of the size of the ATE premium (£798) relative to the size of the claim (less than £2,000). With regard to the materially adverse effect on the administration of justice Mr Chawatama points to the satellite litigation which has ensued and the disproportionate costs generated (said to be in region of £18,000) because of the solicitors’ apparent failure. He further suggests that this imposes pressures on the resources of the court. He argues further that, if solicitors are permitted to skimp on the proper investigation of before the event insurance, the administration of justice will be badly served, since there will be no improvement in the way in which solicitors conduct proceedings of this type.
11.	In Sarwar v Alam [2000] EWCA Civ 1401; [2002] 1 WLR 125 the Court of Appeal considered before the event insurance in detail:
"45.	In our judgment proper modern practice dictates that a solicitor should normally invite a client to bring to the first interview any relevant motor insurance policy, any household insurance policy and any stand alone BTE insurance policy belonging to the client and/or any spouse or partner living in the same household of the client …"
12.	The solicitor is not obliged to embark on a treasure hunt in case, by chance, an insurance policy belonging to a member of the client’s family contains relevant BTE cover. The availability of ATE cover at a modest premium would inevitably restrict the extent to which it would be reasonable for a solicitor’s time to be used in investigating alternative sources of insurance. In the present case it is worth repeating that the ATE insurance premium is £798 including IPT in a straightforward rear end collision involving damages of less than £2,000. 
13.	Mr Chawatama also relied on two County Court decisions Culshaw v Goodliffe (a decision of His Honour Judge Stewart QC dated 24 November 2003) and Adair v Cullen (a decision of His Honour Judge Holman dated 14 June 2004). In each case the Judge refused to allow any costs to the Claimant. These two cases affirm the unenforceability in its entirety of a CFA that breaches Regulation 4(2)(c) (paragraph 47 to 49, Adair paragraph 8, Culshaw). In Culshaw HHJ Stewart proceeded on the basis that the Claimant had unequivocally confirmed that she had no legal expenses insurance (the file note indicated that the Claimant was not sure about her insurance). It subsequently transpired that there was in fact a before the event policy in existence. In Adair the Claimant failed to recover her costs on the basis that there had been a failure to carry out a sufficient check as to the existence of a before the event insurance policy. In fact the Claimant’s motor vehicle insurance contained legal expenses cover.
THE EVIDENCE
14.	Annexed as an exhibit to the statement of Michael Patrick Jones is an Extended Investigations Report from Accident Advice Helpline (AAH), the company which originally contracted with the Claimant to deal with his claim. The Extended Investigations Report indicates that instructions were first received by AAH on 13 September 2001; that initial documents were sent to the client on 17 September 2002 and explained to the client on 18 September. On 18 September the client signed an agreement with AAH. That agreement states at paragraph 3:
"An AAH panel solicitor has now agreed to act for me to pursue my claim on a conditional fee basis. I confirm that I want the solicitor (my solicitor) to act for me. I understand a conditional fee agreement (CFA) will be sent to me upon which I shall be professionally advised before I enter into it."
15.	The identity of the panel solicitor does not appear on the face of the agreement although under the heading "Terms Used" the agreement states:
"Panel solicitor means a solicitor who has entered into an agreement with AAH"
16.	The agreement goes on to explain to the client that AAH has arranged for him to borrow the money to pay the premium for the insurance certificate and up to the sum of £1200 towards some of the expenses, eg court fees, enquiry agency fee. The agreement continues, at 5(a):
"… I ask AAH to arrange for the issue of an insurance certificate for a premium of £760 plus insurance premium tax and for the premium to be paid from the loan."
17.	The agreement goes on to explain that AAH will charge the client a management fee of £199 plus VAT:
"This fee will initially be funded by the loan. If I win compensation this fee will be deducted by the bank to repay that part of the loan."
18.	At paragraph 4 the agreement states:
"I understand that there are a number of ways of funding personal injury claims including:
(a)	legal aid …
(b)	trade union …
(c)	private solicitor – I can instruct a solicitor on a private paying basis or enquire if a conditional fee agreement with insurance would be available to me. Such a solicitor may or may not also be able to make arrangements for a loan to pay expenses, eg court fees, medical experts fees;
(d)	legal expenses insurance – I may have legal expenses insurance cover (which may be included in my house or car insurance) under which I could claim.
