Silvera v Bray Walker Solicitors (A Firm) & Ors [2010] EWCA Civ 332

Case No A2/2009/0222[2010] EWCA Civ 332
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, QUEEN’S BENCH DIVISION
MR JUSTICE BLAKE
LOWER COURT NO: HQ07X03927
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 29/03/2010
Before
LORD JUSTICE PILLLORD JUSTICE WILSONLORD JUSTICE RICHARDS
Between
CARLO MOISE SILVERAAppellantBRAY WALKER SOLICITORS (A Firm)First RespondentBEVANS BRAY WALKER LIMITED (trading as “Bevans”)Second Respondent
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7404 1424Official Shorthand Writers to the Court)
Jeremy Morgan QC (instructed by Jeffrey Green Russell) appeared for Appellant.Nicholas Bacon (instructed by the Second Respondent) appeared for Respondents.Hearing Hearing date: 25 November 2009
Judgment

A: INTRODUCTION

[1]Mr Silvera, the defendant, who is a citizen and resident of Italy, appeals against an order made by Mr Justice Blake in the High Court, Queen’s Bench Division, on 18 December 2008, whereby he gave judgment for the claimants in the sum of £351,000, together with interest and costs.[2]The first claimant is Bray Walker, a firm of solicitors in London; it represented Mr Silvera in proposed and actual litigation in the High Court from 13 November 2003 until 1 May 2007. The second claimant is Bevans Bray Walker Ltd (trading as “Bevans”), solicitors of London; it represented him in that litigation from 1 May 2007 until 25 October 2007 and under terms identical to those upon which the first claimant had represented him. The judgment was for fees held to be owing by Mr Silvera to the claimants under four conditional fee agreements (CFAs) made between them and him.[3]Three of the CFAs were dated 13 November 2003; and the fourth was dated 20 October 2005. Apart from the identity of the proposed defendant, the four agreements are in virtually the same terms. They are all governed by the Conditional Fee Agreements Regulations 2000 (S.I.2000/692) [“the Regulations”], which have been revoked, but only with effect from 1 November 2005, by the Conditional Fee Agreements (Revocation) Regulations 2005 (S.I. 2005/2305).[4]Before the judge Mr Silvera raised four different defences against liability to the claimants. On paper the Vice-President of this court granted him permission to appeal against the judge’s rejection of two of those defences and also against a case-management decision made by the judge in the course of the hearing. Wisely, however, Mr Silvera does not press his appeal against the rejection of one of those defences nor against the case-management decision. So one question remains: are the conditional fee agreements unenforceable for failing “briefly [to] specify” the reasons for setting the percentage increase of the success fee at the level stated in the agreements, contrary to regulation 3(1)(a) of the Regulations? In this appeal Mr Silvera challenges the judge’s negative answer to this question.[5]In its judgment upon the group of appeals conveniently referred to as Hollins v. Russell [2003] EWCA Civ 718, [2003] 1 WLR 2487, this court referred, at [30], to the government’s lack of consultation prior to introduction of the Regulations; at [22], to the fact that insurers of unsuccessful defendants, liable in principle to pay the costs of a claimant, had seized the opportunity to argue that a single breach of the Regulations rendered the claimant’s CFA with his solicitors unenforceable by his solicitors against him and thus against themselves; and, at [42], that throughout England and Wales trench warfare was being waged between claimants’ solicitors and defendants’ insurers in relation to the Regulations. At the centre of the landmark decision in Hollins v. Russell was the ruling that, even if there was a literal breach of the Regulations, the CFA remained enforceable unless the breach was material in the sense of having a “materially adverse effect either upon the protection afforded to the client or upon the proper administration of justice”: see [107].[6]Blake J held that there was not even a literal breach of regulation 3(1)(a) and did not proceed to consider whether, if there was a literal breach, it was material. We may have to take that further step. As I recount the history, the reader may not be slow to join me in considering that the broad merits of the issue lie with the claimants rather than with Mr Silvera. For a start, the claimants do not even claim a success fee in these proceedings: they claim only their basic charges. But to state that Mr Silvera lacks broad merits is not to state that any breach of the regulations is immaterial – although the statements may to a limited extent overlap. Counsel – Mr Morgan QC who appears for Mr Silvera (but who did not do so in the court below) and Mr Bacon who appears for the claimants – are specialists in this field and tell us that this is a rare case in which the challenge to a CFA is brought not by the insurers of a party successfully sued by the client but by the client himself; and that, notwithstanding that the requirement “briefly [to] specify” in regulation 3(1)(a) was in force for more than five years between 2000 and 2005 and ceased to be in force over four years ago, they are aware of no authority, at whatever level, on the ambit of the requirement.

