IN THE EXETER COUNTY COURT 
CLAIM NO. 9EX03801 

ON APPEAL FROM MASTER GORDON-SAKER 
(SITTING AS A DEPUTY DISTRICT JUDGE) 

17th September 2013 

BEFORE: 

HIS HONOUR JUDGE COTTER QC
(Sitting with District Judge Middleton)

BETWEEN:

LOUISE BROOKES
Appellant/Claimant 

-and-

(1) DC LEISURE MANAGEMENT LIMITED
Respondent/First Defendant/ 
Part 20 Claimant. 

(2) TECHNOGYM UK LIMITED
Second Defendant

J U D G M E N T

Mr P.J. Kirby Q.C. (instructed by Quality Solicitors Dunn & Baker)
appeared on behalf of the Appellant

Mr Alexander MacPherson (instructed by DAC Beachcroft LLP)
appeared on behalf of the Respondent

Introduction 
1.	This is an appeal against an order made by Master Gordon-Saker following a detailed assessment in the Senior Courts Costs Office when he was sitting as a Deputy District Judge of Exeter County Court.  I granted permission to appeal on 30th January 2013. As the appeal concerns an assessment I have heard the appeal sitting with District Judge Middleton the Regional Costs Judge for the South West as an assessor pursuant to section 63 of the County Court Act 1984 and CPR 35.15. 

2. 	There are two issues with the appeal. 

3. 	The main issue and first ground of appeal arises from the decision of Master Gordon-Saker that the Appellant was unable to recover for the work done under a Conditional Fee Agreement (“CFA”) dated 13 July 2006, which was the first of two such agreements.

4.	The second ground was that notwithstanding his discretion the Master was wrong to make no order as to the costs of the detailed assessment proceedings up to 27th July 2012 and that he should have ordered that the Respondent pay the Appellant’s costs up until 21 days after an offer by the Defendant which was not bettered at the hearing. 

5.	At first blush the amount of money at stake is relatively small as only £12,613 was claimed under the CFA in issue, the majority of work under the bill having been carried out under the subsequent CFA and in relation to which no issues arise.  Even this figure is likely to be an overestimate as if similar reductions are made to mirror those applied by the Master to the balance of the sums sought (the original bill totalled £105,000) then this appeal may well only concern a sum in the region of £6-7,000.  However there could then be significant consequences as regards the Master’s order as to the costs of the assessment, this being the subject of ground two of the appeal. 

Facts 
6.	I turn to the facts. The Appellant’s accident occurred at premises owned and occupied by Exeter City Council in the course of her employment as a fitness instructor by the Respondent.  She was injured when she was operating a defective item of gym equipment.  This piece of equipment appears to have been supplied by Techogym UK Limited, the Second Defendant in the action, which has played no part in either the assessment or this appeal. 

7.	The Appellant sought advice from Messrs Cartridges a well known and respected local firm who undertake personal injury litigation and entered into a CFA agreement.  No signed version has been produced although a contemporary attendance note apparently refers to the Appellant having signed a copy.  Although the CFA is dated 13 July 2006, this was not the date on which it was entered into, and Master Gordon-Saker concluded that it had probably been signed in the course of a meeting between the Appellant and her solicitor on 18 September 2006 

8.	As is standard in a CFA, the claim to which the retainer relates is expressly defined.  In any CFA it is necessary that the claim is carefully defined because the client’s liability to pay the solicitor costs only arises if she ”wins” her ”claim”.  Furthermore, and importantly different fixed success fees may apply under CPR r.44 depending upon the nature of the claim advanced.  Here the CFA stated that it covered: 

“Your claim against Exeter City Council for damages for personal injury suffered in an accident at work on or about 19 May 2006”. 

9.	Importantly no direct evidence is available as to why the CFA was entered into on these terms.  It may be that as the gym in which the Appellant worked was council property that only a claim against the occupier of the relevant premises was considered.  In any event the likelihood must be that the Appellant well knew the identity of her employer but for some reason a decision was taken to pursue a single third party and not her employer. 

10.	On 6th October 2006 a draft letter of claim addressed to the Respondent was sent to the Appellant by Cartridges for approval.  It was eventually sent out without substantial amendment on 18th October 2006.  Mr Kirby Q.C. submits that the sending of this draft letter to the Claimant and her subsequent approval of it proves that she was aware that a claim was then envisaged against the Respondent.  I have not seen but would presume that at some there was also a letter before action sent to the Second Defendant.  Returning to the content the letter states 

“We should advise you that we are acting for our client under a Conditional Fee Agreement and that an additional liability will be claimed at the conclusion of the case.” 

