51st Update to the CPR - 4

More on the 51st Update to the Civil Procedure Rules. The changes came into force on 6 April 2010.

The big changes relate to CPD 32.5 and the documents to be served with a bill where there is an additional liability.  These changes are to finally get the rules up to speed with the revocation of the Conditional Fee Agreement Regulations 2000 and Collective Conditional Fee Agreement Regulations 2000.

These merit being recited in full:

(b) where the conditional fee agreement was entered into before 1st November 2005, a statement of the reasons for the percentage increase given in accordance with regulation 3(1)(a) of the Conditional Fee Agreements Regulations 2000 or regulation 5(1)(c) of the Collective Conditional Fee Agreements Regulations 2000 [Both sets of regulations were revoked by the Conditional Fee Agreements (Revocation) Regulations 2005 but continue to have effect in relation to conditional fee agreements and collective conditional fee agreements entered into before 1st November 2005.];

(c) where the conditional fee agreement was entered into on or after 1st November 2005 (except in cases where the percentage increase is fixed by CPR Part 45, sections II to V), either a statement of the reasons for the percentage increase or a copy of the risk assessment prepared at the time that the conditional fee agreement was entered into;

(d) if the conditional fee agreement is not disclosed (and the Court of Appeal has indicated that it should be the usual practice for a conditional fee agreement, redacted where appropriate, to be disclosed for the purpose of costs proceedings in which a success fee is claimed), a statement setting out the following information contained in the conditional fee agreement so as to enable the paying party and the court to determine the level of risk undertaken by the solicitor—

(i) the definition of ‘win’ and, if applicable, ‘lose’;

(ii) details of the receiving party’s liability to pay costs if that party wins or loses; and

(iii) details of the receiving party’s liability to pay costs if that party fails to obtain a judgment more advantageous than a Part 36 offer.

There are no doubt a number of claimant representatives who are struggling to understand the section in brackets that says: “the Court of Appeal has indicated that it should be the usual practice for a conditional fee agreement, redacted where appropriate, to be disclosed for the purpose of costs proceedings in which a success fee is claimed”.  When did the Court of Appeal say that?  In Hollins v Russell [2003] EWCA Civ 718.

Given the reluctance of so many claimants to disclose their CFAs I can only assume that there are a significant number of claimant representatives out there who fall into one of three categories:

1. Those who have never heard of Hollins v Russell.
2. Those who have heard of it but haven’t bothered to read it.
3. Those who have heard of the case and have read it but didn’t understand all the long words.

Doesn’t Hollins v Russell say that a CFA should only be disclosed it there is a “genuine reason”?

No.  No.  No.

The case considered disclosure of two types of document.  The first type was the CFA itself.  That should normally be disclosed (see paragraph 80).  On the other hand, attendance notes only need to be disclosed if there is a “genuine issue as to whether there was compliance with regulation 4” (paragraph 81).  The distinction between the two is made clear at paragraph 220:

“So far as matters of procedure are concerned, we consider that it should become normal practice for a CFA to be disclosed for the purpose of costs proceedings in which a success fee is claimed. … Attendance notes and other correspondence should not ordinarily be disclosed, but the judge conducting the assessment may require the disclosure of material of this kind if a genuine issue is raised. A genuine issue is one in which there is a real chance that the CFA is unenforceable as a result of failure to satisfy the applicable conditions.”

For completeness, here is paragraph 82:

“Although the procedure envisages that the costs judge will put a party to her election as to the disclosure of the CFA, now that it is clear from our judgment in this case that this is to be the general practice, we hope that receiving parties will disclose the CFA without more ado. It would obviously lead to further costs and delay if receiving parties were to take an unreasonable view on this issue.”

So, the next time you are asked to disclose a copy of your CFA don’t refuse on the basis that the defendant has failed to raise a genuine issue.  You just make yourself look stupid.

The interesting thing to note about the new rules is that they sensibly state that a statement of reasons or risk assessment does not need to be served for CFAs entered into on or after 1 November 2005 where the success fee is fixed by CPR Part 45, sections II to V.  However, there is no corresponding concession for CFAs entered into pre-1 November 2005.  Even if the case is subject to fixed success fees, if the CFA/CCFA pre-dates 1 November 2005 (which with CCFAs will usually be the case) there is still a requirement to serve the relevant statement.  And will all know what the consequence is of failing to follow the rules properly.