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Have not named all the Defendant's in your CFA- not a problem

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Lord Justice Patten and Lord Justice Hamblen sitting at the Court of Appeal in the case of Malone v Birmingham Community NHS Trust [2018] EWCA Civ 1376 found that the Claimant was not limited to recover costs for proceedings brought against the only Defendant who was named in the CFA.

Background to the claim

The Claimant brought an action for damages for negligent failure to diagnose that he had testicular cancer whilst being a prisoner at HMP Birmingham.

The matter was initially dealt with by Ross Aldridge solicitors under the CFA entered into in July 2011. The conducting solicitor encountered difficulties in establishing who the correct Defendant was in this matter. The difficulties arose in light of the fact that at the time when the Claimant was serving his prison sentence the prison was operated by the Ministry of Justice but the health care services were provided by two different HNS Trusts.

In March 2012 the matter was transferred to New Law solicitors who also identified that there was uncertainty over the correct Defendant in the case. Despite the Claimant's efforts to identify the correct Defendant by way of communications with both the prison and prison medical authorities the issue of about the body responsible for the Claimant's medical care remained uncertain.

In August 2013 the Claimant issued Court proceedings against all three potential Defendants, the Ministry of Justice and the two NHS Trusts. In October 2013 Birmingham Community NHS Trust accepted responsibility for the Claimant’s negligent treatment and therefore the other two Defendants were removed from the proceedings.

Issues as to costs

Following the settlement of the main action, detailed assessment proceedings were commenced.  The Defendant contended that they had no liability for pay costs on the basis that the Claimant's CFA only named the Home Office as a Defendant and accordingly the CFA was limited to the claim against this party only.

The matter went before DJ Phillips, the regional costs judge for Wales, where the issue of the construction of the CFA was found in favour of the Defendant. DJ Phillips held that the Defendant was not liable to pay costs as the Claimant had no contractual liability to pay his legal representatives for work for bringing the claim against the Defendant.

Permission to appeal was sought and granted for the Claimant but the first appeal was dismissed by HHJ Curran QC in September 2015. A further permission to appeal was granted on the papers by Briggs LJ in July 2017.

On appeal

The Claimant appealed the previous decision on the ground that the judge was wrong in law by concluding that the Claimant's CFA was limited to costs incurred to pursue a claim against Home Office only. The Claimant contended that the judge should have held that:

"(1) The function of the critical wording was merely to identify the claim to which the CFA related, and not to limit the scope of the CFA to a claim against the Home Office and no other entity;

(2) In any event, construed in context, the reference to "Home Office" was a reference to the public authority or authorities responsible for the claimant's welfare as a prisoner at HMP Birmingham, and this included the defendant, which was admittedly responsible for medical services at HMP Birmingham.”

In support of their position the Claimant referred to a number of authorities concerning the proper approach to construction of a CFA with the most recent authority being Wood v Capital Insurance Services [2017] UKSC 24; [2017] AC 1173 where Lord Hodge stated that:

“where there are rival meanings, the Court can give weight to the implications of rival construction by reaching a view as to which construction is more consistent with business common sense."

In this case it was considered that the CFA was poorly drafted with little attention to detail which caused three apparent mistakes within the critical wording:

(i) the omission of the date of the instructions and (ii) the omission of the definite article before "Home Office" and (iii) the description of the claim as being against "Home Office". The Home Office had not been responsible for operating prisons for some years.

The Defendant accepted that the reference to “Home Office” was a poor description and that the same should be treated as referring to the Ministry of Justice. The Defendant, however, contended that the only Defendant named within the CFA was "Home Office" and therefore only costs regarding claims against this Defendant were covered by the CFA.

The Claimant argued that the reference to Home Office did not limit the scope of the CFA; the CFA covered all work undertaken as a result of instructions received from the Claimant.

Having considered representations made by both parties the Lord Justice Hamblen found that the Claimant’s CFA was to be interpreted as not being limited to the claim against the Ministry of Justice. In this judgment it was found that “the most natural reading of the critical wording is that the CFA covers “all work conducted” on the Claimant’s behalf which follows from the “instructions provided” in respect of this claim”. Lord Justice Hamblen further stated that:

This construction is supported by the contractual context. As is clear, no great care has been taken in relation to the drafting of the critical wording. This is consistent with the wording being descriptive rather than prescriptive. If the intention had been to define and limit the coverage of the CFA to claims against a particular defendant, greater care and precision would be expected and, in particular, one would not expect the named defendant to be an entity which was obviously inappropriate.

In addition to the above Lord Justice considered additional matters such as the stage at which the CFA was entered into; the benefit to both the Claimant and the instructed solicitor of entering into limited CFA; the difficulty in establishing the correct Defendant and the fact that in the current matter there was no commercial reason to limit the claim to a particular Defendant.

Lessons to learn

The most important lesson for any legal representative to be learnt from this case is that poorly drafted contracts will get you into trouble. When preparing a CFA or any other contract it is imperative that proper consideration is given to the wording and the content of the document.

In terms of naming the Defendant within the CFA the legal representative ought to consider whether the name of the Defendant should be included at all, especially in circumstances where identifying the correct Defendant is difficult. In those circumstances the legal representatives might want to consider whether to exclude the name of the Defendant within the CFA and instead properly define the claim the CFA relates to.