Postponement Element of Success Fees

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The case of Hughes -v- George Major Skip Hire which was heard recently in the SCCO highlighted a problem that we often encounter in relation to errors and/or typing mistakes in calculating the total success fee and the element that relates to the cost of postponing receipt of charges and disbursements.

The CFA in question indicated that the postponement element of the success fee made up 50%, the risk element of the success fee made up 50% and that the total was 50%. The Claimant's Solicitor and the Claimant both gave evidence that their understanding of the agreement between them was that nothing would be charged for the postponement element of the success fee and the Claimant's Solicitor gave evidence that a typing error had resulted in 50% being inserted instead of 0%.

The first interesting point about the Judgement is that the Court concluded that the evidence of the Claimant and her Solicitor was inadmissible for the purpose of interpreting the CFA as the Court cannot receive extrinsic evidence "which is offered for no other purpose than to contradict, vary, add to or subtract from the contract as contained in writing". Nor is the Court entitled to receive evidence of the parties' subjective intentions.

In the light of the ruling about the admissibility of the evidence from the Claimant and her Solicitor as to the interpretation of the contract, the Master concluded that there was a breach of the CFA Regulations as the agreement failed to specify with sufficient clarity how much of the percentage increase related to the postponement element of the success fee.

Fortunately for the Claimant's Solicitors, the Master did take account of the evidence that had been given in relation to the question of whether the breach was material and he concluded that the failure to comply with Regulation 3(1)(b) had not had a material adverse effect on the protection afforded to the Claimant nor had there been a material adverse effect upon the proper administration of justice. Accordingly the CFA was not unenforceable because of the breach.

Although the case ended happily for the Claimant's Solicitors it does highlight the problem of errors in the percentages making up the total success fee and it would be wise to check these.

If you would like a word about this, or indeed about any costs issues, please do not hesitate to contact me.

Andrew

A Neat Legal Services
Law Costs Draftsmen and Legal Costs Consultants.