COST BITES 218: JUNIOR COUNSEL’S FEES NOT RECOVERABLE IN PRIVY COUNCIL CASE WHERE THE CFA WAS NOT LAWFUL
I am grateful to Andrew Roy KC for sending me a copy of the judgment of Costs Judge Rowley in Ruhumatally v The State of Mauritius & Anor, a copy of the judgment is available here Ruhumatally – reasons. The judge was considering whether a “CFA” entered into by counsel in relation to proceedings was valid and the costs recoverable. The judge held that the CFA was not enforceable and junior counsel’s fees could not be recovered from the respondent.
“There is no doubt that the agreement in this case does not comply with the 1990 Act. Not only are CFAs banned from being used in criminal proceedings but they have to be in writing. An oral CFA is inevitably an unlawful one.”
THE CASE
The appellant had been successful in an appeal to the Privy Council on a criminal matter. The respondent had been ordered to pay the appellant’s costs. All the costs were agreed except for the payment of junior counsel’s fees.
THE DISPUTE IN RELATION TO THE RECOVERABILITY OF COUNSEL’S FEES
The bill of costs stated that the legal representatives were acting on a conditional fee basis. That led the respondent to challenge whether the funding agreement was, in fact, enforceable.
2.The dispute regarding Mr Ramdhun’s fees arises from an entry in the Form 5 bill of costs. Under the heading “Outline of funding arrangements” the following description is given:
“The Legal representatives accepted the case on a no win no fee basis with Mr. Zaredhin Jaunbaccus agreeing to pay for all disbursements.”
3.The respondents said in their points of dispute (General point 2):
“The Court will need to be satisfied that there were correct retainers in place from the outset to cover both counsel and solicitor work. If there is no valid retainer in place, then there can be no recovery of costs for any work that is not covered by a retainer.”
4.This paragraph clearly put the appellant on notice that there was a challenge to the terms on which counsel , and indeed the solicitor, were instructed by the appellant.
5.In these circumstances, the reply to the point of dispute was not very forthcoming. It simply indicated that Mr Ramdhun was based in the UK and was instructed by the legal adviser based in Mauritius who had care and conduct of the case.
THE REQUIREMENTS OF A CONDITIONAL FEE AGREEMENT
6. The respondents produced a supplementary point of dispute which set out Section 58A of the Courts and Legal Services Act 1990 (“the 1990 Act”). That section, together with Section 58, sets out minimum requirements for a Conditional Fee Agreement (“CFA”) to be lawful. If those requirements are not met, then the agreement is unenforceable against the client and, by virtue of the indemnity principle, means that an opponent does not have to pay costs claimed under a CFA either. The supplementary point of dispute set this issue out as follows:
“It is the Respondent’s contention that the CFA entered into by Mr Ramdhun is unenforceable, and as such no costs in relation to his fees are payable by the Respondent.”
THE RECEIVING PARTY’S RESPONSE
8. At this point, the parties’ arguments are clear. The respondents say that the agreement the appellant had with Mr Ramdhun falls foul of the 1990 Act and as such they are not liable to pay any costs under that agreement. The appellant says that the agreement was made in Mauritius and there is no such issue regarding compliance with legislation in order to make an agreement enforceable.
THE JUDGE’S DECISION (1): THE UNLAWFUL RETAINER
11. A “no win no fee” agreement describes what happens when the case is unsuccessful i.e. the legal representative claims no fees from their client. It does not describe what happens where the case is successful but it is well understood that, in such circumstances, fees are to be recovered from the losing party. That is the understanding behind the statement of Mr Raffeek that “…if we would win the appeal, Mr Ramdhun would get paid.” It is a paradigm example of an agreement where the fees payable are contingent upon the outcome.
12. Such contingency fee agreements were unlawful in England and Wales until the 1990 Act came into force. The legislation provided a method by which CFAs – often called no win no fee agreements – could be used as long as they complied with that legislation.
13.There is no doubt that the agreement in this case does not comply with the 1990 Act. Not only are CFAs banned from being used in criminal proceedings but they have to be in writing. An oral CFA is inevitably an unlawful one.
14.Consequently, the quedtion is simply whether the agreement between Mr Ramdhun and those instructing him is subject to the law of England and Wales or of Mauritius. If it is the former, then the agreement cannot support the fees claimed. If it is the latter, then there would be no such bar.
THE JUDGE’S DECISION 2: LAW OF ENGLAND AND WALES APPLIES
15. I note that the agreement was said to be reached in Mauritius. On the other hand, all (or almost all) of the work done would appear to have been carried out in London. Whilst these factors might lead to a difficult question of jurisdiction, the answer lies in Practice Direction 8 to the JCPC Rules which states, at paragraph 3.2 as follows:
“The assessment of costs in the Judicial Committee shall be limited to costs incurred in the United Kingdom except that fees for work done outside the United Kingdom in advising on an appeal to the Privy Council, preparing an application for permission to appeal to the Privy Council, preparing a case on an appeal and preparing for a hearing are treated as having been incurred in the United Kingdom.”
16. As I have said, it appears that all (or almost all) of the work of Mr Ramdhun was carried out in London. As such, the rules relating to England and Wales apply to the costs claimed. To the extent that any work was done in Mauritius, it is to be treated as having been done in the United Kingdom in any event. Since all work done in the United Kingdom was carried out in London, including attendance at the hearing, it seems to me inevitable that it is the English and Welsh jurisdiction that is relevant to any work done in Mauritius under the terms of the Practice Direction.
17. For these reasons I have come to the clear conclusion that, at least for the purposes of assessment, the costs claimed in respect of Mr Ramdhun are to be treated as if they have been incurred under an unlawful CFA and as such items 1, 2, 3, 4, 20, 37, 38, 39, 47, 51 and 53 cannot be recovered from the respondents.
18. For the sake of completeness, the fact that the JCPC awarded costs to the appellant does not mean that they are recoverable if there is an unlawful agreement under which those costs are claimed.