11.	It is not necessary to consider the progress of or indeed compromise of the action save to note that Mr Kirby Q.C. also relied upon a statement signed by the Claimant on 10th February 2008 which referred to the claim being against the Respondent as the First Defendant and Technogym UK Limited as the Second Defendant and with no reference to any claim against Exeter City Council.  In his submission this further proved that the Appellant was well aware of the parties against which the claim was proceeding. 

12.	The issue which is the subject of this appeal only arose in the course of the detailed assessment.  Mr McPherson submitted that this was because the Appellant had refused to disclose the CFA prior to the hearing despite the Respondent’s requests and despite the guidance in such cases as Hollins v Russell [2003] 1 WLR 2487 which provides that disclosure should be the norm.  However nothing turns on this late disclosure; if indeed it was late. This is because at the outset of the detailed assessment the appellant agreed to the CFA being disclosed to the Respondent and the issue as to the ambit of the retainer arose. 

13.	The only direct evidence relied upon by the Appellant to prove the fact and terms of her retainer was the CFA document itself and the documents to which I have referred.  The Appellant’s representative did not seek an adjournment in order to adduce further evidence from the Appellant or the Appellant’s solicitor. 

14.	When it was disclosed the Respondent raised the issue that the first CFA i.e. the relevant CFA for this appeal, referred specifically and solely to a claim against Exeter City Council and not to either of the other two potential Defendants being the parties against which a claim actually proceeded.  As a result it was submitted that there was no valid retainer as regards a claim against the Respondent whilst this was the only CFA in existence and as a result, and given the effect of the indemnity principle, no costs were recoverable against the Respondent for this period. 

15.	The Master dealt with the issue as follows:

“ Given that the claim that was made and in respect of which the Claimant is entitled to her costs was a claim against her employer , D C Leisure Management Ltd, I cannot see that the work that was done by Cartridges is covered by this conditional fee agreement. It may well be that Exeter City Council was the occupier of the swimming baths, it may well be that there was a mistake as to the appropriate Defendant , I simply have no evidence beyond that document .  I cannot I think infer in the absence of any evidence that the intention of the parties as at the date of this agreement was a claim against D C Leisure Management Limited.  Nor can I infer an agreement by the Claimant to pay Cartridges’s fees other than under the terms of the agreement that she signed.  On the face of it the intention was that she would pay Cartridge’s fees only in the event of success as defined in the conditional fee agreement.  Given that intention, I cannot infer a conventional retainer that she would pay their fees in any other circumstance.  It follows that the work done under part one of the bill is not covered by the Conditional Fee Agreement dated 13th July 2006, nor under any other retainer.  Accordingly the Claimant is not liable for those costs to her solicitors and cannot recover them from the Defendant.” 

Grounds of Appeal 
16.	Turning to the Grounds of Appeal of appeal in relation to the issue of the retainer, as expanded upon within the skeleton it is submitted that the Master erred for three reasons; 
a) Firstly he failed to imply a term into the CFA at the time that it was entered into that the claim was to be against whoever was the appropriate Defendant; 
b) Secondly, and alternatively, that he should have found that the retainer had been varied by the parties to cover a claim against D C Leisure Management. 
c) Thirdly that he should have found that the Claimant would have been estopped from denying her own liability for costs and therefore there was no breach of the indemnity principle 

17.	In response the Respondent contends that the Master correctly identified that it was not possible to infer that the intention of the parties as at the date of the agreement was that the CFA would cover a claim against the Respondent.  Nor could it be inferred that the Appellant agreed to pay the solicitor’s fees in any other circumstance than success as defined in the CFA.  Rather it was submitted that an implied retainer was the correct analysis in relation to this claim.  When a claim was advanced against a different Defendant which was not covered by the first retainer, the Appellant and her solicitors impliedly entered into a new retainer, but they neglected to put the retainer in writing as they were required to do under s.58(3) of the Courts and Legal Services Act 1990. 

18.	Before turning to detailed analysis I should briefly set out that although there is no general requirement that a solicitor’s retainer has to be in writing, a valid and binding CFA has to be in writing.  Whilst many of the previous requirements for an agreement have been relaxed this essential rule remains as does the requirement to set out the uplift claimed.  Any subsequent assessment of the reasonableness of the uplift considers the question as at the date that the agreement was entered 

19.	Further in order to succeed in a claim against the Respondent for the costs set out in Part One of the Bill, the Appellant needs to establish that she is under a liability to pay these costs to her solicitor by reason of an enforceable retainer. The onus is on the Appellant to prove that the work claimed for came within the ambit of an enforceable retainer.  There is no doubt that this (the indemnity principle) remains a part of English law. 

