This case addresses the issue of the applicability and effect of the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008. The 2008 regulations apply to agreements for credit, goods or services made during a visit by the provider of that credit, those goods or services unless exempted. Solicitors’ retainers, where a Conditional Fee Agreement is signed or ‘made’ at the Claimant’s home are subject to the above regulations and Regulation 7 provides that the Consumer must be given a written notice of the right to cancel the contract within seven days. Regulation 7(6) in particulars clearly states that a contract which is subject to the regulations is unenforceable unless the trader has given the consumer a notice of the right to cancel.
The Claimant had brought an Employers’ Liability Claim following an incident that had left her with severe injuries. As a result of those injuries, the Claimant required an attendance at her home to take initial instructions and on that occasion, she signed a CFA agreement. Investigations into the availability of legal expenses insurance were undertaken culminating in the insurer declining to authorise the instructed Solicitor to act. The claim therefore continued under the CFA.
The Claimant subsequently recovered significant damages and an order for standard basis costs was made in her favour.
Detailed Assessment proceedings ensued and the Defendant became aware that the mandatory notice had not been provided at the point of signing in compliance with the 2008 regulations. The Defendant submitted that the CFA was unenforceable and sought an order that the Claimant’s costs be assessed at nil.
At the detailed assessment hearing, the Claimant submitted that the CFA was only intended to come into effect contingent upon full enquiries into legal expenses insurance being completed and indemnity not being available. This position was accepted by the presiding District Judge who ruled that the CFA commenced when the Claimant was informed of the insurer’s decision not to provide indemnity and that the 2008 regulations therefore did not apply.
The Defendant appealed on the basis that the CFA had been ‘made’ at the point of signing and the appeal was granted with HHJ Denyer QC holding that the District Judge had erred in finding that the CFA came into effect on any other date than the date upon which it was signed. The CFA was therefore was subject to the 2008 regulations and, due to the lack of notice to cancel, was unenforceable with the indemnity principle preventing recovery of costs from the paying party.
Appeal to the Court of Appeal
The Claimant was initially refused leave to appeal however, following an oral hearing, such leave was granted and the matter came before the Court of Appeal where it was considered that whilst the CFA might not take effect until the legal expenses insurer’s decision had been made, the CFA had been ‘made’ when it was signed and the decision of HHJ Denyer QC was therefore upheld. With the lack of notice to cancel, the contract was deemed unenforceable, the Bill of Costs was assessed at nil and the Defendant was awarded costs of the detailed assessment and both appeals.
This something of a cautionary tale and it is clearly vital that the appropriate notice is provided to the client as and when a CFA is signed during a home or workplace attendance, whether or not the CFA is intended to come into force immediately or at a later date. MRN are always vigilant in carrying out checks for compliance where the CFA has been signed in such circumstances if only to warn the client of the potential for nil assessment. Also, given the wide reporting of this case, it would be reasonable to assume that further challenges and fishing expeditions will be forthcoming on the basis of possible non-compliance with the 2008 regulations.