CFA can include claims against parties not named in the agreement

The Court of Appeal has held that a conditional fee agreement (CFA) that referred to a claim against a named defendant also applied to related claims against other defendants who were not named. In doing so, the court took into account the poor drafting of the CFA as well as the context in which it was signed.

Background

In Malone v Birmingham Community NHS Trust [2018] EWCA Civ 1376, the claimant was a former prisoner who wished to sue for damages for delays in diagnosing his cancer. The prison was operated by the Ministry of Justice, and health care services to the prison were provided by two NHS Trusts. At the time of entering into the CFA, his solicitors were still investigating which entity was the correct defendant. The agreement identified the work covered as “all work conducted on your behalf following your instructions on [blank] regarding your claim against Home Office for damages for personal injury suffered in 2010”.

The claim was eventually issued against the Ministry of Justice and both trusts. One of the trusts then admitted liability, and the claim was amended to remove the other defendants. The claim was settled for £10,000 plus costs to be assessed. The trust then argued that no costs were payable because the CFA was limited to a claim against the Home Office.

The decision

The Court of Appeal began by considering whether this was a case in which more emphasis should be placed on a close textual analysis of the CFA, or on its context. The court noted that in the key provision, the date of the instructions had not been filled in; “the” was missing before “Home Office”; and in any event, the Home Office was clearly not the correct defendant given that it had not been the ministry responsible for prisons for some time. This lack of attention to detail suggested that more emphasis should be placed on context than on textual analysis. It also distinguished the case from the earlier decision in Law v Liverpool City Council [2005] EWHC 90020, where a properly-drafted CFA was found to be limited to a single named defendant.

Nevertheless, the court briefly considered the textual aspects and concluded that the reference to the Home Office was a description of Mr Malone’s instructions rather than of the work the solicitors would do.

As regards the context, the Court of Appeal identified four relevant factors:

• The CFA was entered into at an early stage, when it is not unusual for the identity of the eventual defendant to be unclear. In those circumstances, it was intrinsically unlikely that the CFA was intended to be limited to proceedings against a named defendant.
• It would not have been in either party’s interests to apply strict definitions to the work to be carried out.
• Identifying the correct defendant was one of the key tasks the solicitors were being instructed to carry out, making it less likely that the CFA was intended to be limited to a single defendant.
• There were no financial reasons for any of the defendants to be excluded from consideration.

In the light of both the textual and contextual factors, the Court of Appeal held that the CFA was not limited to a claim against the Home Office, meaning that the trust was liable to pay costs.

Comment

In light of the decision in Law, this decision will come as a surprise to regular litigants. It seems unsatisfactory that a defendant’s costs position should depend even in part on the quality of drafting of its opponent’s solicitors, while claimants are effectively rewarded for their solicitors’ mistakes.

It may still be possible for non-recovery of costs under a CFA where the wording is so specific that the meaning, both textual and contextual, could only be read as the retainer covering an incorrect Defendant only.

The key lesson in respect of CFAs still appears to be never to name a Defendant when drafting the relevant clause in the CFA.