Case No: 5MY01586
Neutral Citation Number: [2008] EWHC 90115 (Costs)
IN THE HIGH COURT OF JUSTICE
SUPREME COURT COSTS OFFICE
ON APPEAL FROM COSTS OFFICER LAMBERT

Clifford’s Inn, Fetter Lane
London, EC4A 1DQ

Date: 25  June 2008 

Before :

MASTER CAMPBELL
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Between :

	DANIEL DUNN 	Appellant	
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	CRESCENZO MICI	Respondent	

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Mr Roger Mallalieu (instructed by Anthony Gold Solicitors) for the Appellant
Mr James Arney (instructed by E L Murphy & Co) for the Respondent

Hearing date: 29 May 2008
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Judgment

Master Campbell:

1.	This is an appeal against a decision of Costs Officer Lambert made on 15 November 2007 whereby the learned Costs Officer disallowed the bill of the claimant (“Mr Dunn”) amounting to £28,507.81 sought from the Defendant (“Mr Mici”).  His reasons for doing so were that Mr Dunn’s Conditional Fee Agreement with his solicitors, Anthony Gold Solicitors dated 4 March 2002 was unenforceable for want of compliance with Regulation 4(2)(c), Conditional Fee Agreement Regulations (2000) (“the Regulations”) and by operation of the indemnity principle, under which only those costs which a receiving party is liable to pay his own solicitors are recoverable from a paying party, there were no costs to indemnify and accordingly Mr Mici’s liability for costs was nil.
The facts
2.	 These can be stated briefly.  Mr Dunn was born on 30 April 1984.  On 12 January 2002, when aged 17, his moped collided with a vehicle driven by Mr Mici, resulting in personal injury including a fracture dislocation of his left ankle.  On 4 March 2002, Mr Dunn entered into a CFA with Anthony Gold.  On 30 April 2002 he turned 18.  On 21 May 2003 (having initially denied liability) Mr Mici admitted liability for the accident.  On 14 April 2005, protective proceedings were issued and on 8 November 2006 the matter was settled by way of a consent order under which Mr Dunn received  damages of £60,000 (gross of CRU)  together with his costs to be assessed on the standard basis if not agreed.
3.	Proceedings for detailed assessment were commenced on 15 August 2007.  Points of dispute were served on 28 September 2007.  Point 1 said this:
“CFA
This litigation was funded by way of a Conditional Fee Agreement between Anthony Gold & Co and the claimant’s mother, acting as his litigation friend, entered into on 4 March 2002…..Regulation 5(1) of the Conditional Fee Agreement Regulations states “ A conditional fee agreement  must be signed by the client and the legal representative” Since the Claimant’s mother and not the Claimant signed the CFA, it is submitted that this is a material breach of the Regulations and no profit costs incurred after 30th April 2002 ought to be allowed….
 …the Claimant is put to strict proof that there has been no breach of the Conditional Fee Agreement Regulations 2000 Act, Regulation 4(2)(c).  The claimant is put to proof as to what documents were physically inspected before the CFA was entered into.   Confirmation is sought as to whether there was any home insurance, motor insurance, credit card insurance providing legal expenses cover and whether the claimant was a member of a trade union …”
4.	Agreement about the costs could not be reached, as a result of which Anthony Gold applied to this court for assessment and the bill was assigned to Costs Officer Lambert.  Although no transcript is available of the hearing on 15 November 2007 it is common ground that the learned Costs Officer held that the CFA did not comply with Regulation 4(2)(c) of the Regulations and was unenforceable.  Accordingly, he assessed the bill at nil.
The Law  
5.	Section 27(1) Access to Justice Act 1999 (“AJA”) substituted the following for section 58 of the Courts and Legal Services Act 1990 (“CLSA”) :
“58 – (1) A Conditional Fee Agreement which satisfies all 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.
(2 ) For the purposes of this section and s.58(a)
(a) a Conditional Fee Agreement is an agreement with a person providing advocacy or litigation services which provides for his fees and expenses, or any part of them, to be payable only in specified circumstances; …
(3) The following conditions are applicable to every Conditional Fee Agreement –
(a) it must be in writing;
(b) it must not relate to proceedings which cannot be the subject of an enforceable Conditional Fee Agreement; and
(c) it must comply with such requirements (if any) as may be prescribed by the Lord Chancellor.”
6.	Section 58(A)(3) provides:
“The requirements which the Lord Chancellor may prescribe under s.58(3)(a)-(c)
(a) include requirements for the person providing advocacy or litigation services to have provided prescribed information before the Agreement is made;  and
(b)  may be different for different descriptions of Conditional Fee Agreement and (in particular) may be different for those which provide for a success fee and those which do not).”
7.	At the time that the CFA was signed, the relevant requirements mentioned in s.58(A)(3) were the Regulations (different Regulations apply to CFAs signed after 31 October 2005).
8.	Regulation 4 of the Regulations provides as follows:
“Information to be given before Conditional Fee Agreements made
(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 information, 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:
(c)	whether the legal representative considers that the client’s risk of incurring liability for costs in respect of the proceedings to which the agreement relates is insured under an existing contract of insurance.”