B: REGULATION 3(1)(A) IN CONTEXT

(A) IN CONTEXT

[7]Section 58 of the Courts and Legal Services Act 1990 provides:
“(1) A conditional fee agreement which satisfies all of the conditions applicable to it by virtue of this section shall not be unenforceable by reason only of its being a conditional fee agreement; but … any other conditional fee agreement shall be unenforceable. … (3) The following conditions are applicable to every conditional fee agreement - … (c) it must comply with such requirements (if any) as may be prescribed by the Lord Chancellor.”
It was in part by reference to perceived elasticity inherent in the word “satisfies” in subsection (1) above that the court in Hollins v. Russell, cited above, felt able to hold that a breach of a prescribed requirement did not render a CFA unenforceable unless it was material: see [106].[8]Regulation 3 of the Regulations provided:
“(1) A conditional fee agreement which provides for a success fee – (a) must briefly specify the reasons for setting the percentage increase at the level stated in the agreement …”
It is clear that this requirement had two purposes. The first was to enable the client who was entering into the agreement to perceive in writing, at the time when it was made, why, broadly, the success fee had been set at the level stated. The second was to enable the court, if ever called upon to determine the reasonableness of the success fee, whether upon the application of the client under s.70 of the Solicitors Act 1974 or, more usually, upon that of another party liable to pay his costs (or – in reality – of that party’s insurers) under CPR 44.4, to understand the reasons which gave rise to the level of it. Indeed paragraph 11.7 of the Practice Direction supplementary to Part 44 requires the court, when considering the factors to be taken into account in assessing an additional liability such as a percentage increase, to have regard to the circumstances as they reasonably appeared to the solicitor (or counsel) at the time when it was set. To that end regulation 3(2)(a) required that in the CFA the client should agree, as Mr Silvera duly did in the CFAs which are the subject of the appeal, to disclose to the court or to any other person, if so required by the court, the reasons for setting the percentage increase at the level stated in the agreement.[9]Regulation 4 of the Regulations made elaborate provision for information to be given by solicitors (or counsel) to the client before the CFA was made; and it is no longer in issue that the claimants provided Mr Silvera with the requisite information. I should nevertheless record, in summary, that solicitors were therein required to explain the effect of the agreement to their client, in particular the circumstances in which he might be liable to pay their costs, and to discuss with him methods of financing any liability ultimately cast upon him to pay the costs of another party to the proceedings which he was proposing to bring.

