BAILEY -v- IBC VEHICLES

This is a case which concentrated on the disclosure of information required to satisfy the paying party as to the validity of retainers when there is an alleged a breach of the indemnity principle. The claimant, in the course of his employment by the defendant, suffered personal injuries, and proceedings were commenced by the claimant's union. The claim was settled in January 1997. The plaintiff's solicitors prepared a bill of costs which exceeded £30,000. The defendant objected to this claim and requested that the claimant provide evidence to show that it was not in breach of the indemnity principle in respect of the expense rate plus mark up that was being charged in the bill. The judge held that there was nothing in the available information which could lead to an inference that the indemnity principle had not been observed by the plaintiff's solicitors. In particular, it was held that the signature on a certificate of accuracy was provided by a representative of the firm concerned, who was acting as an officer of the Court.

There was a presumption that, as such, no breach of the indemnity principle should be inferred, unless the paying party could provide significant reason for doing so. In support, the information available indicated that the claimant's union and its solicitors were agreed that the union should be charged a 'full solicitor/client charge'. There was nothing to suggest that the relationship between the union and the solicitors would have resulted in some form of capping of the fees which the solicitors would have submitted to the union if the claim had failed. The information was sufficient to enable the taxation to proceed on the basis that the figures claimed in the bill of costs did not represent an unacceptable breach of the indemnity principle.

HOLLINS -v- RUSSELL

In another landmark case, and because of the prevalence of challenges by defendant liability insurers to CFAs on the ground that they did not comply with the regulations and because of demands by defendants to see claimants' CFAs during costs assessment proceedings, the Civil Appeals Office brought together a number of appeals raising important points of practice, one of which was this case. The appeal focused on the circumstances in which a court should force a receiving party to choose whether to disclose its CFA to the paying party, the proper construction of the words "satisfies all of the conditions applicable to it" in s.58(1) Courts and Legal Services Act 1990 together with whether any costs or disbursements were recoverable from a paying party in the event of non-compliance with the regulations, and whether in particular cases the requirements of reg.2, 3 and 4 of the regulations had been complied with.
Firstly, it was held that the paying party should be entitled to object to paying costs which he had been ordered to pay if they were made payable by a conditional fee agreement which was not rendered enforceable by s.58(1) of the 1990 Act. Where there was a CFA a costs judge should normally exercise his discretion in ordering a receiving party to produce a copy of the CFA, although the CFA could if necessary be edited to remove confidential information, and attendance notes prepared by the receiving party's solicitors showing compliance with regulation 4 should not ordinarily be disclosed. However, it was found that a CFA was a contentious business agreement to which s.60(3) Solicitors Act 1974 applied. If the solicitor could not enforce the agreement against his client, then the amounts provided for in the agreement were not payable by the client in any event, and accordingly they could not be recovered from the opponent. It was found that the key question in considering whether a CFA satisfied all the conditions applicable to it within s.58(1) of the 1990 Act was whether they had been sufficiently complied with in the light of their purposes. If a particular departure from a regulation or requirement of the section had a materially adverse effect either upon the protection afforded to the client or upon the proper administration of justice, then the conditions had not been satisfied.