Court refuses to impose CFA condition on amended claim

The High Court has refused to make a condition of agreeing to amend a claim that would mean the claimant’s conditional fee agreement (CFA) would not apply to it.

The Chancellor of the High Court, Sir Geoffrey Vos, was giving judgment in In the matter of James Moore (A Bankrupt) sub nom Mawer (trustee in bankruptcy of James Moore) v Moore, reported by Lawtel.

In 2015, the trustee had issued proceedings against the bankrupt’s wife, seeking to set aside transactions at an undervalue under section 339 of the Insolvency Act 1986. The trustee had entered into a CFA with his solicitors before the prohibition on the recovery of success fees in CFAs in insolvency cases came into force on 1 April 2016. But, subsequent to that date, the trustee applied to amend his claim against the wife, alleging transactions defrauding creditors under section 423 of the 1986 Act.

The wife submitted that the amendment should be permitted only if it was made clear that the CFA was not applicable to the amended claim, so that if she was ultimately unsuccessful, she would not have to pay the after-the-event insurance premium taken out by the trustee.

She submitted that the amended case was completely different from the original claim, and that it would be unjust to allow the amendment to assume the new claims with the benefit of the CFA which might cause her significant detriment if she lost.

Lawtel said the trustee argued that it was not appropriate for the court to impose conditions on his application to amend, because the question of costs was one for the court after the substantive issues had been determined, when the court could look at the CFA to see what it covered. He asserted that imposing a condition would pre-judge that exercise.

Sir Geoffrey held that the overall costs of proceedings and how they should be dealt with was not a matter that could be pre-judged. While the wife might well be right in asserting that the trustee’s amended case was different from the original, underlying dispute, the court could not be sure about that until the proceedings were over, and it could look at the CFA and any premium or success fee claimed.

It was not possible to say whether the underlying dispute was changed by the amendment at this interlocutory stage. It followed that the court declined to impose the condition suggested by the wife in permitting the trustee to amend his claim.


This post was posted in ACL e-Bulletin

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Published date
05 May 2017

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