J U D G M E N T (Approved)

1. LORD JUSTICE UNDERHILL : This appeal is entirely about costs and I need say almost nothing about the underlying claim. The Appellant suffered an accident at work. She brought County Court proceedings against her employers, the Respondents, which were in due course settled for the sum of £100,000, with an order that the Respondents pay her costs on the standard basis, to be assessed if not agreed. The Appellant's solicitors were Messrs Wards, who represented her under a conditional fee agreement with provision for a success fee. The question raised by this appeal is whether that agreement was enforceable as between her and them. If it was, the amount of their reasonable charges, which has been assessed at about £53,000, is recoverable against the Respondents, but if it is not the Respondents are entitled to rely on the so-called indemnity principle -- that is, that a paying party under the costs order is only liable to indemnify the other party against costs which that party is legally obliged to pay to their solicitors. The real parties to the appeal are Wards on the one hand and the Respondents' insurers on the other.

2. The reason why it is said that the Appellant is not liable to pay Wards under the CFA depends on the provisions of the Cancellation of Contracts Made in a Consumer's Home or Place of Work Etcetera Regulations 2008, to which I will refer as "the Regulations". I will set out the relevant provisions.

3. Regulation 5 reads as follows:

"These regulations apply to a contract, including a consumer credit agreement, between a consumer and a trader which is for the supply of goods or services to the consumer by a trader and which is made

(a) during a visit by the trader to the consumer's home or place or work or to the home of another individual, (b)-(c) . . . "

It is common ground that the CFA was a contract for the supply of services and that the Appellant was a consumer and Wards were a trader within the meaning of Regulation 5. It is in issue whether the CFA was made in any of the specified circumstances. What the Respondents say, but the Appellant denies, is that it was made during a visit by Wards to the Appellant's home. I will come back to that shortly.

4. Regulation 7(2) reads:

"The trader must give the consumer a written notice of his right to cancel the contract and such notice must be given at the time the contract was made..."

5. Regulation 7(6) reads:

"A contract to which these regulations apply shall not be enforceable against the consumer unless the trader has given the consumer a notice of the rights to cancel and the information required in accordance with this regulation."

It is common ground that no such notice was given by Wards to the Appellant in relation to the CFA.

6. It follows that whether the CFA is enforceable, and thus whether the Respondents are liable to the Appellant for the costs charged under it, depends on whether it was "made at the Appellant's home".

7. There is no dispute as to the primary facts about the making of the CFA, which were clearly set out in the witness statement of the responsible partner, Mrs Underhill. They can be sufficiently summarised for present purposes as follows:

(1) The Appellant was introduced to Wards by her sister-in-law, who worked there. At an initial meeting on 25 November 2008 the Appellant told Mrs Underhill that she wanted to instruct Wards in connection with her claim against the Respondents.

(2) At that meeting the issue of funding was explored, and it transpired that the Appellant had legal expenses cover with a firm called DAS as part of her household insurance. Mrs Underhill told the Appellant that if she claimed under that cover it was likely that she would be required to use a solicitor from the panel approved by DAS, to which Wards did not belong, up to the point at which proceedings were issued, although at that stage she would be allowed to instruct solicitors of her own choice. The Appellant wanted to use Wards from the start, not only because of her sister-in-law's recommendation, but because of their recognised personal injury expertise and the proximity of their office to her home. It was agreed that Mrs Underhill would submit a claim under the policy to DAS on the Appellant's behalf but that if, as she thought likely, they were not prepared to authorise the instruction of Wards for the pre-proceedings work the Appellant would not take that option further at that stage and would proceed under the CFA.

(3) On 26 November 2008, Mrs Underhill sent the Appellant a customer care letter enclosing the CFA. At that point no approach to DAS had yet been made.

(4) On 9 December 2008, Mrs Underhill visited the Appellant at home. She signed the CFA on that occasion but it was confirmed that an application would be made to DAS. Mrs Underhill put it this way in her witness statement:

"I went through the CFA with Mrs Cox, following which she signed the agreement. I did, however, advise Mrs Cox that I would be submitting the claim form to DAS and that if DAS did confirm that they would be prepared to grant us authority to act for her from the outset of the claim, that her costs would then be covered by the legal expenses insurance and that the conditional fee agreement would not be required and would not take effect. This meant that whilst I had gone through the formalities of explaining the CFA and getting Mrs Cox to sign it, neither of us intended it to take effect until after we had heard back from DAS if, as was very likely, DAS were to write back and to say that Mrs Cox was not able to choose her own solicitors until after she had issued proceedings, then at that stage the CFA would become binding as between us."

(5) Mrs Underhill duly submitted a claim to DAS. As expected, they said that the Appellant would have to use a panel solicitor, at least up until the start of new proceedings. Accordingly, on 22 December 2008, Mrs Underhill wrote to the Appellant as follows:

"I have now received the standard letter from DAS, confirming that they have received the claim form and have set up a claim for you.

