Holmes v Alfred McAlpine Homes (Yorkshire) Ltd [2006] EWHC 110 (QB)

Case No 0408286[2006] EWHC 110 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 07/02/2006
Before
MR JUSTICE STANLEY BURNTONsitting with MASTER O’HARE and MR TONY GIRLING as Assessors
Between
JOHN HOLMESClaimantALFRED MCALPINE HOMES (YORKSHIRE) LTDDefendant
Richard Wilkinson (instructed by Stewarts) for ClaimantRoger Mallalieu (instructed by Berrymans Lace Mawer) for DefendantHearing Hearing dates: 6 December 2005
Judgment

Introduction

[1]This is an appeal by the Claimant against the decision of Master Simons, Costs Judge, dated 11 August 2005, in which he decided that the conditional fee agreement entered into between the Claimant and his solicitors, Stewarts, is unenforceable by reason of those solicitors’ failure to comply with then requirements of regulations 4(2)(a) and 4(3) of the Conditional Fee Agreement Regulations 2000 (“the Regulations”). The appeal is brought with the permission of Master Simons, who clearly considered that the appeal had a real prospect of success.

The facts

[2]I can conveniently take the undisputed facts from Master Simon’s clear exposition: 2. On the 8 November 1999 the Claimant suffered severe personal injuries, as the result of an accident at work. Mr Holmes was a member of the Union of Construction Allied Trades and Technicians (‘UCATT’) and they passed his case to a firm of solicitors, O H Parsons, who accepted Mr Holmes’ instructions to endeavour to recover damages from his employers, Alfred McAlpine Holmes (Yorkshire) Limited (the “Defendants”). Although it was a matter of dispute, I have decided that there was a valid retainer between Mr Holmes and O H Parsons. On the 15 June 2000 Mr Holmes decided to change his solicitors and instructed Stewarts. By the time Stewarts were instructed, liability had been admitted by the Defendants, although, there was an issue with regard to contributory negligence. 3. Proceedings for damages were issued by Stewarts on behalf of the Claimant, on the 16 October 2002 and the case was settled shortly before trial on the 19 November 2003, when the Claimant accepted the sum of £1,615,000.00 in settlement of his claim. The Court Order recording the terms of settlement provided that the Defendants pay the Claimant’s costs on a standard basis. 4. On the 15 June 2000 the Claimant met with Mr Dench of Stewarts and on the 21June 2000, Mr Dench wrote to Mr Holmes, the first two paragraphs of his letter, reading as follows:
“I write further to our meeting on the 15 June 2000 and confirm that my firm will be happy to handle your personal injury claim. I have discussed your claim with the Partners and they will offer you a Conditional Fee Agreement with a nil success fee. I have not yet prepared this contractual documentation, as I will firstly attempt to secure funding through the Trade Union. However, it is my experience that the Trade Union will be reluctant to transfer the funding to another firm of solicitors. I will keep you advised.” 5. Mr Dench then proceeded to correspond with UCATT. Mr Dench was unwilling to deal with the case on the basis suggested by UCATT as he considered that basis would be in breach of the indemnity principle. (That issue does not form part of this Judgment). In the second paragraph of his letter to the General Secretary of UCATT dated 27 July 2000, Mr Dench wrote: “It is for this reason that I propose to deal with the matter on a Conditional Fee Agreement, a “no win no fee” agreement, with a “nil” success fee which puts Jack in the same position as he would be if he was on an ordinary private contract.” 6. On the 28 July 2000, Mr Dench wrote to the Claimant and in his letter under the heading “Legal Costs”
Mr Dench wrote:
“I have now discussed this at length with UCATT. The case will be funded by way of a No Win No Fee agreement with a nil success fee. This means that if the case does not succeed you will not have to pay our costs, nor will UCATT. In the event that you succeed then you will be responsible for our legal costs, but the majority of these costs will be paid by the Defendant. UCATT have insisted they will not be responsible for our fees in the event of an unsuccessful outcome and therefore the matter must proceed on a No Win No Fee Agreement for technical reasons. In the event that you lose the case or are ordered to pay costs then UCATT will provide you with appropriate cover. I am preparing the contractual documentation and will go through this with you in detail in the next few days.” 7. There has been produced to me an attendance note dated 22 August 2000 identifying the fee earner as being Stuart Dench and the attendance note states: “SHD engaged 18 minutes conducting a file review Legal Costs The Conditional Fee Agreement with the success fee of nil must be sent out to the client. This has not yet been sent out. In addition, clarification is required from the Trade Union with regard to the insurance cover available.” 8. On the 23 August 2000 Mr Dench wrote to the Claimant as follows: “I have enclosed the Conditional Fee Agreement for your perusal ahead of our forthcoming meeting. I will take you through the agreement in detail at that meeting and explain all of its implications to you. I will ask Gillian to sign this document on your behalf following the meeting.” 9. On the 25 August 2000, Mr Dench met with the Claimant and his wife at the Princess Royal Spinal Injuries Unit at Sheffield. Part of Mr Dench’s attendance note of that meeting records the follows: “1) Costs I discussed in detail with Mr Holmes the position with regards to the Conditional Fee Agreement. Following a long discussion and explanation of each cause (sic) Gillian Holmes signed the CFA on Jack’s behalf as he was unable to sign due to the injuries he sustained in the accident.” 10. The Conditional Fee Agreement was dated 15 July 2000 and included a claim for success fee of 25% of basis charges. 11. Following settlement of the claim, on the 5 November 2004 Stewarts served Notice of a Commencement of Assessment of a Bill of Costs on the Defendant’s solicitors together with a Bill of Costs for assessment. The bill totalled £260,705.25 and included a claim for a success fee amounting to £33,052 which was 25% of Stewart’s basic costs. The Defendant served Points of Dispute and the matter was listed before me for a Detailed Assessment hearing on 10-11 March 2005. Legal Costs “I have enclosed the Conditional Fee Agreement for your perusal ahead of our forthcoming meeting. I will take you through the agreement in detail at that meeting and explain all of its implications to you. I will ask Gillian to sign this document on your behalf following the meeting.”