I have considered and understood these options. I confirm that I am not aware that I have any suitable legal expenses insurance in place (but should this not be the case, I elect not to use it) and I confirm I wish to proceed with AAH."
19.	The Extended Investigations Report records that the case was accepted by the nominated panel solicitor on 17 September and that the documents were sent to the nominated panel solicitor on 19 September. The document sent by AAH to MP Jones & Co (MPJ) dated 17 September 2002 (which was shown to Mr Chawatama during the course of the hearing before me) informs the solicitors of the new personal injury claim. The solicitor is informed: 
"Acceptance of this case will be deemed as an automatic instruction by you for Accident Advice Group to commence investigations work."
20.	The AAH documentation pack was sent to the solicitors on 19 September 2002 with a covering letter stating:
"The documentation includes a signed and completed statement of truth, conditional fee agreement and consumer credit agreement between Mr Maurizio Samonini and the First National Bank Plc. We also enclose a copy of a signed Accident Advice Helpline Client Agreement which sets out the relationship between the parties involved. 
Our investigation team have attended upon the client and explained all of the above documentation. However it is your duty to further contact the client to explain the conditional fee agreement and countersign within the next 10 days and confirm to us in writing.
These duties have formed part of our investigations work and the details will be added to the clients investigation file. For sake of good order, supporting documentation including the Extended Investigation Report, Case History and Correspondence history reports have been included for your file."
 
21.	The accompanying Claim Summary, under the heading "Important Information" states: 
"This claim has been accepted in accordance with the terms and conditions of the Accident Advice Helpline Panel Solicitor Manual. Panel solicitors must NOT deviate from the procedures set out in the manual. Procedures referring to medical reports, issuing of proceedings, termination, settlement and loan repayment must be adhered to fully. Where specific permissions and consents are required to perform an action, they must first be requested and obtained in writing. 
NOTE
Termination of a case may carry financial penalties and cannot be effected without Accident Advice Helpline consent. 
The panel solicitors responsible for the recover of the all costs and disbursements [including the initial costs incurred and insurance premium].
Initial Costs Incurred
Investigation work has been performed following panel solicitor instructions and payment arranged via funding options. 
A funding backed after the event legal expenses insurance policy has been purchased."
22.	The position is therefore that the client has agreed to pay the insurance premium of £798 including IPT, a client management fee of £233.83 including VAT and, through his solicitors, an accident investigation fee of £410.08 including VAT, a total of nearly £1,442 excluding his own solicitors’ costs. If the case had been lost the Claimant would not have had to pay anything except bank interest but, having succeeded to the extent of £1,814 damages, he is required to repay the loan which he took out to cover these expenses, together with interest at 1% per month (APR 13.6%) less any costs recovered from the Defendant.
23.	Surprisingly, the Defendant’s Points of Dispute do not raise the issue of proportionality, nor do they challenge the quantum of the insurance premium. Similarly the status of the investigation fee is not queried. This case can only be decided on the evidence and submissions put before me but I feel bound to say that it seems unlikely that the scheme being run by AAH would stand up to close scrutiny. 
24.	Turning to the question of legal expenses insurance the Extended Investigations Report notes at page 6:
"The client does not have legal expenses insurance, the following LEI checks have been noted: 17.9.02 received confirmation from broker/client." 
25.	The Claim Case History states: 
"16.9.02 Summary: Good circs. Hit while parked stationary. We have 2 wits, who can confirm the client wasn’t moving. TP admitted liability. We have TPI dets …
17 September 2002: Spoke to client, he said he has no LEI, sent to MPJ."
26.	On the same date it is recorded that the case is accepted by MPJ at 20% success fee.
27.	The CFA signed by the client is dated 7 October 2002. Under the heading "Other points" the agreement states:
"Immediately before the agreement was made, we explained the following points to you:
…
(2)	Whether we consider that your risk of incurring liability for fees and disbursements (ours and/or your opponents) in these proceedings is insured under an existing contract of insurance."
28.	Against that documentary background I now turn to the witness statements of the Claimant and his solicitor.
29.	In his witness statement of 10 September 2004 Mr Samonini, the Claimant, states that he remembers being asked by a person at AAH over the telephone, if he had any insurance that would cover him for his claim. As a taxi driver he had had to choose every year whether he wished to pay the additional premium for this when he renewed his insurance. He had taken out the extra insurance a few years ago but had been disappointed in the service he received when he was involved in an accident. He had therefore elected not to have any cover for legal expenses insurance. 