20.	I shall deal with the three reasons why it is said that the Master fell into error in turn. 

An Implied Term 
21.	The submission that the Master should have implied a term into the CFA at the time that it was entered into a term that the claim was to be against whoever was the appropriate Defendant was realistically acknowledged by Mr Kirby Q.C. as not his best argument.  The implied term that he proposed in his skeleton was that the retainer “would cover costs incurred in pursuing a claim against whatever person or body was found to be responsible for the land in question”.  I think that he may have meant equipment rather than land. He argued that it was inevitable that the Appellant would have agreed that the CFA should apply to any claim against the correct Defendant and submitted that it should be implied by reason of business efficacy or the officious bystander test 

22.	Although it is correct to state that, in cases of ambiguity, the courts often seek to construe retainers so that they do not offend the indemnity principle, there are limits to the constructions that can properly be made. As stated by Mr Justice Gray in Kitchen v Burwell [2006] 1 Costs L.R.82 at paragraph 32 

“of course an initial judgment of what an instrument was or should reasonably have been intended to achieve should not be permitted to override the clear language of the instrument”. 

23.	In the present CFA the wording was clear and expressly limited the claim to one against Exeter City Council. Further and importantly there was and is no evidence upon the circumstances surrounding the entering into of the agreement. 

24.	The test imposed for a term to be implied is a stringent and restrictive one.  In seems to me that there a range of potential reasons why a Claimant may wish to limit the CFA to a claim against a third party and not against his or her employer in respect of which from the proposed Claimant’s perspective many practical and background issues may arise.  The term has to be implied at the time the agreement was reached and the Appellant had an impossibly high hurdle before the Master when relying solely on the face of the agreement and the other documents to which I have referred to support an argument of necessity for the term as there was no explanation as to why a choice was made to limit the agreement in this way.  The claim could have been defined in relation to the date of the accident only, but the naming of a particular defendant evidences a clear intention to identify a particular legal claim against a particular Defendant. 

25.	Indeed in my opinion if an agreement is so clearly framed against a third party as it is here it then ordinarily a Claimant may properly subsequently refuse to allow a claim against for example his employer to proceed in addition or instead and I cannot see on the basis of what was before the Master how a wide implied term as suggested by Mr Kirby Q.C. could possibly require this. 

26.	Mr Kirby Q.C.’s argument rested substantially upon the fact that the Appellant did subsequently pursue her employer and the manufacturer.  However this fact does not mean that such a claim was obviously envisaged at the time when the CFA was entered into, and this is the relevant point in time for the purpose of the implication of terms. 

A variation 
27.	Although the statutory requirement is that the CFA must be in writing, it does not have to identify the Defendant. Mr Kirby Q.C. submitted that as the essential terms of this agreement were in writing then a variation evidenced in writing in another document could amount to a variation of the CFA.  An example was a change in fee earner specified in the original agreement. He referred to the draft letter before action sent to the Appellant and her witness statement as amply evidencing a variation.  The Appellant well knew there was a change in proposed Defendant 

28.	However, a variation still has to be by way of agreement.  The courts have historically analysed variation of contract in the same fashion as the entry by the parties into a new contract.  Here obvious questions point to the lack of evidence or detail supporting a concluded agreement or its terms.  Mr Kirby Q.C. was unable to give a date for the agreement to vary and also could not say if there was one variation or two given the proposed claim against Technogym UK Limited.  He was also not able to point to any consideration of, or agreement to, the uplifts referable to these proposed claims.  It is important to repeat that the reasonableness of an uplift as agreed has to be considered as at the date of the agreement.  In reality it is unlikely that the Claimant ever considered the issue of funding and it may well be that the solicitor handling the case did not do so either. 

29.	In my judgment the Master simply did not have the evidence before him to support Mr Kirby’s argument as to variation. 

30.	I also do not accept that the requirements for valid and binding CFA are as malleable as Mr Kirby Q.C. suggests.  If an oral variation were to be permitted in these circumstances a fortiori with such limited evidence it would allow the CFA requirements to be easily circumvented.  As I put it to Mr Kirby Q.C. during submissions it would open a back door that would deny the protection of the formal requirements such as the setting out of the uplift and the date upon which the uplift was agreed.  These were Defendants of a different nature; an owner of premises, an employer and an equipment manufacturer. There were different causes of action and I believe it can be properly assumed differing prospects of success.  Prospects change as time passes as there may be other considerations such as solvency which also affected risk.  In my judgment as the requirements for a variation derive from the law governing contract formation the same formalities apply to the variation of the contract as apply to its formation.  If a contract such as a CFA is required to be in writing then the variation needs to be in writing to have the same effect before a court.  The CFA agreement requires certainty and clarity as to uplifts on the face of a written document and I do not believe there can be a back door through subsequent oral variation even if there is some limited supporting documentation. 