Legal Costs

[3]In preparation for the Detailed Assessment, Master Simons read the Stewarts files. His judgment continues: 12. In my reading of Stewarts files prior to the Detailed Assessment hearing, I became concerned with regard to the fact that the conditional fee agreement appeared to have been backdated and that the correspondence leading up to the signing of the conditional fee agreement had indicated that there would be a nil success fee. At the Detailed Assessment Hearing on the 10 March 2005 I expressed these concerns to the parties and after a short adjournment, the Defendants requested that the Detailed Assessment be adjourned further to enable the Claimants to give a disclosure of all relevant documentation. This was not opposed by the Claimants. I accordingly ordered that the Detailed Assessment be adjourned to the 12 July 2005 and that any further evidence be served by the 11 April 2005. The Claimants duly served a copy of the Conditional Fee Agreement, together with the relevant correspondence on the Defendant’s solicitors and Mr Dench has filed a witness statement, dated 20 April 2005, in which he deals with the background to the entering into of the Conditional Fee Agreement, the Conditional Fee Agreement itself and the Success Fee. The witness statement also deals with the question of hourly rates, which issue does not form part of this judgment.

The Regulations

[4]The relevant provisions of the Regulations are as follows: 3(2) If the Agreement relates to court proceedings, it must provide that where the percentage increase becomes payable as a result of those proceedings, then:(a) …(b) …(c) … (i) … (ii) the legal representative agrees with any person liable as a result of the proceedings to pay fees subject to the percentage increase that a lower amount than the amount payable in accordance with the conditional fee agreement is to be paid instead, the amount payable under the conditional fee agreement in respect of those fees shall be reduced accordingly, unless the court is satisfied that the full amount should continue to be payable under it. 4(1) Before a conditional fee agreement is made the legal representative must: a) inform the client about the following matters, and b) if the client requires any further explanation, advice or other information about any of those matters provide such further explanation, advice or other information about them as the client may reasonably require. (2) Those matters are - (a) the circumstances in which the client may be liable to pay the costs of the legal representative in accordance with the agreement. (b) the circumstances in which the client may seek assessment of the fees and expenses of the legal representative and the procedure for doing so, (c) whether the legal representative considers that the client's risk of incurring liability for costs in respect of the proceedings to which agreement relates is insured against under an existing contract of insurance,(d) whether other methods of financing those costs are available, and, if so, how they apply to the client and the proceedings in question,(e) … (3) Before a conditional fee agreement is made, the legal representative must explain its effect to the client. (5)(1) The conditional fee agreement must be signed by the client and the legal representative.. (i) … (ii) the legal representative agrees with any person liable as a result of the proceedings to pay fees subject to the percentage increase that a lower amount than the amount payable in accordance with the conditional fee agreement is to be paid instead, a) inform the client about the following matters, and b) if the client requires any further explanation, advice or other information about any of those matters provide such further explanation, advice or other information about them as the client may reasonably require. (a) the circumstances in which the client may be liable to pay the costs of the legal representative in accordance with the agreement.

