TIMES NEWSPAPERS LTD v KEITH BURSTEIN (2002)

[2002] EWCA Civ 1739

CA (Lord Phillips MR, Mance LJ, Latham LJ) 28/11/2002

CIVIL PROCEDURE - LEGAL PROFESSION - DEFAMATION - MEDIA AND ENTERTAINMENT

COSTS : DETAILED ASSESSMENT : APPEALS AGAINST AWARDS : RECOVERY : INDEMNITY PRINCIPLE : SOLICITORS : IMPECUNIOUS CLIENTS : LIABILITY TO PAY : SHAM AGREEMENTS : ACTING ON CREDIT : PRIVATE RETAINERS : CONDITIONAL FEE ARRANGEMENTS : INVALID : UNLAWFUL MAINTENANCE OF ACTIONS : UNENFORCEABLE : CHAMPERTY : CHAMPERTOUS : S.58 COURTS AND LEGAL SERVICES ACT 1990 : SHALL NOT BE UNENFORCEABLE : CONSTRUCTION OF STATUTES : TRUE NATURE OF FEE AGREEMENT : LIBEL : NEWSPAPERS

On a detailed costs assessment the appellant was not entitled to an order enquiring further into the arrangements between the respondent and his solicitors as to liability for payment of costs as the arrangements had not been champertous and there was no question of there having been unlawful maintenance of the respondent's libel claim.

Appeal from the Supreme Court Costs Office by the newspaper ('T') against an award of costs to the respondent ('B'). B had obtained judgment against T in a libel action, with costs to be the subject of detailed assessment. T's appeal against the judgment was dismissed but B was awarded only half his costs, again subject to detailed assessment. On assessment, T argued that B's costs claim offended the indemnity principle in that B had at no time been liable to pay any costs to his solicitors ('P'). T sought directions for a trial on that issue. The Deputy Costs Judge dismissed those arguments and T appealed to the Court of Appeal. T argued that B was impecunious and could not afford to pursue his libel claim but had done so by way of a conditional fee arrangement with P but without insurance, and that his costs claim was a form of blackmail. T then inquired into B's financial position and found that he was on state benefits. P gave evidence that no CFA was in place at the relevant time (although one was entered into later to cover the trial) and that B remained liable for all costs regardless of the outcome of the libel claim. Evidence showed that P had viewed B's libel claim as strong and likely to be settled early on and were prepared to enter into a normal retainer despite the financial difficulties B would face if he lost his claim. B had also assured P that the costs would be paid somehow if he lost. However, it was accepted that no enquiry was made by P as to how B might do so, and no interim bill had been issued prior to the CFA, although P had informed B that his damages may be applied to paying any unrecovered costs. Full details of the charging arrangements and the were disclosed to the court, but T argued that the CFA was invalid and any agreement by B to pay the costs personally was a sham. T further argued that the retainer had become champertous, and therefore unlawful and unenforceable, when P became aware that B could not possibly pay their costs but continued to act, despite any agreement otherwise.

HELD: (1) The relevant statutory provisions governing CFAs at the time were to be found in s.58 Courts and Legal Services Act 1990, which provided that a CFA in the prescribed form 'shall not be unenforceable'. That expression indicated that Parliament's intention was that CFAs should be unenforceable as being champertous except to the extent sanctioned by the Order. Geraghty & Co v Awwad (2001) QB 570 ('Awwad') followed. (2) The court had to establish the true nature of an agreement between solicitor and client. The client's impecuniosity may be a relevant factor, but the mere fact that the solicitor may have conducted an action on credit in the knowledge of the client's lack of means did NOT*** justify a conclusion that he was unlawfully maintaining the action. It was perfectly proper for a solicitor to take on a client whilst not intending to exact his fee if the client lost his claim, for whatever reasons, and it would be illogical if a CFA were to be held unenforceable which would otherwise have been enforceable had the solicitor not voiced to the client an intention not to recover his fees. Awwad applied. (3) On the facts of this case, the Deputy Costs Judge had come to the correct conclusion. The evidence overwhelmingly established that it would be inappropriate to make any order in T's favour as to an enquiry into the validity of the CFA. The materials disclosed by P clearly showed that, prior to the CFA, B was liable for P's costs and that there was no agreement otherwise between P and B. Accordingly, there was no evidence to show that the terms as to costs were a sham.

Appeal dismissed.

Richard Wilson instructed by Times Newspapers Legal Department for T. David Holland instructed by David Price of London for B.

Judgment Approved subject to editorial corrections - 14 pages