Estoppel by convention 
31.	Mr Kirby Q.C. submitted that even if there was no implied term or variation the Appellant would clear be estopped from denying that she should be liable for the costs of pursing the claim.  He argued that she could not have defended a claim for costs against her as he had approved the pre-action protocol letter and had signed the witness statement to which I have referred.  Estoppel by convention arises where both parties conduct themselves by reason of a particular common assumption and here the common assumption was that the costs would be covered by a CFA. 

32.	In response Mr McPherson raised the argument that estoppel is an evidential doctrine which does not (save in the case of proprietary estoppel) create substantive rights or a cause of action.  In the commonly used phrase, it operates as a shield and not as a sword see generally and as a relatively recent consideration of the issue; Baird Textile Holdings Limited –v-Marks & Spencer PLC [2001] EWCA Civ 274 paragraphs 38, 49, 54, and in particular 88.  Thus if the Appellant’s solicitor had pursued her for fees by relying upon an estoppel as creating a contractual obligation to pay where otherwise no such contractual obligation would be found, then he would have fallen foul of this rule and his claim would have failed.  However Mr Kirby Q.C. argued that the cause of action would be one in contract and estoppel was not being used a sword rather to enlarge the agreement by binding the parties to an interpretation. 

33.	As Lord Justice Mance stated in Baird the question of how far an estoppel may assist in bringing about a cause of action without standing alone as a cause in itself has remained a matter of dispute since the decision of the Court of Appeal in Amalgamated Investment & Property Co Ltd –v- Texas Commerce International Bank [1982] 1 QB 84.  It has occupied many and far greater minds than mine.  However in the present appeal I do not need to reach a decision on the point as in my judgment the estoppel submission is doomed to failure as the facts of this case do not meet the requirements for an estoppel to operate.  I would add only that even if the evidential basis had been stronger I would still have had difficulty in a contractual position such as in understanding how estoppel by convention can arise as a matter of law.  I see considerable force in the opinion set out by Judge Richard Seymour Q.C. in Tesco Stores Ltd –v-Costain Construction Limited and others [2003] EWHC 1487 (see paragraph 191) that given the legal requirements for an agreement either the parties have a binding contract as set out within the document, or have agreed a variation of it, or they have not.  If they have not ever reached an agreement on central terms; such as what the uplifts should be for new Defendants, then how can an estoppel properly bind them? 

34.	Turning to the basis of estoppel, in HM Revenue & Customs –v-Benchdollar [2009] EWHC 1310 Mr Justice Briggs (as he then was) re-stated the requirements as follows: 

i) It is not enough that the common assumption upon which the estoppel is based is merely understood by the parties in the same way. It must be expressly shared between them. 

ii) The expression of the common assumption by the party alleged to be estopped must be such that he may properly be said to have assumed some element of responsibility for it, in the sense of conveying to the other party an understanding that he expected the other party to rely upon it. 

iii) The person alleging the estoppel must in fact have relied upon the common assumption, to a sufficient extent, rather than merely upon his own independent view of the matter. 

iv) That reliance must have occurred in connection with some subsequent mutual dealing between the parties. 

v) Some detriment must thereby have been suffered by the person alleging the estoppel, or benefit thereby have been conferred upon the person alleged to be estopped, sufficient to make it unjust or unconscionable for the latter to assert the true legal (or factual) position. 

35.	In the present case there is no evidence of an express shared assumption as to the basis on which the solicitor was to charge the Appellant for the work done in pursuing the Respondent.  As I have already stated the Appellant is unlikely to have turned her mind to whether the ongoing work was covered under the original CFA relating to Exeter City Council.  In all probability she simply thought that she had signed a “no win no fee” agreement and that all issues of costs were being dealt with by her solicitor who was after all the professional in this relationship providing legal services to what must be assumed absent any other evidence to be someone with no knowledge of costs law and practice. 

36.	Further there is no evidence to suggest that the Appellant’s solicitor relied upon the fact that both he and the Appellant assumed that the CFA covered the work done in pursuing the Respondent.  If he had paused to think his view may well have been that it was not and that what was needed was a fresh agreement. As Mr McPherson submitted he may just have forgotten to compile a fresh agreement.  It appears to me that even if he did have such an assumption then given that he was the solicitor dealing with a lay person he was duty bound to raise it; the responsibility such as it was rested on his shoulders not those of the Appellant. 