30.	When his solicitor Mr Jones contacted him and explained the CFA "he told me we had to enter into the agreement and take out an insurance policy as I did not already have one". Since Mr Samonini lived in Ilford, Essex, and his solicitors were in Plymouth all communication was by telephone.
31.	Michael Jones, the Claimant’s solicitor, in his statement of 10 September explained how his firm became involved:
"Mr Samonini came to this firm via a claims management company called Accident Advice Helpline (AAH). I would vet the claim for merit and if I accepted a claim I would receive details of the client and would progress the claim from that point on. I know that AAH had two schemes for dealing with road traffic accidents. One was the "LEI" scheme and the other was the "CFA" scheme. This is self explanatory. This firm took only claims under the "CFA" scheme. As far as I am aware each scheme was equally profitable for AAH. I knew that AAH carried out LEI checks in advance of sending out claims – it was not in their interests to issue policies or have inappropriate funding for the claimant."
32.	The statement continues: 
 
"When I received the pack back from AAH I noted that an LEI check had been done. 
… 
Finally I confirm that when I telephoned Mr Samonini on 7 October 2002 I complied with the necessary Regulations concerning oral advice. It is not cost effective to write down everything I say on each occasion and I use shorthand. I go through the points entitled "other points" in the conditional fee agreement. I do not recall if I asked Mr Samonini directly if he had legal expenses insurance as I already knew the answer but I always told the client the reasons why we have to use a conditional fee agreement and why insurance is taken out – that is because there is no other insurance. I believe I would have said the same to Mr Samonini. I do not recall if he made any comment on my explanation of the conditional fee agreement but there was nothing to alert me that a conditional fee agreement with additional liability was inappropriate."
33.	The solicitor’s attendance note for 7 October states merely:
"OTC client 
Explaining CFA"
34.	In the event the Claimant’s insurance brokers confirmed to Mr Jones by letter of 10 September 2004, that Mr Samonini did not accept the offer for the Uninsured Loss Scheme when renewing his insurance in October 2001.
SUBMISSIONS
35.	Mr Adamson had not had the advantage of seeing the cases of Culshaw and Adair before the hearing. Accordingly I gave directions for further written submissions and a response on behalf of the Defendants. Mr Adamson puts his submissions under three heads:
i.	Should the court embark on the enquiry? 
 
ii.	Has there been a breach of the Regulations? and 
 
iii.	Was the breach material?
36.	Mr Chawatama submits that the AAH papers show that AAH did an LEI check (whose adequacy for the purposes of the Regulations is not accepted) before sending the Claimant to the panel solicitor and that Mr Jones confirms this arrangement in his statement. He submits that this touches upon the central issue of whether the solicitor complied with Regulation 4(2)(c) and the related issue of whether there was delegation of this function by MPJ to AAH with MPJ retaining responsibility. He points out that although Mr Jones was a panel solicitor he retained the right to reject the claim even after LEI checks by AAH. He argues that if MPJ could reject claims referred to them in this way, they never assumed, let alone retained professional responsibility, for performance of the duties under Regulation 4. Mr Chawatama argues that the arrangement between AAH and MPJ "was the reverse of that in the TAG scheme where the solicitor accepted a claim and only thereafter were checks done by the claims investigator on behalf of a particular solicitor".
37.	On that point there is quite simply insufficient evidence as to the arrangements between AAH and MPJ and the client to be able to state with any certainty how the scheme operated or whether or not there was delegation to the AAH representative.
38.	Mr Chawatama argued that there had been a breach of Regulation 4(2)(c) of the CFA Regulations 2000 because:
i.	the solicitor relied entirely on the check by AAH, since he "already knew the answer";

ii.	AAH are not a party to the CFA and did the LEI check (which Mr Chawatama argues was inadequate in any event) at a time prior to the appointment of the panel solicitors; 
 
iii.	the Claimant was only ever asked by AAH whether he had LEI, he was not asked about household insurance or asked to produce motor and household policies; 
 
iv.	the attendance note for 7.10.02 appears to suggest the Claimant waived his recourse to LEI; and 
 
v.	there was no reference to consideration of LEI in the solicitors’ follow up letter after the telephone attendance of 7.10.02. 
