High Court refuses non-party costs order against solicitor acting on CFA for impecunious client


Manchester Civil Justice Centre: solicitor must have acted beyond his role to justify order

The High Court has refused to grant a non-party costs order against a solicitor who took on a case for an impecunious claimant under a conditional fee agreement (CFA) without after-the-event (ATE) insurance and also agreed to pay the disbursements.

HHJ Stephen Davies, sitting as a judge of the Technology and Construction Court in Manchester, said that to make an order the solicitor must have acted beyond his role in conducting the litigation.

In Tinseltime Ltd v Roberts & Others [2012] EWHC 2628 (TCC), the order was sought against sole principal Gavin Edmondson after his client disappeared with a costs order against him unpaid.

The judge said the authorities on non-party costs orders established that the starting point must be whether in all the circumstances it is just to make the order; this is a fact-specific enquiry. When a solicitor is involved, “it must be shown that he has in some way acted beyond or outside his role as a solicitor conducting litigation for his client”.

Where there is a CFA, “the fact that [the solicitor] stands to benefit financially from the success of the litigation, in that otherwise he will not be able to recover his profit costs or his success fee, does not of itself mean that he has acted in some way beyond or outside his role as a solicitor conducting litigation for his client”. The judge said the fact Mr Edmondson had funded the disbursements made no difference as this was “perfectly proper”.

He suggested that to justify an order there would usually need to be “either some financial benefit to the solicitor over and above the benefit which he can expect to receive from the CFA, or some exercise of control of the litigation over and above that which would be expected from a solicitor acting on behalf of a client, or some combination of both”.

HHJ Davies found no evidence of either. If anything, rather than viewing the case as a business proposition from which he could receive substantial fees, the evidence was that the solicitor failed to appreciate how complex and costly the case might be, he said. Further, had the case settled before trial, he would have recovered £20,000 in profit costs, a £2,500 success fee and £10,000 in disbursements. “That does not seem to me to indicate someone who is taking on a case as a business proposition.”

Similarly there was no clear evidence that Mr Edmondson was aware the case could not proceed if he did not fund the disbursements, nor did he advise his client not to take out an ATE policy. Further there was no reason to believe he controlled the litigation.

“Finally, but extremely significantly in my judgment, when I come to consider the overall justice of the matter, there is a case where there is contemporaneous evidence that Mr Edmondson was not motivated solely by financial self-interest in taking on this case, but with the laudable aim of providing access to justice to Tinseltime.”

Rejecting the application for an order, HHJ Davies added that had he found differently, he would have limited Mr Edmondson’s exposure to the £10,000 he had estimated incurring on disbursements at the beginning of the case (it ended up being more than double that). He also dismissed an application for a wasted costs order.

During the ruling, the judge said he was not aware of any reported cases in which a solicitor acting under a CFA has had a non-party costs order made against him on the basis of control. “But I can see how there might be circumstances where the court was able to conclude that the solicitor’s desire to achieve a successful outcome had caused him to in effect take over the running of the litigation for his own ends, and that this would justify the making of a non-party costs order against him.

“One example might be where the damages claimed were, or had become, modest in comparison to the costs already incurred, so that the client had for all practical purposes lost any real interest in the pursuit of the proceedings but the solicitor was wedded to pursuing them to recover his costs.”

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