The Court of Appeal’s decision of Cox v Woodlands Manor Home  EWCA Civ 415 has highlighted the importance of compliance with consumer cancellation regulations and its potential fatal implications for the recovery of costs.
The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008 (“the 2008 Regulations”) apply to consumer contracts made on 1st October 2008 until 13th June 2014. Thereafter, the Consumer Contract (Information, Cancellation and Additional Charges) Regulations 2013, (“the 2013 Regulations”) replaced the Consumer Protection (Distance Selling) Regulations 2000 and the 2008 Regulations.
Despite the fact that the 2008 Regulations have now been replaced by the 2013 Regulations, they continue to apply to contracts made before 13th June 2014.
The 2008 Regulations will apply to a contract which is made outside of the solicitor’s office;
- During a visit by the solicitor to the client’s home or place of work, or to the home of another individual;
- During an excursion organised by the solicitor away from his business premises; and
- After negotiations made by the client during such a visit or excursion (Reg. 5, of the 2008 Regulations).
There are numerous requirements of the 2008 Regulations which must be satisfied. As per Reg 7(6) of the 2008 Regulations, should the solicitor fail to provide the client with a notice of the right to cancel and the information required in accordance with the regulation then the contract will not be enforceable against the client.
In the case of Cox v Woodlands, the receiving party’s costs were assessed at nil for failure to provide notice of right to cancel and the Defendant was awarded their costs of the detailed assessment in addition to both appeals.
Receiving party solicitors must be careful to comply with the requirements of the regulations in full. In the matter of All Property Claims Ltd v Mr Tang Pang and ICT Compliance Ltd (2015) notice was sent to the client by way of e-mail following a home visit where the retainer was entered into. It was held that the retainer was void as notice had not been given to the client at the same time as the agreement.
It is a common fishing expedition by receiving parties to challenge compliance with the 2008 Regulations, however, it remains to be seen whether a paying party must make a “genuine issue” before they can make a challenge. Where there is a dispute as to the receiving party’s liability to pay costs, as usual, it would be necessary to disclose the retainer. Whilst the notice of right to cancel forms part of the retainer, it would difficult to avoid lodging the document.
Furthermore, where a Bill of Costs has been prepared and the solicitor is aware that the 2008 Regulations have not been complied with in full, this amounts to a serious disciplinary offence.
Where a matter is ongoing and, for whatever reason, the initial retainer failed to comply with the 2008 Regulations, there is argument that remedy may be found by entering a retrospective retainer. It goes without saying that the subsequent retainer must fully comply with the 2013 Regulations, to include the additional information now required as well as to the notice of right to cancel. Care must be taken to avoid providing the paying party with an opportunity to argue that the new retainer is simply a continuation of the original.
The 2008 Regulations will apply to all retainers (unless exempt), failure to comply with the requirements of the regulations will render the retainer void. Should the issue be raised by the paying party and the matter proceeds to assessment, this would prove fatal to the recovery of any costs.
Since Cox v Woodlands there has been a noticeable increase of challenges to retainers in respect of compliance with the 2008 Regulations by paying parties. This is a real issue to be wary of and something that MRN assess with great care on each case where applicable.