It’s all in the detail – the costly lesson of getting your retainer wrong: Radford & Anor v Frade & Ors [2018] EWCA Civ 119

In July 2017, the grounds on which the Appellants brought an appeal were considered in the blog CFAs, Counsel and Rectification – Permission to Appeal granted. This blog focused on the decision of Frade & Ors v Radford & Anor [2017] EQCA Civ 1010.

Fast forward to 07 February 2018, and the Court of Appeal have now considered, and subsequently dismissed, the appeal. Lord Justice McCombe ordered that work done outside the scope of a CFA was not recoverable inter partes, and that retrospective rectification of Counsel’s CFA did not permit costs to be recoverable when they would not have been recoverable save for the rectification.

The Solicitor’s retainers

The Appellants’ argued that a conventional retainer that was entered into before the CFA covered work which was not covered by the CFA. They argued that whilst the CFA superseded the original retainer, there was no basis to conclude that the CFA revoked this retainer. The Appellants relied on the fact that the original retainer letter was sent to their clients at the same time the draft CFA was sent. However, on appeal, the Judge found that there was no co-existing retainer to capture the work which was not covered by the CFA. He concluded on this point that “it only makes sense that the solicitors and clients understood that the CFA superseded the original conventional retainer which had been entered into in circumstances of urgency and before the viability of a CFA could be assessed”, and that “I simply can find no room, on the facts of this case, for the two types of express retainer to have subsisted side by side or for the original retainer to spring back into life, when, contrary to all expectations, the CFA did not cover all the steps taken”.

Therefore, it was a costly lesson to the Appellants that their failure to review the terms of their CFA resulted in work being undertaken that they would not receive payment for.

Counsel’s CFA and retrospective rectification

In terms of the retrospective rectification of Counsel’s CFA, the Appellant’s argued that the rectification of the CFA, which post-dated the order for costs, corrected an error of the omission of two corporate Defendants on the CFA, and that the rectification of the document rendered those Defendants’ liable for Counsel’s fees. And therefore, as a result of such, Counsel’s fees were recoverable on an inter partes basis.

However, the Respondents argued that there was no evidence that the corporate Defendants had ever agreed to retrospectively be responsible for Counsel’s fees, and that it was not open to the Appellants to add to the paying party’s liability for costs after the date the costs order was made. The Respondents relied upon Kellar v Williams [2004].

The Court of Appeal considered the argument and agreed with the original finding of Warby J on this point:

“The underlying rationale is in my judgment that the effect of a costs order is to create a liability to pay, subject to assessment, those costs which a party has paid or is liable to pay at the time the order is made. The liability to pay costs crystallises at that point and, although its quantum will remain to be worked out, that process must be governed by the liabilities of the receiving party as they stand at that time. To allow enforcement of a retrospective agreement which increases those liabilities would be to alter retrospectively the effect of the court’s order.”

The Judge followed the decision in Kellar v Williams [2004] and found that a retrospective rectification of Counsel’s CFA cannot be effective to increase the liability of the paying party after the making of the inter partes costs order.

The decision is therefore an important lesson to litigators. When working under CFAs, it is essential to consider and monitor the retainers to ensure two things; that the work being undertaken is covered by the scope of the retainer, and that for any CFA entered into with Counsel, the parties responsible for Counsel’s fees are documented within the CFA.

 

If you have any questions or queries in relation this blog please contact Joanne Chase (joanne.chase@clarionsolicitors.com and 0113 336 3327) or the Clarion Costs Team on 0113 2460622.

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