C: EVENTS PRIOR TO THE AGREEMENTS

[10]The four CFAs were made between the parties in connection with proposed proceedings by Mr Silvera for damages for professional negligence against leading counsel, junior counsel and two firms of solicitors in the course of their representation of him in an action brought by him and dismissed by Mr Justice Ferris in the High Court, Chancery Division, on 16 April 2003. The effective defendant to the action was Mr Lovat Urquhart and the action is conveniently described as “the Urquhart action”.[11]The Urquhart action represented an attempt by Mr Silvera to recover the proceeds of an investment allegedly made by him in 1987 in the purchase of a golf club in Elstree. Mr Lovat Urquhart’s brother [“the brother”] had apparently been a co-investor. At the centre of the complex arrangements for the purchase was Mr Levene, an English solicitor then in practice in London who, then as now, was a friend of Mr Silvera and seems to have organised a number of investments on his behalf; for certainly at one stage Mr Silvera was a man of substantial wealth. The assets of the golf club were placed into an English company which was wholly owned by a Hong Kong company. But neither Mr Silvera nor the brother was registered as a shareholder of the Hong Kong company. Its registered shareholders were one person who on any view had nothing to do with the company and another purported person who may not even have existed. At all events the company was controlled by Mr Levene. In 1993 the brother was murdered and it is possible that those subsequently convicted of his murder committed it pursuant to a contract with a person who remains at large. In 1994 Mr Levene ceased to practise as a solicitor and went to live in New York. It was the contention of Mr Silvera before Ferris J that, following the brother’s death, Mr Lovat Urquhart had, by various improper manoeuvres, including in relation to the allotment of further shares in the parent company in Hong Kong, seized not only the management but ostensible ownership of the golf club and, on its sale in 1994, had misappropriated its entire proceeds.[12]In a long written judgment following a hearing which had proceeded for almost three weeks Ferris J found that Mr Levene, who had given evidence to him by video-link from Israel, was thoroughly untrustworthy; and the judge was also critical, albeit more mutedly, of the credibility of Mr Silvera. Mr Lovat Urquhart had failed to attend the hearing and, equally, the judge expressed himself deeply suspicious of some of his actions. Nevertheless, in dismissing the action, the judge was also substantially critical of the way in which the counsel and solicitors who had been representing Mr Silvera at the material times had formulated his claim. The gist of his criticism of them was that, generally, they had adopted a scattergun approach to formulation and, specifically, they had failed to recognise the difficulties in any direct claim on the part of Mr Silvera to ownership, whether legal or equitable, of assets which were or had been held through an English company by a Hong Kong company; and that, if funds belonging to Mr Silvera had indeed been deployed indirectly in investment in the golf club, his remedy lay either against Mr Levene (whom back in 1988 he had sued but with whom, once it had become clear that he had the benefit of no relevant indemnity, Mr Silvera had reached a compromise) or, in proceedings in Hong Kong, against Mr Lovat Urquhart and others for rectification of the register of the shareholdings in the parent company so as to identify himself as a 50% shareholder and/or for oppression of himself in that capacity on the part of Mr Urquhart (being proceedings which Mr Silvera had issued in 1999 but had never served).[13]Mr Stephen Walker is a partner in the firm which is the first claimant in the present proceedings. On 1 May 2007 the firm ceased to carry on business as solicitors but it continues to exist. Prior to that date it represented Mr Silvera under the CFAs and, within the firm, conduct of his affairs was in the hands of Mr Walker, assisted by Mr Petteni, who at that time was a paralegal and who is, conveniently, an Italian. With effect from 1 May 2007 business which would otherwise have been conducted by the firm was instead conducted by the second claimant, being a company of which Mr Walker is a shareholder and was at all material times a director. With effect from 1 May 2007 it represented Mr Silvera under the CFAs; and, within the company, conduct of his affairs remained in the hands of Mr Walker, assisted, as before, by Mr Petteni.[14]In July 2003 an approach was made by Mr Levene to Mr Walker that his firm might act for Mr Silvera in an action for negligence against his former lawyers arising out of the judgment of Ferris J dated 16 April 2003. Mr Walker thereupon read the judgment and spoke about it to Mr Bourne of counsel, whom he held in high regard. Mr Walker’s response to Mr Levene was that he might be prepared to accept instructions to represent Mr Silvera in the proposed action, including under a CFA. But even at that early stage, in communications with Mr Levene, Mr Walker stressed the distinction between the “smaller” potential claim for reimbursement of the costs expended and ordered to be paid by Mr Silvera in the Urquhart action (which Mr Walker regarded as easier to substantiate) and the “larger” potential claim for loss of the chance of successfully suing Mr Urquhart in particular in the courts of Hong Kong (which Mr Walker regarded as much less easy to substantiate). It was arranged that Mr Walker, accompanied by Mr Petteni, would meet Mr Silvera and Mr Levene in Milan on 13 November 2003. The meeting took place; it lasted for almost five hours; it was conducted partly in English (of which Mr Silvera had a reasonable grasp) and partly in Italian; and at the end of it the first three of the four CFAs were signed.[15]The findings of Blake J as to what was said at the meeting on 13 November 2003 are based on the evidence given to him by Mr Walker and by Mr Petteni on behalf of the claimant and, by video-link from Geneva, by Mr Levene on behalf of Mr Silvera; and on the attendance notes of the meeting made by Mr Petteni and Mr Levene. Mr Silvera himself failed to appear at the hearing before Blake J in circumstances in which he claimed to be ill but which the judge described as suspicious. The judge’s unchallenged findings are that:(a) Mr Walker explained that, on the basis of CFAs, he was prepared to act for Mr Silvera in proposed negligence proceedings against leading counsel, junior counsel and the penultimate firm of solicitors instructed by him in the Urquhart action;(b) Mr Walker handed to Mr Silvera and to Mr Levene copies of a model CFA issued by the Law Society; it was expressed to be for use in personal injury actions but no other model CFA had been issued by the Law Society for any other type of action;(c) Mr Walker explained the terms of the proposed agreements to Mr Silvera and Mr Levene, paragraph by paragraph, and in effect he used the paragraphs as a check-list for what needed to be discussed; Mr Petteni translated some of them into Italian when so requested by Mr Silvera and translated into English any responsive questions raised in Italian by Mr Silvera;(d) Mr Walker stressed the distinction between a conditional fee, being an increase calculated by reference to the basic charges, and a contingent fee, being calculated by reference to the size of any recovery by Mr Silvera in the proposed proceedings;(e) Mr Walker explained the circumstances in which Mr Silvera might himself be liable to pay costs under the agreements and in that regard explained the term (set out at [18] below) which provided for Mr Silvera’s liability in the event of his rejection of the claimant’s advice about settlement;(f) Mr Walker explained the circumstances in which Mr Silvera might be liable to pay the costs of other parties to the proposed proceedings and in that regard discussed the possibility of insurance against such risks;(g) Mr Walker explained that he hoped that Mr Bourne would also be prepared to act for Mr Silvera under a CFA and stressed that his firm was not prepared to pay disbursements of any sort;(h) Mr Walker repeated the distinction between the smaller claim and the larger claim and explained that in his view the chances of success of the former were significantly higher than those of the latter;(i) Mr Walker indicated that the success fee which the first claimant required to be identified in the CFAs was 75% of basic charges, of which 5% was referable to the delay in payment of the basic charges even in the event of success (and could never be recovered from another party: CPR 44.3B(1)(a)) and of which 70% was referable to the risks that the first claimant would be paid nothing;(j) Mr Walker’s oral explanation of the figure of 70% was brief, namely that the normal range in such a case was between 50% and 100%, that this was a complicated case and that there were risk factors; but he did not proceed to explain aloud what was then more specifically in his mind, namely that his assessment of the chance of success was between 70% and 80% in relation to the smaller claim and between 40% and 50% in relation to the larger claim and that the figure of 70% was what in evidence he called a blended fee referable to both parts of his assessment;(k) Mr Walker made clear that a “win” such as would trigger liability for the success fee was any recovery of damages, whatever its size; and(l) by the time when Mr Silvera came to sign the three agreements, both he and Mr Levene were well aware of their terms.

