When a CFA describes the claim rather than the work it covers

The recent Court of Appeal decision of Malone v Birmingham Community NHS Trust [2018] EWCA Civ 1376 reinforced the importance of a clearly drafted funding document.

The case involved a prisoner at HMP Birmingham who pursued a claim for failure to diagnose testicular cancer between August 2010 and January 2011. The prison was operated by the Ministry of Justice, and health care services were provided by Birmingham Community NHS Trust, and Birmingham and Solihull Mental Health Foundation Trust.

The Claimant initially instructed Ross Aldridge Solicitors, who had difficulty in identifying the correct Defendant, and in March 2012 the Claimant transferred instructions to New Law Solicitors. They, too, encountered uncertainty when trying to identify the correct negligent Defendant.

The Claimant entered into a CFA with New Law Solicitors on 16 January 2013, which stated that the agreement covered “All work conducted on your behalf following your instructions provided on [sic] regarding your claim against Home Office for damages for personal injury suffered in 2010.”

On 04 October 2013, after proceedings were issued but yet to be served, Birmingham Community NHS Trust admitted responsibility for the Claimant’s treatment, and on 20 March 2014 damages were agreed in the sum of £10,000 plus costs.

A detailed assessment of costs commenced, and the Defendant challenged the enforceability of the CFA on the basis that it was limited to a claim against the Home Office/Ministry of Justice only. DJ Phillips, regional costs judge for Walker, found on 27 April 2015 that the CFA excluded a claim against the Defendant and therefore costs were not recoverable under the agreement as the Claimant had no contractual liability to pay his Solicitor for the work done in suing the Defendant.

The Claimant applied for permission to appeal, which was initially dismissed by HHJ Curman QC in a judgment dated 25 September 2015, but was later granted by Brigg LJ by way of order dated 28 July 2017.

On appeal, Patten LJ and Hamblen LJ considered whether the critical wording of the CFA (highlighted in bold above) merely identified the claim to which it related, or whether it limited the scope of the CFA to a claim against the Home Office only. It was necessary to consider the principles established in paragraphs 11-13 of Wood v Capita Insurance Services [2017] UKSC 24 to ascertain whether a textual analysis of the agreement was required or whether greater emphasis should be given to the factual matrix (contextualism).

[A textual analysis is typically used for agreements that have been negotiated and prepared with the assistance of skilled professionals. Alternatively, consideration of a factual matrix can also lead to the correct interpretation of an agreement, particularly if a contract had been made without skilled input].

Hamblen LJ stated that the “insertions made to the CFA demonstrate it as poor quality drafting and little attention to detail. The critical wording consists of only one sentence and yet it contains three manifest mistakes: (i) the omission of the date of the instructions and (ii) the omission of the definite article before “Home Office” and (iii) the description of the claim being against “Home Office”. The Home Office had not been responsible for operating prisons for some years”. The poor drafting led to a greater emphasis being placed on the factual matrix of the agreement rather than a close textual analysis.

Hamblen LJ considered the most natural reading of the critical wording as being a CFA that covered “all work conducted” on the Claimant’s behalf following “instructions provided” in respect of his claim “against Home Office” and he concluded that the wording was descriptive of the instructions received rather than of the work to be done. Further, he suggested that if the CFA had meant to provide only a limited coverage, greater care and precision would have been expected, but that in any event it would have been in neither party’s interest to seek to impose a strict definitional limit on the agreement so early in the claim.

Therefore, taking into account both textualism and contextualism, it was found that the CFA was not limited to a claim against the Home Office/Ministry of Justice only and the Claimants appeal was allowed.

Whilst in this case the judgment goes in favour of the receiving party, it highlights the importance of giving careful consideration to exactly what a retainer provides for, both at the outset and during the life of a claim, to ensure there are no pitfalls on assessment. It is crucial that time is invested into the creation of a retainer at the outset of a matter, and that it is regularly reviewed throughout the life of a case.

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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