CFAs and the cancellation of contract regulations

This particular case concerned the Judgment on a preliminary point in Detailed Assessment proceedings, regarding The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008 and the application of the same to a CFA that limited the costs that the Solicitor could recover from his client to the amount that was recovered from the losing party.
The Defendant contended that the CFA entered into between the Claimant and his Solicitors was one to which the 2008 Regulations applied and that, given that no notice of the required right to cancel had been given to the Claimant, the CFA was unenforceable.
The Claimant’s Solicitors sought to rely on Regulation 6 and paragraph 6 in the list of Excepted Contracts, which excludes contracts under which the total payments to be made by the consumer do not exceed £35. The Claimant’s Solicitors submitted that, because they agreed not to charge the Claimant more than they recovered from the losing party, the CFA was a contract under which the total payments to be made by the Claimant did not exceed £35.
The Claimant’s Solicitors further sought to argue that the CFA in question was a “CFA lite”, ie; it limited the Claimant’s liability for his Solicitor’s costs to those which were recovered “by way of costs or otherwise.” The Claimant submitted that such CFAs have historically been exempt from consumer protection regulation and that the rationale behind the exemption was that the Claimant did not need protection afforded by the Regulations where they were not being personally required to pay the costs from their own funds. However, the Judge advised that there was nothing within the 2008 Regulations which excluded CFA lites or any other type of CFA or retainer between Solicitors and their clients from their application where it was entered into at the client’s home.
Further, it was held that the CFA between the Claimant and his Solicitors was one to which the 2008 Regulations applied. There had been no written notice of the right to cancel. The charge to the Claimant was the amount to be recovered from the Defendant. Although it was not quantified at the time of the CFA, the charges would plainly exceed £35. As such, it followed that the agreement was not enforceable as between the Claimant and his Solicitors and, therefore, the Claimant was not entitled to recover his costs from the Defendant and the Bill was assessed at nil.