9.	It is agreed that if the appropriate information was not given under Regulation 4(2)(c), then the decision of the Costs Officer was correct on the grounds that the CFA was unenforceable and by operation of the indemnity principle, there were no costs incurred by  Mr Dunn to indemnify and Mr Mici’s liability under the bill would be nil.
Analysis
10.	It is common ground that the appeal is a re-hearing (see CPR 47.23).  It is agreed that matters have moved on since the hearing before the Determining Officer and that issues have been narrowed and the only point that arises on the appeal relates to Regulation 4(2)(c); the challenge under 5(1) has been abandoned.  Put shortly, it is the case for Mr Dunn (advanced by Mr Mallalieu of counsel) that:
1.  	Mr Dunn was the client and the party to the CFA; advice that he received complied with the Regulations.  
2.  	Alternatively, Mr Dunn and his mother were both clients; only Mr Dunn received compliance advice; nonetheless the CFA remained valid and enforceable against Mr Dunn.
11.	Mr Arney’s case on behalf of Mr Mici is that Mrs Dunn was the client.  Since it is agreed she did not receive the required Regulation 4 advice, the CFA is unenforceable.  Alternatively, if both Mr Dunn and his mother were clients, the failure to comply with the Regulation in relation to Mrs Dunn invalidates the CFA in relation to her son, rendering the contract unenforceable.
The Conditional Fee Agreement
12.	The sections relevant to the issues I have to decide are the following:
“Conditional Fee Agreement.  This agreement is a legal binding contract between you and your solicitor.  Before you sign, read everything carefully…
Agreement date:  4 March 2002
We, the solicitors			Anthony Gold
New London Bridge House
25 London Bridge Street
London SE1 9TW
“You, the client		Daniel Dunn (by his mother and litigation friend)
176 Lethbridge Close
Lewisham, SE13 7QHG
What is covered by this agreement
•	Your claim for damages for personal injuries suffered on 12 January 2002 …
Other points
Immediately before you signed this agreement, we verbally explained to you the effect of this agreement and in particular the following:
(c)  	whether we consider that your risk of becoming liable for any costs in these proceedings is insured under an existing contract of insurance’
(d)  	other methods of financing those costs, including private funding, community legal service funding, legal expense insurance, trade union funding …
Signatures
Signed by the client, S Dunn   [Mrs Dunn]
I confirm that my solicitor has verbally explained to me the matters in paragraph (a) to (e) under “other points” above.
Signed … S Dunn (Client)”     [Mrs Dunn] 
The submissions on behalf of Mr Dunn
13.	In Mr Mallalieu’s submission, the case advanced before the Costs Officer that Mrs Dunn was the client was simply wrong.  At all times Mr Dunn had been the client but his mother had acted as his agent.  This was plain from a number of factors.  First, there had been no requirement for Mr Dunn to have a litigation friend under rule  21.2 of the Civil Procedure Rules (“CPR”) because a litigation friend is required only after proceedings have been issued and the client is a minor;  in the present case, the CFA had been signed a few weeks short of Mr Dunn’s birthday but by the time that proceedings were issued he had attained his majority and a litigation friend was not required under the rule.  Second, as a matter of fact, Mrs Dunn had never been appointed as a litigation friend.  Third, there is no statutory or regulatory reason either under the Courts and Legal Services Act 1990 or under the CFA Regulations which prevents a person under the age of 18 from entering a CFA.  There was no bar to Mr Dunn being the client on the grounds of contract law or incapacity .
14.	That Mr Dunn was the client was also plain from the wording of the CFA; he was “the client”; the cause of action was his; it was Mr Dunn who had been involved in the accident.  The fact that Mrs Dunn had signed on his behalf made no difference;  there was nothing to prevent an agent acting on behalf of a principal;  Mrs Dunn was simply a conduit through whom instructions were taken for her son.  Since there was no requirement for a litigation friend to be appointed, there was nothing in the submission that Mrs Dunn was also the client.  Accordingly, only Mr Dunn could be liable under the agreement. As no appointment as litigation friend had been made under CPR 21.9(6),   Mrs Dunn could not be liable for any costs. 
15.	So far as compliance was concerned, Mr Mallalieu accepted that Mrs Dunn had not been given any advice which complied with Regulation 4.  The reason for this, quite simply, was that Mr Dunn was the client and it was he who had been given the advice.  It followed that the Determining Officer had erred in disallowing the bill.  He ought to have found on the material before him that:
i)	Mr Dunn was the client under the CFA.
ii)	In that capacity, he had received advice which complied with Regulation 4.
Accordingly, the CFA was enforceable, contrary to the Determining Officer’s finding.  The bill should now be remitted to him for assessment.
The submissions on behalf of Mr Mici
