A leading media law firm has lost the recovery of hundreds of thousands of pounds in costs after the Court of Appeal upheld a decision that its conditional fee agreement (CFA) did not cover much of the work it did.
Taylor Hampton (TH) was acting for individual and corporate defendants in an action brought by Oscar-nominated film director Michael Radford over a project to make a Spanish film called La Mula. Mr Radford was retained to direct the film, but in time the parties fell out. The director left the shoot and was replaced.
In July 2010, Mr Radford and the partnership through which he traded started legal action and obtained injunctions, which included prohibiting the defendants from using or publishing film footage he had shot without his authority.
Taylor Hampton and Augustus Ullstein QC were instructed under CFAs to set aside the injunctions and also dispute the jurisdiction of the English court and service of the proceedings.
According to Mr Justice Warby’s ruling in the High Court: “The initial objective was substantially achieved by a consent order made by Tugendhat J on 23 May 2012… By this point, the substantive proceedings against the individual defendants were over. But they continued against the corporate defendants.”
TH successfully applied for summary judgment, and Sir David Eady dismissed an application for permission to appeal against it on 28 July 2014. The defendants became entitled to recover their costs.
Master Eyre made an order for payment of £120,000 on account of costs, which was upheld by Sir David.
In the detailed assessment proceedings, TH submitted a bill in the sum of £805,500. This was on the basis that all the work carried out by the firm and Mr Ullstein was done pursuant to their CFAs, and they were entitled to recover success fees accordingly.
However, Master Haworth in the Senior Courts Costs Office ruled that the work done by TH between 23 May 2012 and 28 July 2014 was outside the scope of the CFA, and that the defendants were not liable to pay for it. “It is said that the effect is to disallow most of the defendants’ costs,” Warby J noted.
Master Haworth ruled that the CFA – which was adapted from the Law Society model – was meant to cover only procedural issues such as service and jurisdiction.
He continued: “The consequence of my finding is that the defendants had obtained a win as defined by the agreement by 23 May 2012. By that date, the scope of the agreement had come to an end and accordingly the defendants are unable to recover costs from the claimants under the terms of the CFA from that date.”
As the clients were not liable for the fees of either solicitors or counsel, on the indemnity principle, they were not recoverable from the claimants.
Master Haworth had also ruled that the defendants could not recover any fees for work done by counsel after 23 May 2012, because his CFA was made with TH, and the clients had no liability to pay TH.
He further found that, in any event, no fees could be recovered for work done by counsel in respect of the corporate defendants, who were not identified as counsel’s clients in his CFA with TH. There was an attempt to address this second problem with a deed of rectification in July 2015 during the assessment proceedings.
Giving the unanimous ruling of the Court of Appeal in Radford and Anor v Frade and Ors  EWCA Civ 119, Lord Justice McCombe said he rejected the appeal “not without regret”.
With regard to TH, he said that, like the judges below, he found it “impossible” to accept the argument that the initial conventional retainer continued after the CFA was signed so as to pick up such items of work by the solicitors as were not covered by the CFA.
“In my judgment, 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.”
TH argued in the alternative that the ordinary rule of law should apply, as stated in Adams v Improved Motor Coach Builders Ltd  1 KB 495 (CA), that a client who instructs a solicitor to perform work comes under an obligation to pay for it.
But the court said the facts were “rather different” than in Adams. “Here, in blissful ignorance of the doubtful ambit of the CFA, the solicitors carried on their work (no doubt with instructions from time to time from the clients) on the basis that they were working on a ‘no win, no fee’ basis.
“Their conduct never changed. They never reverted to submitting interim bills, as had been envisaged by the original conventional retainer. As my Lord, the Chancellor, pointed out in the course of argument, even after the dispute as to the ambit of the CFA had arisen, the solicitors sought to ‘rectify’ their arrangements with counsel to record a continuing CFA throughout; it is hardly likely that they were conducting themselves on a different basis with regard to their own charges.
“All their conduct indicated that they were ‘carrying on as usual’ after 23 May 2012 and nothing had changed. The misfortune was that the continuing willingness to work on a conditional basis only was not fully recorded in writing.”
In relation to counsel, McCombe LJ held that “the making of the retrospective variation of counsel’s CFA, after the making of the costs order in favour of the appellants, cannot be effective to increase the liability of the respondents as paying parties under that order”.
Benjamin Williams QC, instructed by Taylor Hampton, represented the appellants/defendants. Alexander Hutton QC, instructed by Simons Muirhead and Burton, was for the respondents/claimants.