Appeal court upholds validity of CFA switch despite legal aid remaining in place

Rowley: ruling upheld twice

The Court of Appeal has upheld a ruling that a conditional fee agreement (CFA) was valid even though the claimant’s legal aid certificate remained in place.

At first instance, Master Rowley found that the certificate had been “discharged by conduct”, and there was no need for the equivalent of a “burial certificate” from the Legal Services Commission (LSC).

This was first upheld by Mr Justice Soole and now by a three-man Court of Appeal, with Lord Justice Davis giving the lead judgment.

He said: “It is quite plain, as the costs judge found on the facts of this case, that the CFA was designed and understood entirely to supersede for all purposes the public funding of the claim.”

Hyde v Milton Keynes Hospital NHS Foundation Trust [2017] EWCA Civ 399 was a clinical negligence case where liability was agreed but a dispute over quantum continued for a further 18 months, during which time the LSC refused to increase the funding limitation on the claimant’s certificate.

As a result, the claimant and her solicitors, Ashton KCJ, entered into a CFA and took out after-the-event insurance.

The solicitors did not apply to discharge the certificate. They did serve an N251 notice of funding on the defendant, however.

The defendant argued that this failure meant the claimant could not recover the costs generated under the CFA, but Master Rowley disagreed. This was not, he found, a ‘topping-up’ case where the legally aided party’s solicitor seeks to recover more money than he is entitled from the public purse.

Davis LJ said that neither the legislation nor case law supported a “bright line approach” which required the certificate to be discharged before a private retainer began.

“As a matter of reality and substance, the CFA had for all purposes replaced the previous public funding,” he said.

“The crucial fact was not, in my view, the solicitors’ own assessment that the work thus far done had reached, or was approaching, the limit set by the LSC. That would not of itself, I accept, cause the certificate to be spent.

“That, however, was simply the motivation for, and reason for, what here was, as I see it, the crucial fact: namely the entering into the CFA.

“The absence of a certificate of discharge, in such circumstances, was evidential: not conclusive. It is quite plain, as the costs judge found on the facts of this case, that the CFA was designed and understood entirely to supersede for all purposes the public funding of the claim.

“As [counsel for the claimant] put it, there had been a ‘definitive switch’. There was no prospect of topping up in such circumstances.”

Noting the defendant’s complaint that the court’s conclusion would in effect neuter the statutory scheme with regard to discharge, Davis LJ concluded: “But the general desirability of obtaining such a discharge of course remains: as the very fact that this case has ended up in the Court of Appeal illustrates.”

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