39.	With regard to these last two items there is nothing on the attendance note for 7 October indicating that LEI was mentioned at all, still less that the Claimant waived his recourse to it. It is correct to say that in the follow up letter LEI is not mentioned.
40.	Although very little documentation has been produced it is evident from the papers that M P Jones are panel solicitors who receive work on a regular basis from AAH. They have clearly entered into an agreement with AAH and are required to comply with the procedures set out in the Panel Solicitors Manual. It is not clear from the documents whether the relationship between the panel solicitor and AAH was sufficiently close for delegation to have taken place. The question remains however whether the enquiries made by the solicitors (or by AAH on their behalf) were sufficient in the circumstances to satisfy the duty upon the solicitors to make appropriate enquiries and to consider whether the client’s risk of incurring liability for costs in respect of the proceedings is insured against under an existing contract of insurance. 
41.	Mr Chawatama argues that the solicitors themselves took no responsibility for ascertaining whether or not there was legal expenses insurance and relied entirely on the enquiries made by AAH. Those enquiries appear to have consisted of a telephone conversation between Kirsty Newell and the Claimant on 17 September 2001, the note of which states: "Spoke to client he said he has no LEI. Sent to MPJ." He further argues that the fact that the client’s assertion subsequently proved to be correct in relation to the motor insurance does not exonerate the solicitor from having to carry out the necessary enquiries. 
Should the Court Embark on the Enquiry
42.	Mr Adamson relied on the decision in Adair of HHJ Holman, who held that where there was no evidence indicating that anything was amiss there would be no valid basis on which the court could go behind the documentation signed by the Claimant. The Judge continued:
"But in this case the revelation of the fact that the client had legal expenses cover under her motor insurance policy and at no cost to her is plainly inconsistent with the information in the documentation."
43.	HHJ Stewart QC expressed a similar view:
"But where it becomes apparent as here that somebody did in fact have BTE insurance then the question can properly be raised as to whether there was compliance with 4(2)(b)."
44.	Mr Adamson argues that there is no such inconsistency in the present case. He suggests that the Defendants in their Points of Dispute invited the court to embark on a fishing exercise:
"The Claimants solicitors are asked to confirm whether they have complied with the general principles set out in the case of Sarwar v Alam and the Claimant’s (sic) will be requested to disclose the initial attendance with the Claimant to ensure that all enquiries were undertaken."
45.	This speculation he argues is precisely the sort of exercise which the Court of Appeal in Hollins v Russell was eager to prevent. He characterised the Defendant’s point as a technical challenge which would frustrate the intention of Parliament that CFAs with an insurance policy should be seen as an appropriate way of funding this type of litigation.
46.	Mr Chawatama’s response to that is that there is good reason to go behind the solicitor’s certificate on the bill. The reason is given in the Points of Dispute:
"It should be noted that the Claimant would have an insurance policy to cover him for any accidents as a taxi driver and that he would have been able to bring a claim pursuant to that insurance policy."
47.	He suggests that this is a proposition which accords with common experience and by inference a taxi driver without such insurance is unusual and justifies investigation.
48.	Mr Chawatama also points out the paucity and quality of the material put before the Costs Officer who first dealt with the bill. The attendance note and follow up letter, neither of which made reference to LEI, positively invited investigation given the presumption advanced that the LEI was likely to be in place. He argues that given the nature of the Claimant’s business this is not a mere technical challenge and he does not accept that a black cab driver is in that class of claimant who should be deemed to have special knowledge of LEI, such as insurance brokers or lawyers practising in the field. 
49.	Although, as I have said, the Defendants have not challenged the quantum of the insurance premium, the fact is that the Claimant has entered into an agreement with AAH which requires him to pay a premium of £798 in a very straightforward case involving minimal damages. The premium sought for the ATE policy is on its face disproportionate and demands investigation. It is therefore appropriate to go behind the solicitor’s signature on the bill.
HAS THERE BEEN A BREACH OF THE REGULATIONS?
50.	Mr Adamson submits that the Claimant’s Solicitors have complied with the requirements of Regulation 4(2)(c). He suggests that the assertion that the solicitor relied on the check by AAH is irrelevant, firstly because he did not rely solely on that enquiry, but conducted his own enquiry; and secondly, even if he did rely upon it, this does not amount to a breach of the Regulations. 
