Varying Terms of a CFA

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Owen Oysten  -v-  Royal Bank of Scotland Plc.

This is a case which practitioners might like to consider the full transcript of if they are giving consideration to entering into a Deed of Variation or Deed of Rectification with their clients in order to remedy any breaches of CFA agreements entered into before November 2006. 

The action involved a claim commenced in Manchester Mercantile Court by the Claimant who alleged that a sum had been wrongfully debited to his personal deposit account with the Defendant. 

The Defendant eventually recovered judgment for £258,373.00 together with interest. 

The case had been funded by a CFA dated 2nd July 2002 which provided for the following unusual success fee:-

“This is 100% of our base fees.  In addition you will pay £50,000.00 provided you recover damages in excess of £1 million.”

On 16th August 2005 the Claimant and his solicitors entered into a Deed of Variation which added to the original CFA, which amongst other things, removed all reference to the payment of £50,000.00.  The Defendants submitted that the CFA was unenforceable. 

On the point about the Deed of Variation, Senior Costs Judge Hirst held that the Deed of Variation was ineffective to rectify the situation as against the paying party. 

By the date of the Deed of Variation the issues between the parties had been resolved and the Costs Order had been made.  He held that it cannot be right that a Deed of Variation can be used to impose a greater burden on the paying party than existed before judgment. 

The fact that the Claimant agreed to the Deed of Variation was of no assistance. 

Unfortunately the question of what effect the Deed of Variation would have had had been entered into before judgment was not argued before Senior Costs Judge and he expressed no view about it.