(e) …

[5]In Hollins –v- Russell [2003] EWCA Civ 718, [2003] 1 WLR 248, Brooke LJ said, at [107]: A key question therefore is whether the conditions applicable to the conditional fee agreement by virtue of section 58 of the 1990 Act have been sufficiently complied with in the light of their purposes. Costs Judges should accordingly ask themselves the following question: Has the particular departure from a Regulation pursuant to section 58(3)(c) of the 1990 Act or a requirement in section 58, either on its own or, in conjunction with any other such departure in this case had a materially adverse effect, either on the protection afforded to the client or upon the proper administration of justice? If the answer is “yes” then the conditions have not been satisfied. If the answer is “no” then the departure is immaterial and assuming that there is no other reason to conclude otherwise the conditions have been satisfied.

Master Simons’ findings

[6]At the hearing before Master Simons on 12 July 2005, the Defendant contended that the CFA was unenforceable on the ground that there had been four breaches of the Regulations which together were material. Master Simons rejected two of these grounds on the basis that in one case there had been no breach and in the other the breach was not material in itself and had no cumulative effect. It is only necessary to mention the first of these grounds, which was that the agreement had not been signed by the client as required by regulation 5(1). Master Simons held that it was sufficient for the agreement to be signed on behalf of the client; Mrs Holmes had done so on behalf of her husband, because of his disability; and the agreement therefore was compliant in that respect. There has been no cross-appeal against that finding.[7]Master Simons however held that there were two other matters which led to the conclusion that there had been a breach or breaches of the Regulations which were material. Those breaches were the failure to explain to the client the backdating of the agreement and the provision of a success fee and its consequences for the liability of the client. He said:24. I accept the basic proposition of Mr Williams that a contract can be retrospective in effect, if that is the intention of the parties, on the assumption that a contract would ultimately be agreed on lines known to both parties, though, with the final form of various constituent terms of the proposed contract still under discussion. However, in this case at the date of the contract, Mr Dench had already written one letter to the client informing him that there would be a nil success fee and would subsequently write a further letter to Mr Holmes providing the same information, before the contract was actually signed. Mr Dench states that the probable explanation of the backdating of the Conditional Fee Agreement was that the form was adapted by his colleague in connection with another case where the date of signature was 15 July 2000. This is speculation and not fact. The 15 July 2000 appears to have no significance whatsoever in this matter. There is no evidence of any common intention that the parties should be bound from the 15 July 2000.25. Whilst I do not disagree with the editor of Butterworths that work done before a conditional fee agreement can be subject to a success fee, the difficulty in this case is identifying what such work would be. On page three of the Conditional Fee Agreement under the heading “Basic Charges”, it states:
“These are for work done from now until this agreement ends.” 26. The question that has to be asked is what does “…..from now” mean. Mr Williams submits that “now” should be 15 July 2000, but it seems to me that that date is of no significance whatsoever. Why that date? Why not the date when Mr Dench was first instructed? Why not the date when Mr Dench “changed his mind” about the level of success fee? Why not the date when the Conditional Fee Agreement was signed on behalf of Mr Holmes? 27. I must also make a distinction between this case and Trollope and Coles Ltd –v- Atomic Power Construction Ltd. That case envisages a commercial contract. In this case, whilst there is a commercial contract, it is a commercial contract that is subject to statutory regulations which require that an adequate explanation must be given to the client, as to the effect of the Agreement. The contract in Trollope and Coles Ltd does not appear to be a contract that was subject to statutory regulations. There is no evidence before me that the question of retrospectivity was ever discussed with the client. The 15 July 2000 is a date that has no significance and if the Conditional Fee Agreement is to be backdated to that date, there has to be an explanation as to why that date and not another date. There is no explanation other than that date may have been inserted in error. 