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Thursday 22nd May 2008
Various Claimants –v- Gower Chemicals Ltd and Others
So held Master Wright in Various Claimants –v- Gower Chemicals Ltd and Others the technical challenges have continued. On 14th April 2008 Master Wright, sitting as a Deputy District Judge of the Cardiff County Court, looked at Clause 5 of the CCFA Regulations and the requirements for contents of CCFAs providing for success fees. In this particular case the CCFA contained the following provisions:
“5.1 The success fee will be 100% or such lesser percentage as is determined in accordance with this part of this agreement.
“5.2 When accepting instructions in relation to any specific proceedings the Solcitors must prepare and retain a written statement containing:
5.2.1 their assessment of the probability of the circumstances arising in which the success fee will become payable in relation to those proceedings (‘the risk assessment’);
5.2.2 their assessment of the amount of the success fee in relation to those proceedings, having regard to the risk assessment; and
5.2.3 the reasons, by reference to the risk assessment, for setting the success fee at that level.”
After hearing submissions he accepted the Claimant’s argument that clause 5 of the CCFA is part of an entire contract and not a mini contract divisible from the CCFA as a whole. If there had been a failure to comply substantially with the obligation posed by that clause, the result would not be the disallowance of the success fee. Further, Master Wright did not accept that clause 5.2 required that there should be a three stage process in carrying out the requirements of clause 5. Moreover, he did not consider that clause 5.1 operated as a default provision having the result that a failure to comply with the Court requirements of clause 5.2 would trigger a default success fee of 100%, he considered that clause 5.1 operated as a cap of 100%. The Master accepted the Claimant’s submissions and in his judgment what was prepared was informative and readily intelligible. Accordingly, he considered that the documentation complied, or certainly substantially complied, with the requirements of clause 5.2.
During submissions the Claimant referred to the earlier judgment of Field J in the Various Claimants –v- Gower Chemicals Ltd and Others. This showed that the rights and obligations conferred by clause 5 were conferred on the contracting parties. The consequences of a breach were obtainable at the election, and only at the election, of the member or the union. As far as the indemnity principle was concerned there was nothing which required the Claimant to take action simply to benefit the paying party. The Master agreed with these submissions and the indemnity principle does not apply unless the member or union elects to make a challenge which results in a reduction in the costs payable by them to the receiving party.
This followed the recent argument heard by the Court of Appeal in Garbutt –v- Edwards (2006) 1 WLR 2907 (43). There, the paying party contended that, by virtue of the indemnity principle, on inter partes assessment, the Costs Judge should impose a reduction in the bill equivalent to that which the receiving party might obtain by inviting the Law Society to exercise its power under Schedule 1A of the Solicitors Act 1974. The Court of Appeal held that this was not a matter for a paying party. It would cause uncertainty and spawn satellite litigation and in any event it was for the client alone to choose whether or not to take a point.
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