Plevin v Paragon Personal Finance Ltd [2017] UKSC 23

This important case addressed both the assignment of conditional fee agreements (CFAs) and the recovery of a pre-LASPO success fee and an after the event (ATE) insurance premium where a CFA had been extended after 1 April 2013 to cover appeals.

Facts

In this case, the claimant had entered into a Conditional Fee Agreement (CFA) in 2008, which covered all proceedings up to and including the trial and all steps taken to seek leave to appeal. In August 2013, the claimant entered into a deed of variation extending the CFA to cover their appeal to the Court of Appeal. In January 2014 the claimant further extended the CFA to cover the appeal to the Supreme Court. Also the After the Event (ATE) insurance was “topped up” twice to cover the appeals.

The claimant entered into deeds of variation after the commencement of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) which provided that success fees and ATE insurance premiums were not recoverable costs from an opponent.

The defendant submitted that the claimant’s success fee was not recoverable because the deeds of variation were new agreements, entered into post-LASPO for the provision of litigation services after this date. Also the defendant argued that the ATE premium was not recoverable and the appeal to the Court of Appeal and the Supreme Court did not constitute part of the same “proceedings” as the trial.

Decision

The Supreme Court held that the claimant’s deed of variation provided for litigation services in relation to the same underlying dispute at the original CFA, albeit at appeal stages. Also, it was held that unless the effect of the deeds of variation were to discharge the original CFA and replace it with new agreements made at the dates of the deeds, the success fee could properly be included on the costs order.

The Supreme Court concluded that both deeds of variation were expressly agreed to vary the original CFA, leaving all of its terms unchanged, except for the addition to cover a further stage of the litigation and a change to the success fee. As a result, it was concluded that the deeds of variation did not discharge or replace the CFA so it had been properly assigned and the success fee was recoverable.

In respect of the recoverability of the ATE premium, the Supreme Court assessed section 46(3) of LASPO which refers to an insurance policy “in relation to the proceedings” and not to the subject matter of the proceedings. It was noted that prior to April 2013 there was an ATE insurance policy in place but this was not yet in respect of the appeals before the Court of Appeal and Supreme Court.

The Supreme Court concluded that the starting point was whether, as a matter of ordinary language, it could be said that the proceedings were brought in support of a claim and were not over until the courts had fully disposed of the case, whether at first instance or on appeal. The Supreme Court pointed out that the purpose of the transitional provisions of LASPO were to preserve the rights and expectations vested under the previous law and there was no rational reason why the transitional provisions should be limited to a particular stage in the litigation. As a result, the Supreme Court held that the ATE insurance premium was also recoverable.

What this means for you

This is a significant ruling in respect of the transitional provisions of LASPO where Lord Sumption stated that the purpose of the transitional provisions was to “preserve vested rights and expectations arising from the previous law”.

This case means that claimants who have entered into a CFA and ATE insurance policy pre-LASPO but have subsequently varied the CFA will still be able to recover a success fee as long as the terms of the CFA remain unchanged, other than the addition for a further stage of the litigation to be covered and a change to the success fee. Also the increased premiums following “top ups” to a pre-existing ATE policy will also be recoverable as a result of this judgment unless the ATE insurance policy does not relate to the proceedings in question.

In cases where the claimant has entered into funding arrangements pre-LASPO, it is important to check that they have provided notice of the funding that is in place in the event that they are seeking to recover the costs of any additional liabilities, such as success fees and ATE premiums. In the event that a claimant does “top up” an ATE insurance policy or enter a deed of variation in respect of the CFA then they should provide notice of this to the defendant. In the event, that a claimant does not provide notice of any pre-LASPO funding arrangements or changes to them, then the recoverability of any success fees and ATE premiums should be challenged along with payment of the costs claimed.