28. The corollary to this, is that I am not satisfied that the reason for the backdating of the agreement has been properly discussed with the client. Mr Dench in his statement said he had very little memory of the sequence of events. The date “15 July 2000” is clearly printed in bold on the first page of the agreement and it therefore must be questionable, as to whether Mr Dench gave or was able to give an explanation to the client, as to why that date was chosen. If he does not know the reason himself, how could he have given an explanation to Mr or Mrs Holmes. I therefore accept Mr Mallalieu’s submission that the attempt at retrospectivity taints this agreement, in that it provokes an inevitable confusion on part of the Claimant, as it purports to impose a greater liability on him than he actually has. I am not satisfied that regulation (4) (3) has been complied with in this respect, as it raises a serious doubt as to the adequacy of the explanation, that is required by the regulation, that has been given to the client. 29. I am also satisfied that there have been further breaches of Regulation 4. I accept Mr Mallalieu’s submission that there is a primary liability on the Claimant to his solicitors to pay a success fee. On two occasions, the client was informed that there would be a nil success fee. Mr Dench has reported to UCATT that liability has been admitted. On the 22 August 2000, Mr Dench has spent eighteen minutes conducting a file review and has recorded that “a conditional fee agreement with a success fee of nil must be sent to the client”
. Three days later, the Conditional Fee Agreement was signed, but incorporated a twenty-five per cent success fee. Mr Dench says in paragraph 23 of his witness statement, that “I then changed my mind…”. Mr Dench has to give a better explanation than simply that he changed his mind. What happened between his file review on the 22 August 2000, when he had already been dealing with the case for two months and the 25 August 2000, to make him change his mind? Whatever that reason was, surely, it has to be recorded and an explanation given to the client. His attendance note simply states that he discussed the Conditional Fee Agreement in detail with the client and explained each clause. He failed to record any explanation as to why the Agreement was dated 15 July 2000, nor did he record any explanation as to why the success fee had suddenly leapt from nil to twenty-five per cent, or the reasons why he had changed his mind. No evidence has been submitted by Mr Holmes as to the circumstances and consequently I do have serious doubts as to whether there has been compliance with Regulation 4(2) (a) and Regulation 4(3).[8]Master Simons cited the summary of the law at paragraph 107 of the judgment of Brooke LJ in Hollins –v- Russell [2003] EWCA Civ 718, [2003] 1 WLR 2487, and continued:31. I am satisfied that in this case the breaches of Regulations 4(2) (a) and 4(3) are material and have had a materially adverse effect upon the protection afforded to the client. The success fee in this case was claimed at £33,052. The Claimant does have a primary liability to his solicitors for payment of this sum. There are circumstances, however technical, where the Claimant could be liable for this sum. The Conditional Fee Agreement provides, in condition 4(2) that: “You remain ultimately responsible for paying our Success Fee.”32. There is also a liability for payment of the success fee if Mr Holmes were to die and his personal representatives wished to continue the claim for damages or, if Mr Holmes decided to change his solicitors. Mr Holmes was informed in writing on two occasions that there would be a nil success fee, in which case he would have had no additional liability. There is no evidence of any explanation being given to the client, in breach of the Regulations, of the circumstances whereby Mr Holmes could have a substantial personal liability. Mr Dench has been quite honest in stating that he cannot clearly remember what actually happened, but where, in the circumstances of this case, there has been such deviation from what the client was informed in writing, to what was actually stated in the document, I must treat the limited information provided by the evidence of Mr Dench with considerable caution.33. All the facts lead me to believe that just as the date of 15 July 2000 was inserted in error, and that such error was not noticed by Mr Dench when he gave his explanation of the Conditional Fee Agreement to the client on 25 August 2000, it seems highly likely that the success fee of 25% was also included in the agreement in error. Mr Dench attempts to explain the backdating by suggesting that his assistant copied the agreement from a previous draft. If that was the case then it is possible, if not probable, that the same previous draft contained a 25% success fee and that error also became embodied into the Agreement signed by Mr Holmes. As the Conditional Fee Agreement signed on behalf of Mr Holmes contained two basic, obvious and fundamental errors, I cannot be satisfied that the explanation of the terms of the Agreement was given to the client in accordance with the Regulations. I conclude that the absence of sufficient explanation has had a materially adverse effect on the protection afforded to the client. Accordingly, the Conditional Fee Agreement dated the 15 July 2000, is unenforceable.