16.	Mr Arney submitted that it was plain from the documents that, in reality, Mrs Dunn was the client together with her son.  Accordingly, both were entitled to be given the Regulation 4 advice.  Mr Arney submitted that this submission could be made good by reference to the fact that the CFA stated that the client was “Daniel Dunn by his mother and litigation friend” and had then been signed by Mrs Dunn.  Moreover, in Mr Mallalieu’s skeleton argument in support of the appeal, she had been referred to throughout as “the litigation friend” and not as her son’s agent or mother.  It followed that Anthony Gold had been under an obligation to enquire as to whether Mrs Dunn held before the event legal expenses insurance (“BTE”) which would have covered her liability for costs in addition to her son’s.  Mr Mallalieu’s submission that Mrs Dunn had never been the client was in conflict with Regulation 1(3) of the CFA Regulations which define “the client” to include a person who:
“(a) 	has instructed the legal representative to provide the advocacy or litigation services to which the CFA relates, or
(b) 	is liable to pay the legal representative’s fees in respect of those services … ”
17.	The requirement to make sufficient enquiries pursuant to Regulation 4 as to Mrs Dunn’s funding position was not a mere formality.  On the contrary, she was under a liability to pay the costs and in these circumstances if, prior to entering the CFA, she had BTE insurance, this should have been used instead of the CFA. The failure to make the appropriate enquiries prior to signing the CFA was a breach of Regulation 4(2)(c) rendering the CFA unenforceable .
Decision
18.	It is agreed that the issue for decision is whether Mr Dunn alone was the client; if so, did he receive advice which complied with Regulation 4; if not and he and his mother were both clients, what was the effect on the enforceability of the CFA if one had received compliant advice but the other had not?
19.	In my judgment, the wording of the CFA has created difficulties which, at one point, gave the appearance of being fatal to its validity.  Looked at on its face, the document clearly states that the agreement covers Mr Dunn’s claim for damages and personal injury “by his mother and litigation friend” with her signature appearing at the relevant places in the document.  However, the contention made in the points of dispute that Mrs Dunn’s signature might affect the validity of the CFA under Regulation 5(1) was not pursued on appeal. Accordingly, when, as Mr Mallalieu was able to do, it was explained that no formal appointment under CPR 21 as litigation friend was ever made, it became clear that Mrs Dunn was not, and could not, have been the client. 
20.	 I have reached this conclusion for the following reasons.  First, I accept Mr Mallalieu’s submission that a principal can act through an agent;  here, the principal was Mr Dunn and his mother was his agent.  Second, there was no requirement for a litigation friend to be appointed.  This would only have been obligatory on the issue of proceedings had Mr Dunn then been a minor, but by that date, he had  already attained his majority.  In other words, the expression “litigation friend” on the face of the CFA had no significance so far as CPR 21 was concerned, since no formal appointment was ever  made.  In these circumstances, I do not consider there was any obligation on Anthony Gold to give Mrs Dunn  advice under Regulation 4.  As Mr Mallalieu expressed the position, she was merely the conduit through whom Anthony Gold received their instructions from Mr Dunn and not “the client” as defined in Regulation 1(3)(a).  Third, not having been appointed litigation friend under CPR 21, Mrs Dunn did not assume any liability to pay Anthony Gold’s fees by reference to Regulation 1(3)(b). The submission that the solicitors breached the Regulations for failing to provide the appropriate  information to Mrs Dunn must, accordingly, fail.  
21.	Mr Arney also placed emphasis on the fact that there was a discrepancy in the reply to the points of dispute and the document now relied on setting out the name and policy number of Mr Dunn’s insurance.  For my part, I am satisfied that the mistake was made at the points of reply stage, which has now been rectified.  Mr Arney also challenged the adequacy of the enquiries made about the existence of BTE cover. Here I also accept Mr Mallalieu’s submission that at the date of the CFA, Anthony Gold made appropriate  enquiries about  BTE and any other insurance that might have been available to Mr Dunn.  In my opinion the nature of the enquiries that needed to be made would, inevitably, have been short;  Mr Dunn was then under 18.  He was too young to have a credit card;  he could not own the legal estate in a house in his own name and would not have a home insurance policy upon which BTE might have been tacked;  he was not a member of a Trade Union;  he had an insurance policy for a moped but this did not include any legal expenses insurance, a point confirmed with the solicitors.  In establishing these facts, in my judgment, the solicitors discharged the tasks which the Regulations required them to undertake in relation to Mr Dunn, there being no requirement that these should be repeated in relation to Mrs Dunn.  It follows that in my judgment the CFA is valid and enforceable and the Determining Officer ought not to have disallowed the costs for want of compliance with the CFA Regulations.  The appeal is allowed and the matter must be remitted to the Costs Officer so that he can complete the detailed assessment.
22.	I do not expect the parties to attend before me when this judgment is handed down.  If Mr Arney on Mr Mici’s behalf wishes to apply for permission to appeal, any submission should be lodged in writing within fourteen days of the date of this judgment.  Subject to any argument to the contrary, the respondent will pay the appellant’s costs of the appeal and below to be assessed by the Costs Officer if not agreed.