29 March 2017Print This Post

Supreme Court rejects narrow approach to LASPO transitional provisions on success fees and ATE

Sumption: CFA argument was “bad point”

The Supreme Court has allowed the recovery of a pre-LASPO success fee and after-the-event (ATE) premium where the conditional fee agreement (CFA) and insurance had to be extended after 1 April 2013 to cover appeals.

In a significant ruling on the Act’s transitional provisions, Lord Sumption said that the purpose of the transitional provisions was to “preserve vested rights and expectations arising from the previous law”.

That purpose would be defeated “by a rigid distinction between different stages of the same litigation”, he said, giving the majority ruling in Plevin v Paragon Personal Finance Ltd [2017] UKSC 23, supported by Lady Hale, Lord Clarke and Lord Carnwath. Lord Hodge dissented.

The Supreme Court dismissed Paragon’s appeal in the substantive case and ordered it to pay Mrs Plevin’s costs, which were assessed at £751,463, including £31,378 for the success fee and £531,235 for the ATE insurance premium.

Both the CFA and insurance was agreed in 2008, but the former was varied and latter topped up twice after 1 April 2013 to deal with the appeals to the Court of Appeal and then Supreme Court.

Paragon argued that the two variations were new CFAs and so not therefore covered by the transitional provisions of LASPO.

Lord Sumption dismissed this as “a bad point”, saying that the deeds of variation provided for litigation services in relation to the same underlying dispute as the original CFA.

Paragon would only have succeeded if the effect of the deeds was to discharge the original CFA and replace it with new agreements, which was not the case.

The transitional provisions relating to ATE are worded slightly differently, linking to the insurance to the ‘proceedings’, rather than their subject matter.

Lord Sumption said: “The purpose of the transitional provisions of LASPO, in relation to both success fees and ATE premiums, is to preserve vested rights and expectations arising from the previous law. That purpose would be defeated by a rigid distinction between different stages of the same litigation.

“It may or may not be reasonable to expect an insured party who fails at trial to abandon the fight for want of funding. That will depend mainly on the merits of the appeal. But an insured claimant who succeeds at trial and becomes the respondent to an appeal is locked into the litigation.

“Unless he is prepared to forego the fruits of his judgment, which by definition represents his rights unless and until it is set aside, he has no option but to defend the appeal. The topping-up of his ATE policy to cover the appeal is in reality part of the cost of defending what he has won by virtue of being funded under the original policy.

“The effect, if the top-up premium is not recoverable, would be retrospectively to alter the balance of risks on the basis of which the litigation was begun.”

He added that though the legislation used different wording, there was “no rational reason” why Parliament would have meant to treat success fees and ATE premiums differently.

The defendant also sought to challenge the CFA on the basis on ineffective assignment on two occasions when the claimant’s solicitors, Miller Gardner, reorganised itself, first into an LLP and then into a limited company. However, Lord Sumption said that on the basis of how the agreements transferring the firm’s assets were worded, the argument had “no merit”.

Paragon argued that ‘work in progress’ included only work already done at the transfer date, not further work on the same matter done thereafter.

“If this were correct, it would mean that the only right of the successor firm was to bill the clients for work done before the transfer date, leaving them with no solicitor to act for them other than the defunct shell of the old firm. This plainly cannot have been intended,” Lord Sumption said.

By Neil Rose


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