The parties’ submissions before me (a) the procedure on this appeal

(a) the procedure on this appeal

[9]Mr Wilkinson submitted that the appeal should be by way of a rehearing, rather than a review of the judgment below. In that connection he applied to adduce in evidence a second and a third witness statements of Mr Dench that had not been in evidence below. He submitted that it was appropriate to receive that evidence because the Claimant had not had an adequate opportunity to address the issues of fact and law arising below, and the new evidence might have an important impact on my decision.[10]Mr Mallalieu objected to these applications. So far as the first is concerned, no good reason has been put forward to depart from the normal rule that an appeal is limited to a review of the decision of the lower court: CPR Part 52.11. So far as the latter is concerned, the issues of fact that had to be addressed by the Claimant, and in particular Mr Dench, were made obvious by Master Simons on 10 March 2005. Mr Dench did not serve his first witness statement in the time required by Master Simons’ directions given on that date, but only on 6 July 2005. He had had ample opportunity to research his and Stewarts’ files and to consider and to prepare his evidence. In fact, his evidence is to the effect that he has no specific recollection of the making of the CFA, and in particular as to the factual issues that Master Simons considered crucial, and so far as the facts are concerned his original witness statement was, in so far as it went beyond the contemporaneous documents, speculation, as Master Simons’ himself described it. The latest witness statements of Mr Dench contains additional speculation as to the reason for the backdating of the agreement and cannot be said to be evidence that might have an important effect on the result of his appeal.[11]I have no hesitation in accepting Mr Mallalieu’s submissions on these matters. The issues of fact Mr Dench had to address had indeed been made clear on 10 March, and I cannot accept that he and Stewarts were unaware of the possible consequences of a failure to satisfy Master Simons that the Regulations had been complied with. No good reason has been put forward for the delay in serving Mr Dench’s first witness statement, which from the header and the details on the first page must have been substantially completed on 20 April 2005. No new contemporaneous documents have been produced that can be objectively and clearly linked to the matters in issue, and in general the additional evidence consists of further speculation as to the reasons for the insertion of the date of 15 July 2000 in the agreement and what if anything was said about the uplift when the agreement was concluded.

The parties’ submissions before me: (b) on the substance of the appeal

(b) on the substance of the appeal

[12]Both parties accepted that, once a breach or breaches of the Regulations has or have been established, the question for the Court is, in accordance with the statement of Brooke LJ set out above, whether it is or they are material: have they had a material adverse effect on the protection afforded to the client by the Regulations or upon the proper administration of justice?[13]The crucial question is whether Stewarts explained the effect of the agreement to Mr and Mrs Holmes before it was signed, and if not whether their failure to do so was material. It is common ground that the onus is on the receiving party to show that the Regulations were complied with, and if not that any breach was immaterial.[14]Mr Wilkinson submitted that the agreement as executed was retrospective. There is no objection to retrospectivity as such. Mr and Mrs Holmes would clearly have understood that the agreement covered all work done by Stewarts from the date of the agreement. The agreement applies to their work done “from now”, and it would be obvious that “now” referred to the date of the agreement. Whatever the reason for the insertion of 15 July 2000 as the date of the agreement, it must have been covered by Mr Dench when he went through its terms with Mr and Mrs Holmes as evidenced by the attendance note of 25 August 2000, which records that Mr Dench was engaged with the client for 3 hours. So far as the provision for a success fee or uplift is concerned, it is specified as 25 per cent in 4 places in the agreement, and it is inconceivable that it would not have been discussed and explained. In any event, he submitted, neither breach, if such there was, was material: given that there had already been an admission of liability at the date of the agreement, the risk of the client having to pay any of the costs between 15 July and 25 August 2000 was remote, and the client was relieved of any liability for the costs between those dates unless he succeeded in his claim, and he was also relieved of the liability to fund those costs. So far as the uplift was concerned, for similar reasons there is no reason to believe that the client would not have agreed to it, as confirmed by the fact that the client had not complained about it.[15]For the Defendant, Mr Mallalieu confirmed that no allegation of impropriety was made against Mr Dench. The question is whether the evidence showed that the Regulations had been complied with. He emphasised the matters which understandably concerned Master Simons. The first is that there is no sensible explanation for the date inserted in the agreement. The date, 15 July 2000, is not the date of any relevant event, and it is difficult to see what explanation for that date could have been given to Mr Holmes. As to the uplift, it is clear that as late as 22 August 2000 Mr Dench envisaged an uplift of nil. Clearly, therefore, the change was last minute. It is not the subject of any specific note on the file or intra-office memo; and it was not specifically referred to in the attendance note of 25 August. There was nothing on file to show how or why the uplift was arrived at, particularly since by the date of the agreement liability had been admitted. The attendance note of 25 August is general in terms. One would expect it to mention specifically the salient points that should have been covered in relation to the agreement, namely its backdating and the last minute uplift. It does not. In these circumstances the court could not conclude that the matter had been explained to the client. Both breaches were material, both of them affecting and increasing the potential liability of the client. In these circumstances, it was impossible for this court to conclude that Master Simons had made any finding of fact or reached any conclusion that was not reasonably open to him.