37.	In my judgment the Appellant and her solicitor have adduced no evidence as to their assumptions at different times, or as to the reasons why the Respondent was pursued without a fresh CFA being entered into.  In these circumstances, there is no evidential basis for concluding that an estoppel operated. 

38.	For the reasons that I have set out the appeal on the main ground in relation to the retainer fails.  However for the sake of completeness I should refer to what appear to be conflicting cases on essentially the same issues of principle as arose in this appeal. Mr Kirby Q.C. referred to and relied upon the decision of His Honour Judge Hollis in Scott-v-Transport for London [Hastings County Court 23rd December 2009] in which he allowed an appeal against District Judge Lethem a Regional Costs Judge who had found that there was no valid retainer when the original CFA agreement for an accident involving a trip in the road had referred to “your claim against Lambeth Council” when it subsequently transpired that the proper Defendant responsible for the highway was another public body; Transport for London and it was this body that eventually settled the claim.  It appears that His Honour Judge Hollis believed that there had been a variation of the original CFA and that there was clearly no doubt in the Claimant’s mind who she was proceeding against.  He found that there was a valid retainer and also appears to have been of the view that there would have been an estoppel by convention. 

39.	Mr Kirby Q.C. also referred to Brierely –v-Prescott [2006] Lawtel, a case which also involved Master Gordon-Saker and in which he found that there was a valid retainer when the CFA agreement stated “your claim against Hertz Car Hire for damages for personal injury arising out of the accident on 7tH January 2000” but the claim was issue against Mr Prescott.  He concluded that this phrase meant “the claim for damages….being handled by Hertz” and therefore included the claim subsequently issued against the actual driver. However this case turned very much on its own facts and was in any event one that turned upon interpretation of the wording agreement.  I do not believe that it is relevant to the issues in this appeal. 

40.	In response Mr Mc Pherson referred to the decision of His Honour Judge Stewart QC (as he then was) in Law-v-Liverpool City Council [2005] Liverpool County Court (as discussed in Friston: Civil Costs. 2nd Edition; paragraph 8.35) in which he found that where a conditional fee agreement was made to pursue a claim against a person A but the claim was pursued against a person B, the work done in respect of person B did not fall within the ambit of the retainer.  He rejected the notion that a purposive construction would permit the court to find otherwise.  He also rejected the argument that the claimant elected to treat the contract as covering the claim against person B, and that it is not for a stranger to the contract (i.e. the paying party) to intervene with an argument to the contrary. 

41.	In my view little direct assistance could be gained from these past non-binding authorities, which of course were based on upon their own facts, and I did not even have the benefit of the judgement in Law-v-Liverpool City Council. However, if Mr Kirby’s interpretation of the judgment of his Honour Judge Hollis is accurate (and he also appeared in that case) then with the hesitation that one always has when disagreeing with a colleague at Circuit level, I regret to say that I do not accept the reasoning as correct 

Second ground: Costs of the detailed assessment proceedings 
42.	Mr Kirby Q.C. did not pursue this ground with great force.  If the ground one failed then it was always going to be difficult to persuade an appellate court to interfere with the Master’s ruling as to the costs of the detailed assessment proceedings.  Clearly, the discretionary decision of an experienced specialist cost judge as to the costs of an assessment which he has himself conducted, and after he has considered and determined the various detailed challenges made in the course of that assessment, is as Mr McPherson submitted, entitled to considerable respect.  He may not expressly refer to all the relevant elements of the legal framework within which his discretion is exercised but it is highly unlikely indeed that he did not consider them. 

43.	In reaching his view as to the proper order the Master clearly placed significant weight upon the extent to which the bill was reduced: “You have asked for an awful lot more costs than I have allowed … on the basis of the assessment that there has been, there has been a substantial reduction. I have allowed less than half.”  The bill of £105,434.27 was reduced to £48,802.86. 

44.	Mr McPherson submitted that the Respondent’s offer of £55,000 in July 2012 was comfortably beaten and also that a further factor drawn to the Master’s attention was that the Appellant’s lowest offer was £87,000.  The Appellant thus not only claimed unreasonable costs in an excessive bill, but had also maintained an unrealistic position in the negotiations which followed. 

45.	In my judgment whilst the matter was dealt with briefly the Master was quite entitled to conclude that having regard to the conduct of the assessment process and the amount by which the bill was reduced the correct order was that there should be no order for costs for the period prior to the Respondent’s effective settlement offer.  Accordingly the appeal also fails on ground two. 

46.	I shall hand down this Judgment in open court at 2.00pm on 17th September 2013.  No parties need attend and I shall adjourn the hearing pending an indication as to whether the parties can agree the consequential order.