The Court of Appeal has upheld a decision that a leading media law firm could not recover hundreds of thousands of pounds in costs because its conditional fee agreement (CFA) did not cover much of the work it undertook.
Giving the unanimous ruling of the Court of Appeal in Radford & Anor v Frade & Ors  EWCA Civ 119, Lord Justice McCombe said he rejected the appeal “not without regret”.
London firm Taylor Hampton (TH) was acting for individual and corporate defendants in an action brought by Oscar-nominated film director Michael Radford over a project to make a Spanish film called La Mula.
Mr Radford was retained to direct the film but in time the parties fell out and the director left the shoot and was replaced.
In July 2010, Mr Radford and the partnership through which he traded started legal action and obtained injunctions, which included prohibiting the defendants from using or publishing film footage he had shot without his authority.
Taylor Hampton and Augustus Ullstein QC were instructed under CFAs to set aside the injunctions and also dispute the jurisdiction of the English court and service of the proceedings.
According to Mr Justice Warby’s ruling in the High Court: “The initial objective was substantially achieved by a consent order made by Tugendhat J on 23 May 2012… By this point the substantive proceedings against the individual defendants were over. But they continued against the corporate defendants.”
Though the case continued for another 26 months, when TH successfully applied for summary judgment, Master Haworth at first instance ruled that the work done after May 2012 was outside the scope of the CFA, which was meant to cover only procedural issues such as service and jurisdiction.
An implied agreement to pay after that period was a CFA, and “TH failed to take the precaution of ensuring that this CFA was reduced to writing”, he said.
TH had submitted a bill in the sum of £805,500, most of which Warby J said related to that post May 2012 period.
As the clients were not liable for the fees of either solicitors or counsel, the indemnity principle meant they were not recoverable from the claimants.
Master Haworth had also ruled that the defendants could not recover any fees for work done by counsel after 23 May 2012, because his CFA was made with TH, and the clients had no liability to pay TH.
He further found that, in any event, no fees could be recovered for work done by counsel in respect of the corporate defendants, who were not identified as counsel’s clients in his CFA with TH. There was an attempt to address this second problem with a deed of rectification in July 2015 during the assessment proceedings.
His ruling was upheld by Mr Justice Warby, and in agreeing with them, McCombe LJ said he found it “impossible” to accept TH’s argument that the initial conventional retainer continued after the CFA was signed so as to pick up such items of work by the solicitors as were not covered by the CFA.
“In my judgment, it only makes sense that the solicitors and clients understood that the CFA superseded the original conventional retainer which had been entered into in circumstances of urgency and before the viability of a CFA could be assessed.”
He found that TH’s conduct indicated that it was “carrying on as usual” after 23 May 2012 and nothing had changed. “The misfortune was that the continuing willingness to work on a conditional basis only was not fully recorded in writing.”
In relation to counsel, McCombe LJ held that “the making of the retrospective variation of counsel’s CFA, after the making of the costs order in favour of the appellants, cannot be effective to increase the liability of the respondents as paying parties under that order”.
Taylor Hampton partner Daniel Taylor said: “While we are obviously disappointed by the judgment, it is clear that this was a very finely balanced decision.
“Unfortunately on this occasion the judges ruled, to quote the judgement ‘not without regret’, to dismiss our appeal.”