51.	For his part Mr Chawatama argues that there is no evidence that Mr Jones conducted his own enquiry. He cannot recall doing so. If the wording in the CFA was simply recited to the Claimant (as appears to be the case) that would be insufficient. Mr Jones, at paragraph 10 of his statement, states:
"I do not recall if I asked Mr Samonini directly if he had legal expenses insurance as I already knew the answer."
52.	Mr Samonini remembers being asked by a person at AAH if he had any insurance that would cover him for a claim. He then states at paragraph 6:
"I gave details of my claim to AAH. I was then contacted by Mr Jones who explained the document called the conditional fee agreement to me. He told me we had to enter into the agreement and take out an insurance policy as I did not already have one."
53.	I do not accept that Mr Jones carried out any separate enquiry as to LEI. In my judgment he did not consider whether the Claimant’s risk of incurring liability for costs was insured against, but relied entirely upon the enquiries made by AAH. 
54.	Turning to Mr Adamson’s submission that nonetheless this does not represent a breach of the Regulations, he relies on paragraph 195 of the decision in Hollins:
"We must stress that we are only concerned on this issue with the question whether, as a matter of principle, a solicitor may delegate his Regulation 4 responsibilities to a wider class of people than those embraced by Mr Burnett’s primary argument on the appeal. If it is possible to delegate more widely then the solicitor will remain professionally responsible for the performance of the person who actually performs the duties. Each situation must be considered on its own facts. Parliament wishes to foster new ways of rendering litigation services and, provided that the performance of Regulation 4 duties is appropriately delegated and the duties are properly performed under appropriate supervision, we cannot see that Parliament’s intentions are being thwarted if the solicitor delegates more widely than is allowed for in Mr Bernard’s primary argument before us. We would not wish to be prescriptive about the form which that supervision should take provided that an appropriate system has been set up."
55.	Mr Chawatama argues that AAH are not a party to the CFA and that they carried out the LEI check at a time prior to the appointment of the panel solicitors. I have already stated that it is not possible to decide from the documents which have been produced whether delegation did in fact take place or whether an appropriate system of supervision had been set up. Mr Adamson submits that the cases are dealt with in a consistent manner and, given the relationship of M P Jones & Co as panel solicitors with AAH, there is no single way in which the relationship should be structured and the supervision exercised. He urges that the court should not conduct a detailed enquiry into the nature of the arrangement between M P Jones and AAH and that such an enquiry would be manifestly disproportionate, contrary to the guidance of the Court of Appeal and would be a distraction from the more important question concerning the quality of the enquiry. 
56.	Mr Chawatama argues that the approach of AAH did not measure up to the "proper modern practice" envisaged by the Court of Appeal in Sarwar. I mention for the sake of completeness that Mr Chawatama also argues that the LEI checks were done prior to the acceptance by MPJ of the claim. Those checks were done for a potential legal representative to be drawn from a panel of solicitors, all or any of whom could reject the claim. At the time when the Claimant was asked about LEI there was no identifiable legal representative who retained professional responsibility for consideration of existing LEI under Regulation 4(2)(C).
57.	The situation therefore is this. It is not possible, on the evidence before me, to decide whether there has been proper delegation. I am not persuaded that the solicitor made separate enquiries of his own. There is therefore a potential breach of Regulation 4(2)(c). Two questions remain to be answered. First in relation to the enquiries made by AAH, if I am wrong about the insufficiency of the evidence to prove delegation and AAH are subsequently found to have been delegates of the solicitors, the question to be answered is whether there has been a sufficient compliance with the Regulation. The second question is that posed by the Court of Appeal at paragraph 107 in Hollins: 
"Has a particular departure from a Regulation … either on its own or in conjunction with any other such departure in the case had a materially adverse effect either upon the protection afforded to the client or upon the proper administration of justice."
58.	Mr Adamson relies on the fact that when the Court of Appeal decided Sarwar the court was dealing only with the recoverability of the ATE premium in circumstances where the BTE insurance of an insured also provided cover for passengers. The court did not give guidance on the approach to the Conditional Fee Agreements Regulations 2000 which were not then in force. Lord Phillips MR stated, at paragraph 50:
"The guidance we have given in this part of our judgment should not be treated as an inflexible code. The overriding principle is that the claimant assisted by his/her solicitor should act in a manner that is reasonable. The availability of ATE at a modest premium will inevitably restrict the extent to which it will be reasonable for a solicitor to be used in investigating alternative sources of insurance."