Discussion

[16]Master Simons was not entirely clear as to what his findings were. At paragraph 29 of his judgment, he said that he had “serious doubts as to whether there has been compliance with Regulation 4(2)(a) and Regulation 4(3)”, but went from that statement to referring in paragraph 31 to breaches of the Regulations that had been established. I must infer that the doubts to which he referred were sufficient for him to find that on a balance of probabilities those provisions of the Regulations had not been complied with. He then decided that the breaches in respect of the date of the agreement and the uplift were together material.[17]The evidence that the client was given an adequate explanation of the matters in question is in my judgment limited to the attendance note of 25 August 2000 and the contents of the agreement itself. I have to say that I find it curious that Mr Dench has no specific recollection of the matters which rightly concerned Master Simons. The agreement with the Claimant was one of the first if not the first CFAs that he had dealt with under the post-April 2000 CFA regime. It was backdated to a date that required some explanation to the client. The late change in the uplift equally required explanation, and I should have thought that the lateness of the change itself would have led to some recollection on the part of Mr Dench.[18]So far as the attendance note is concerned, I do not think that it can be wholly relied upon. The same applies to the certificates in the agreement itself, signed by Mrs Holmes and Mr Dench respectively, that he had verbally explained to the client “the matters in paragraphs (a) to (e) under ‘Other points’ above”. If Mr Dench had gone through what is not a long agreement clause by clause, as stated in his attendance note, he would have noticed that it stated:
“If this agreement ends before your claim for damages ends, Accident Line Protect ends automatically at the same time.”
There was in fact no such insurance. Schedule II to the agreement, which was headed “The Insurance Policy” stated that Stewarts believed that the cover available through Mr Holmes’s trade union, UCATT was appropriate to cover the defendants’ charges and disbursements in case he lost the case. I would have expected, therefore, the reference to Accident Line Protect to have been deleted by Mr Dench as he went through the agreement. So far as paragraphs (a) to (e) referred to in the certificates are concerned, paragraph (e)(i) stated: In all the circumstances, on the information currently available to us, we believe that a contract of insurance with […] is appropriate. Detailed reasons for this are set out in Schedule II.

(e) (ii) stated:

“In any event, we believe it is desirable for you to insure your opponent’s charges and disbursements in case you lose.”
I would have expected both of these subparagraphs to have been deleted: both were inappropriate in view of the protection afforded by UCATT.[19]Mr Wilkinson submitted that the agreement was on its face, retrospective. That is incorrect. It was not retrospective: it was back-dated, which is a very different thing. A properly drafted agreement would have borne the date on which it was executed, but would have expressly provided for its application to work done from the prior date agreed by the parties. The written agreement in this case was misleading. Anyone who saw it would assume that it had been executed on the agreement date, that is, 15 July 2000. In fact it was not. Indeed, it is the fact that it was back-dated that leads to my surprise that Mr Dench has no recollection of the matter. The date of an agreement is just the kind of matter that is easily passed over when an agreement is read or discussed, it being assumed that it is the date of signature. Given the matters to which I have referred above, if the matter had come before me at first instance, I should have found that it had not been established that the back-dating of the agreement, and any consequences of that back-dating, had properly been explained to the client. It follows that I would uphold the Costs Judge’s finding on this issue.[20]However, whether that breach of the regulations of itself had a material adverse effect on either the protection afforded to the client or the proper administration of justice is a different question. Master Simons did not express a view on this breach in isolation. In my judgment, it was not material to the protection afforded to the client in itself. The agreement provided that the basic charges were “for work done from now until this agreement ends”. The natural meaning of “now” is the time when the agreement is entered into. In the absence of an explanation from Mr Dench (and I am not satisfied that there was one), that is how Mr and Mrs Holmes would have understood the agreement. For the agreement to have had retrospective effect, it would have had to refer to work done “from the date of this agreement”, or “from 15 July 2000”. Thus, for it to be retrospective, rectification would have been required. On this basis, there was no material effect on the protection afforded to the client. It did not apply to work done before 25 August 2000.[21]Even if the agreement had had retrospective effect, I should not have found the failure to explain the retrospectivity to have been material. The application of the agreement to work done from 15 July 2000 would have had the effect of relieving the client in practical terms from his liability for costs incurred between 15 July 2000 and 25 August 2000 in the event that his claim failed. He would also have been relieved of the liability to fund those costs pending determination of his claim. It seems to me that any sensible client, to whom the retrospective effect of the back-dating of the agreement had been explained, would have agreed to it.[22]Whether the back-dating of the agreement had a material affect on the administration of justice is a separate question. An allegation that the agreement was deliberately back-dated in order to mislead the defendant or its solicitors or the court into believing that it was entered into on the date it bore, in order, for example, to give the impression that the uplift of 25 per cent had been agreed before there was an admission of liability, would be a serious allegation of impropriety (indeed, of dishonesty) which, if established, would certainly lead to the unenforceability of the agreement. However, the defendant has disclaimed any allegation of impropriety on the part of Mr Dench. The fact that the agreement had been back-dated was apparent from the files provided to Master Simons, and was noticed by him. In these circumstances, there is no basis for a conclusion that the agreement is unenforceable on the ground that its back-dating had a material effect on the administration of justice.[23]I would emphasise, however, that the back-dating of documents as was done in this case is generally wrong. It is wrong to seek to give an agreement retrospective effect by back-dating it. If it is agreed that a written agreement should apply to work done before it is entered into, it should be correctly dated with the date on which it is signed and expressed to have retrospective effect, i.e. to apply to work done before its date. Back-dating is liable to mislead third parties, and is liable to lead to the suspicion that it was done in order to mislead third parties, including a court before which the agreement is to be placed. The dangers may be seen in the Claimant’s bill of costs. Part 2 lists “work incurred by Messrs Stewarts prior to the entering of a Conditional Fee Agreement”. The costs draftsman seems to have taken the date of entering into the agreement as the date it bore, since Part 2 lists no work done between 15 July and 25 August 2000. Back-dating is at best due to incompetence or lack of thought, and at worst to dishonesty. It should not be done.[24]I turn to consider the other alleged breach of the Regulations, namely the failure to explain the uplift. So far as that is concerned, I agree with Master Simon that the documentation is wanting. I should have expected to see a note to file, dated before the meeting with the client, justifying the decision to seek the uplift, and a specific reference to the discussion of the uplift in the attendance note of that meeting. I should also have expected Mr Dench to have sent a letter to the General Secretary of UCATT explaining why Stewarts had decided after all to seek a success fee and asking for confirmation that the union would fund the Defendant’s costs and disbursements notwithstanding the departure from the terms of the CFA indicated in the letter to him of 27 July 2000.[25]However, notwithstanding that paragraph 1 of Mr Dench’s attendance note of 25 August 2000 appears to overstate the thoroughness with which the agreement was discussed with Mr and Mrs Holmes, given that the uplift was central to the agreement, and that its percentage amount is prominent in the agreement as entered into, I do not see how the attendance note, if contemporaneous (and it is not suggested that it is not) could have been honestly made without the uplift having been discussed. As mentioned above, the Defendant has disclaimed any imputation on Mr Dench’s honesty. In these circumstances, I do not think that Master Simons could reasonably have concluded that the uplift was inserted in error and not noticed or discussed when the agreement was discussed on 25 August 2000. If it was discussed, there is no basis for finding that the discussion was inadequate.[26]It follows that I would allow this appeal on the grounds that the backdating of the agreement did not involve a material breach of the Regulations and that there was no breach of the Regulations in relation to the inclusion of the uplift.

Cited in 6 later judgments