COSTS UPDATE - Accident Line
ACCIDENT LINE
There have been a number of important decision relating to the above scheme, which have deemed the CFA as unenforceable. The following decisions are set out below: -
Myers v Bonnington (Cavendish Hotel) Ltd (2007) EWHC 90077 - In this case Master Rogers found that Conditional Fee Agreement in conjunction with an After the Event Insurance Policy effected under the Accident line Scheme had been made in breach of the Regulation 4 (2)(e)(ii) of the Conditional Fee Agreements Regulations 2000.
In the event the CFA remained enforceable because the Master held that the breach was immaterial. The grounding for this latter conclusion was the clear evidence submitted by the Claimant's Solicitors that as far as the firm as a whole was concerned, work through Accident Line, provided only 0.3% of the firms total income.
Other CFA's effected in conjunction with the Accident Line Scheme have not been so fortunate. The 2 cases set out below found the CFA's to be unenforceable: -
Goldthorpe v Dodd (Oldham County Court 15.01.07)
In this case the District Judge found three particular aspects of the Solicitors involvement in the Accident Line Scheme should have been disclosed when recommending that a 'tied' Insurance product be purchased namely an ongoing interest in the referral of work by reason of panel membership, that the Insurance Service was tied to a membership of the Scheme and the reduction in the membership fee offered to Solicitors firms by reaching a target for the number of policies sold in any given year.
McFaydan v Liverpool City Council (Liverpool County Court 09.05.07)
In this case, after a more detailed recital of the facts than in the 'Goldthorpe' case, the District Judge found that the Solicitors did have an undisclosed interest, because they were members of the Accident Line Scheme, Members of the Panel and paid an annual fee. Secondly, the Solicitors had an incentive to recommend the insurance product through a reduction in their membership fees, if the target for sale of the policies was to be met and lastly that the Client's freedom of choice was limited, namely that if he wished to enter a CFA Agreement with that firm, there was no choice than to get the Insurance through Accident Line.
In the immediate future, those representing the interest of Paying Parties faced with an Accident Line backed claimed may well wish to raise the decisions referred to herein as a preliminary issue in the Points of Dispute.
In relation to Receiving Parties under Accident Line back CFA's, the Receiving Party will need to consider whether the appropriate interests have been declared, whether any failure to do so, could be said to material and in the worst scenario whether a Deed of Rectification may need to be entered into prior to the making of any Costs Order.
Geoff Farmer (FALCD)