D: THE TERMS OF THE AGREEMENTS

[16]The three CFAs, one in respect of each of the then proposed defendants, were in the Law Society’s model form, which had twelve pages. Into each agreement there were a few hand-written insertions. On pages four and five of each agreement, prior to two schedules attached to it, Mr Walker and Mr Silvera appended their signatures; and Mr Silvera also initialled every page.[17]In the body of each agreement the success fee was identified at 75% of basic charges and it was stated that “the reasons for calculating the success fee at this level are set out in Schedule 1 to this agreement”. Schedule 1 was in the following terms:
“The success fee is set at 75% of basic charges and cannot be more than 100% of the basic charges. The percentage reflects the following: (a) the fact that if you win we will not be paid our basic charges until the end of the claim; (b) our arrangements with you about paying disbursements; (c) the fact that if you lose, we will not earn anything; (d) our assessment of the risks of your case. These include the following: (e) any other appropriate matters. The matters set out at paragraphs (a) and (b) above together make up 5% of the increase on basic charges. The matters at paragraphs (c), (d) [and (e)] make up 70% of the increase on basic charges. So the total success fee is 75% as stated above.”
Apart from the four references to numerical percentages, which were inserted in hand-writing, the above entirely comprised the printed terms of the Law Society model. It will be noted that, at (d), under the printed words “These include the following:”, there was no insertion.

The percentage reflects the following:

[18]In the body of each agreement it was provided that the Law Society Conditions, set out in Schedule 2, were part of the agreement.

(b) (iii), that:

“We can end this agreement if you reject our opinion about making a settlement with your opponent. You must then: • pay the basic charges … • pay the success fee if you go on to win your claim for damages.”