59.	Mr Adamson asserts that, given that the Claimant is a professional black cab driver, he may be expected to know with some certainty whether or not he has LEI motor insurance.
60.	Mr Chawatama points out that the proposition that the guidance in Sarwar does not apply to the 2000 CFA Regulations was advanced and rejected in both Culshaw and Adair. In his submission all that Sarwar requires was for the solicitor to request sight of a motor or house policy at or before a first interview or over the telephone. The Claimant specifically told AAH that he had not been involved in any previous legal action (page 2 of the Extended Investigations Report) the fact that the Claimant was a black cab driver did not have any effect on the mode or extent of investigation used by AAH or MPJ in his case. There is no evidence at all that the Claimant was asked either by AAH or MPJ about a household or other policy which might contain LEI. Finally he asserts that the fact that there was no LEI in place (at least in respect of the motor policy) does not alter the possibility of there being a breach of the Regulations.
61.	As I have already stated I am not satisfied that the solicitor made any, or any sufficient, enquiries of the Claimant as to the existence of LEI. If there has in fact been delegation to AAH, the enquiries made by them were in my judgment inadequate and insufficient to comply with the Regulations. In particular the Claimant was never asked about any policy other than his motor policy. Looking first at the quality of the compliance with the Regulations: this was in my judgment inadequate, by both the solicitor and AAH. In those circumstances it is immaterial whether or not there was proper delegation to AAH, since on any view the compliance was insufficient.
WAS THE BREACH MATERIAL?
62.	Mr Adamson argues that there has been no materially adverse effect caused by any breach. The Claimant knows the size of the premium, the circumstances in which it is payable are clear from the documentation. He suggests that even if the Regulations had been fully complied with the Claimant would have funded the litigation in precisely the same manner because he had no other method of finance available. Therefore, at the time that the CFA was signed, there was no adverse effect on the protection afforded to the Claimant. Secondly, the Claimant elected not to use his LEI insurance should he be found to have it. Mr Adamson argues that he is entitled to do this if he so wishes and many do so, for example to protect no claims bonuses. 
63.	He argues further that with regard to the materially adverse effect on the administration of justice caused by satellite litigation and disproportionate costs generated by the Claimants’ solicitor’s apparent failure, subsequent events have shown that there was no flaw in the investigation in that the Claimant did not have LEI (at least under his motor policy). 
64.	Mr Chawatama submits that the potential adverse effects on the protection afforded to the Claimant are those found in most CFAs, as explained by HHJ Stewart QC in Culshaw at paragraphs 25 to 33 where the Claimant, if the CFA was to be enforceable, would be in a worse position than a Claimant under a BTE insurance policy. Mr Chawatama also submits that there is no evidence that the relative advantages and disadvantages of BTE and ATE were explored with the Claimant before he signed the declaration, stating that he did not in any event wish to rely on LEI, nor is there any evidence that he elected to waive that reliance because he wished to protect his no claim bonus or for any other reason.
65.	In my judgment the failure, properly to consider whether the client’s risk of incurring a liability for costs in respect of the proceedings to which the CFA relates, is insured against under an existing contract of insurance, has had a materially adverse effect upon the protection afforded to the client, in that the client has entered into a CFA, a loan agreement and an ATE insurance policy costing £798. In circumstances where the Claimant’s damages were never going to exceed £2,000, a premium of this magnitude is, on its face, disproportionate. The Court of Appeal in Sarwar referred to: "the availability of ATE at a modest premium …" This is not such a policy. If it is appropriate for the Claimant to have agreed to take on a policy with a premium of this size, the solicitor is clearly under a duty to carry out a careful investigation as to alternative sources of insurance.
66.	As to the proper administration of justice I accept Mr Chawatama’s submission that if solicitors are permitted to skimp on the proper investigation of LEI the administration of justice will be badly served since there will be no improvement in the way in which solicitors conduct proceedings of this type, added to which the client will have been badly served. In addition this breach has led to costly satellite litigation.
67.	In those circumstances I find that there has been a breach of Regulation 4(2)(c) which has had the materially adverse effect which I have described. In those circumstances the CFA is unenforceable and this appeal is accordingly dismissed.