CHANGING FROM LEGAL AID TO A CFA: JUDGMENT IN THE COURT OF APPEAL: DEFENDANTS’ APPEAL ALLOWED: ADDITIONAL LIABILITIES NOT RECOVERABLE
I am grateful to Sean Linley of PIC costings for sending me a copy of the Court of Appeal judgement in Surrey -v- Barnet and Chase Farm Hospitals NHS Trust [2018] EWCA Civ 451. This is the latest in the saga of whether a defendant is liable to pay the uplift, and insurance premium, in cases where the claimant switched from legal aid to a CFA. The Court of Appeal considered three cases where a claimant had changed funding to a CFA. The change in funding was (usually) made shortly before the abolition of the inter-partes recoverability of additional liabilities. The Court of Appeal held that the additional liabilities were not recoverable.
THE CASES
In each case the claimants had been conducting clinical negligence cases using legal aid. There was then a switch from legal aid to a conditional fee agreement. At that time this meant that the claimants’ solicitors would be able to recover an additional liability and the costs of ATE insurance from the defendant. At first instance the additional liabilities were held not to be recoverable. This was overturned on appeal to the High Court judge. The Court of Appeal allowed the defendants’ appeals. The additional liabilities were not recoverable from the defendant.
THE REASON THE APPEAL WAS ALLOWED
The Court of Appeal held that the purpose of the change was important.
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circumstances I consider that DJ Besford was correct in saying at [81]:
“Where one of two or more options available to a client is more financially beneficial to the solicitor, the need for transparency becomes ever greater.”
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This a reflection of the fundamental principle of equity that where a person stands in a fiduciary relationship to another, the fiduciary is not permitted to retain a profit derived from that fiduciary relationship without the fully informed consent of the other.”
The judges at first instance had held that the switch meant that the claimants lost the 10% uplift. There was some doubt as to the effect this would have had on their decision if they had been fully advised.
The High Court judge should not have interfered with the findings of fact made and the discretion exercised by the Masters and District Judge at first instance. Their decisions were approved, and restored.