E: EVENTS SUBSEQUENT TO THE AGREEMENTS

[19]Mr Bourne was persuaded to enter into a CFA with the first claimant: nothing turns on his CFA with it. In October 2005 Mr Silvera accepted the advice of Mr Bourne and Mr Walker that there should be a fourth defendant to the proposed negligence proceedings, namely the pre-penultimate firm of solicitors which had represented him in the Urquhart action. So the first claimant and Mr Silvera entered into the fourth CFA, with a view to adding proceedings against that firm to the proposed proceedings against the three principal defendants: mutatis mutandis, the fourth CFA was in terms virtually identical to those of the first three CFAs and requires no separate consideration.[20]In December 2005 Mr Silvera issued the negligence proceedings against all four of the proposed defendants. Liability was denied. But negotiations for settlement began. In July 2007 the three principal defendants, without admission of liability, made an offer, no doubt authorised by their insurers, in the total sum of £450,000 plus a contribution to costs. Mr Bourne and, on behalf of the second claimant, Mr Walker both advised Mr Silvera to accept it. He refused. In October 2007 the offer was raised to the sum of £600,000 plus the contribution to costs; and the fourth defendant offered an additional £20,000. Mr Bourne and Mr Walker strongly advised Mr Silvera to accept it and threatened to exercise their rights to terminate their CFAs if he rejected their advice. But he rejected it. With effect from 25 October 2007 Mr Bourne terminated his CFA. On the same date both the claimants did likewise and claimed against Mr Silvera their basic charges amounting to £351,000. On 14 November 2007 the claimants issued the present proceedings and two days later they obtained a freezing order in the sum of £400,000, apparently directed in particular at such sums as Mr Silvera might recover in the negligence proceedings and (I speculate) served both on the defendants to those proceedings and on the solicitors whom he had instructed to represent him in those proceedings in lieu of the second claimant. In the event, no doubt with the latter’s assistance, Mr Silvera entered into a global settlement of the negligence proceedings in the sum of £600,000 but without contribution to costs, i.e. on terms somewhat less favourable than those which in October 2007 Mr Bourne and Mr Walker had advised him to accept. Following delivery of his judgment Blake J directed that the frozen sum be paid to the claimants in partial satisfaction of Mr Silvera’s liabilities under his order.

F: BREACH OF REGULATION 3(1)(a)?

[21]The argument before us has become reduced first to a dispute whether the references in (c) and (d) in Schedule 1 to the CFAs, namely to “the fact that if you lose, we will not earn anything” and to “our assessment of the risks of your case”, represented a literal compliance with the obligation in the regulation that the agreement should briefly specify the reasons for setting the percentage increase at 70% (exclusive of the deferral element); and second to a dispute whether, even if there was a literal breach of the regulation, there was no relevant breach because it was immaterial. Mr Morgan does not suggest that the claimants should have filed a respondent’s notice in order to be entitled to argue that such component of a breach as is reflective of its materiality was absent in the present case.[22]Mr Morgan strongly argues that the two linked references at (c) and (d), in the terms only of the Law Society’s model agreement and entirely unelaborated, fail to comply with the regulation, in particular because they fail to specify reasons for the level of the stated success fee, viz 70%. The word “specify” (he submits) connotes the provision of some detail and the word “briefly” cannot entirely deprive it of its connotation. He points, of course, to the further words at (d) in the model agreement, namely “These include the following …”, and to the failure of the parties (but, in reality, of the claimants) to make the insertion which (so he suggests) the Law Society must have considered to be requisite. When I asked Mr Morgan to indicate to us the sort of terms which, if inserted into the agreement, would, on his case, have complied with the regulation, he immediately produced – on a forensic level, it was highly impressive – a typed page of A4 which encapsulated Mr Walker’s evidence, accepted by the judge, about the reasons for his arrival at 70%. But Mr Morgan’s page runs to 286 words and, in the end, he was constrained to admit that perhaps it exceeded the realms of brevity. Did his gallant attempt serve only to highlight the difficulties inherent in identifying the boundaries of brief specification?[23]Mr Bacon, on the other hand, protests that the reasons for the agreed level of the success fee were indeed to be found both in Mr Walker’s assessment of the risks of Mr Silvera’s failure in the proposed proceedings and in the fact that, were he to fail, the claimants would not earn anything; and that expressly to refer to those two factors was – albeit indeed briefly – to specify those reasons. Mr Bacon points out that the two factors, although linked, are not identical. He argues – correctly – that the reference to not earning “anything” highlighted an extra dimension to the risks of failure in that another type of CFA (an example of which was considered by this court in Gloucestershire CC v. Evans [2008] EWCA Civ 21, [2008] 1 WLR 1883) will provide for payment of some fee, albeit discounted, even in the event of the loss of the proposed action. Mr Bacon suggests that the inclusion by the Law Society, at (d) in the model agreement, of the words “These include the following …” represents an encouragement to solicitors to observe best practice – and in particular to protect their own interests at a later stage – and cannot change or even illumine what the regulation itself requires.[24]It is here, in my view, that we come close to finding the key which unlocks these issues – certainly the issue as to the materiality of any breach and perhaps also that as to the literal existence of a breach itself. In Hollins v. Russell, cited above, this court, before which no issue was raised about the subparagraph of regulation 3 with which we are concerned, ruled that the materiality of a breach of the regulations should be judged by reference to the need to protect the client and to the interests of the proper administration of justice. I have suggested in [8] above that the parliamentary purpose behind regulation 3(1)(a) ran parallel to such objectives, namely to protect the client and to promote fairness in any ultimate assessment by the court of the reasonableness of the specified success fee.[25]Let us then first examine the words used in the agreements through the prism of the need to protect Mr Silvera. By the time when on 13 November 2003 the agreements were drawn and signed, the talking had been done; the explanations had been made; and, as Mr Silvera is now constrained to concede, the information required to be given by regulation 4 had been duly given. Although English is not his first language, Mr Silvera is an experienced businessman, well-acquainted with litigation even in England; and, most importantly, he had the assistance in person of Mr Levene, a shrewd and intelligent lawyer, who had an intimate knowledge of the events which had given rise to the Urquhart action and of the way in which that action had proceeded and who appeared actively to be directing the proposed negligence proceedings on Mr Silvera’s behalf. There is no evidence that either Mr Silvera or Mr Levene failed to understand any aspect of the CFAs or that they put to Mr Walker any question which failed to elicit an answer which they considered to be satisfactory. In my view the extent of the permitted brevity of the specification of the reasons for the level of the success fee in the agreements should to some extent be measured by these important features of the background to the agreements.[26]Let us next turn to examine the words used in the agreements through the prism of the need to promote fairness in any ultimate assessment by the court of the reasonableness of the specified success fee. There is likely to be only one loser as a result of any omission from the agreement of full reasons for the level of the success fee: namely the solicitor. Both counsel are agreed that, in the enquiry mandated by paragraph 11.7 of the Practice Direction supplementary to Part 44 of the CPR, the costs judge might well draw from such an omission an inference adverse to the reasonableness of the level. And, were the costs judge to reduce the level for the purpose of calculating the liability of the unsuccessful defendant, the claimant would be likely also to be a beneficiary of the reduction: for regulation 3(2)(b) of the Regulations required a CFA to provide (as the CFAs in the present case did) that the claimant would not be obliged to pay any part of a success fee disallowed in such circumstances unless the court were otherwise to direct.[27]In parenthesis I should note a discrete objection raised by Mr Morgan to the 70% level of success fee specified in the CFAs and, in particular, to Mr Walker’s acknowledged blending of the level to reflect the difference in the two perceived risks. On any view, and as Mr Walker accepted, it would be unreasonable to charge a success fee of as much as 70% in respect of proposed proceedings estimated, like the smaller claim, to carry a chance of success as high as 70% to 80%. The success fee rose to 70% only because of the substantially lower chance of success estimated in relation to the larger claim. Yet the agreement provided that any recovery, even if (as apparently proved to be the case) expressly limited to the smaller claim, triggered liability for the fee of 70%. This seems to me to be, at first sight, a powerful objection; but the claimants do not seek, even in principle, to recover any part of their success fee; and the judge was not considering an assessment of the reasonableness of its level under the Act of 1974. Thus it is that Mr Morgan’s objection goes into parenthesis. Counsel agree that the reasons required by the regulation to be specified in the agreement did not have to be good reasons, i.e. reasons which would withstand disallowance of all or any part of the success fee in the event of later assessment. Mr Morgan continues, however, to maintain that no reasons for the level were specified at all, even briefly.[28]In conclusion I have found it surprisingly hard to determine whether the judge was right to conclude that there had been no breach of the regulation even in the literal sense. In the end, by the narrowest margin, I subscribe to his determination even of that point. I consider that there is sufficient flexibility within the word “briefly” to allow the background features to which I have referred to render the requisite specification extremely brief; and that on that basis the printed words at (c) and (d) of the Law Society’s model agreement, however general, were the reasons and do pass muster. But, of the second, wider point, namely whether there was a breach in the material sense identified in Hollins v. Russell, I entertain no doubt at all. I am convinced that, even if there was a literal breach, it does not qualify as a breach for the purpose of rendering the CFAs unenforceable under the Act of 1990 because, in the events which had happened and in the context of the present claim, it was entirely immaterial.[29]So I would dismiss the appeal.[30]I agree.[31]I also agree.

Cited in 1 later judgment