"DAS have further confirmed that they will close their file until such time it becomes necessary to issue proceedings. They accept that if and when that step is necessary, you will then have the freedom to choose your solicitor. We can then request DAS's authority to continue to act for you under the terms of your legal expenses cover at that time.

"In the meantime, I will continue to act for you under the Conditional Fee Agreement you have already signed."

In her witness statement Mrs Underhill said that the use of the word "continue" in the final sentence of that letter was inaccurate. There was a statement from the Claimant to substantially the same effect. I do not think it is necessary for me to read out its terms.

8. Although it is not apparent from the witness statements, it is clear from Wards' file that they did not wait for a response from DAS before starting to work on the Appellant's claim. They wrote a pre-action protocol letter on 11 December 2008 in which they said, inter alia, that they had entered into a conditional fee agreement with the Appellant which provided for a success fee. They were of course obliged under the rules to give such notice. They also attended on at least one witness.

9. It is the Respondents' case that the CFA was "made" within the meaning of the Regulations on the occasion that it was signed and thus that it was made "during a visit by the trader to the consumer's home". It is the Appellant's case, however, that it was "not made" until Mrs Underhill wrote on 22 December to confirm DAS's response, which was not of course during any such visit.

10. By a decision dated 17 April 2013, District Judge Britton, sitting as the Regional Costs Judge in the Bristol County Court, accepted the Appellant's case. His analysis was that during what he described as the "vacuum" between 9 and 22 December 2008 there was no legal agreement in place because there was at that stage no intention to create legal relations. In putting it that way, I have no doubt that he had in mind the decision of this court in Robertson v Swift [2012] EWCA Civ 1794 to which he referred, albeit in a different point of his judgment. The issue in that case was whether a contract was made in the consumer's home if it was concluded there, irrespective of whether there had been earlier negotiations there or elsewhere. That is not the same issue as is before us, but in that context Lord Justice Jackson, who gave the only substantial judgment, said at paragraph 41(i):

"The focus of para 5(a) is upon the occasion when and the place where the consumer becomes legally committed. A contract is not made until all the ingredients are present, in particular offer and acceptance, intention to create legal relations and consideration. At that moment, and not before, the contract springs into existence. At that moment the parties become subject to all the common law and statutory incidents of the contractual relations into which they have entered."

11. The Respondents appealed. The appeal was heard before His Honour Judge Denyer QC on 20 December 2013. He allowed the appeal on the basis that the CFA was plainly made on the occasion that it was signed and that it was impossible to say that there was no intention to create legal relations at that time. He placed some weight on the fact that Mrs Underhill had in her letter of 22 December used the phrase "continued to act", and also on the fact that there had been an attendance on a witness during the relevant period. (I should say that he did not refer to the pre-action protocol letter because it was not drawn to his attention, though it was in Wards' file and it had been available to District Judge Britton.) But his fundamental point was that the fact that the CFA might have ceased to operate if DAS had agreed to Wards being instructed did not prevent it being legally effective from the moment that it was signed.

12. Permission to appeal was refused on the papers by Sir Stanley Burnton but was granted following an oral hearing before Lord Justice McCombe.

13. In my view Judge Denyer was right. It seems to me that the legal analysis is as follows. The starting point is that on the documents the Appellant and Wards plainly entered into a legally binding agreement at the Appellant's home on 9 December 2008. I see no difficulty in principle about admitting nevertheless the evidence of both parties that that agreement was subject to a condition relating to possible funding by DAS. It may be debatable precisely what that condition was. Mrs Underhill's evidence, if read literally, was that the CFA would not take effect until DAS's position was known, or at all if they agreed that Wards could be instructed for the pre-proceedings work. In fact, as I have said, Wards did start work in the meantime, and that suggests to me that the condition was not that the agreement should not take effect at all until DAS's position was confirmed but that it would terminate if, unexpectedly, DAS gave the necessary consent. That is of course consistent with the language of Mrs Underhill's letter of 22 December. But ultimately it does not matter. Even taking Mrs Underhill's evidence at face value, what we have is a contract which is subject to a condition, namely a condition as to when the obligations into it will come into effect. As Sir Stanley Burnton observed when he refused permission on the papers, there is nothing unusual about that. It is quite different from there being no intention to create legal relations. The Appellant was, in Lord Justice Jackson's phrase, "legally committed". The condition, which related to DAS's attitude, was one over the satisfaction of which she had no control, and if it eventuated the agreement would take effect without any further act on her part or opportunity to say no. Even if the obligations did not come into immediate effect, the agreement was in my view plainly "made" on the occasion that it was signed on 9 December.

14. That seems to me not only to be the correct analysis in law but to conform to the policy behind the Regulations. The mischief at which they are aimed is that consumers in their homes may feel pressured into making a decision which they would not have made if they had an opportunity to reflect in the absence of a trader. That pressure operates at the moment of the decision. It would undermine the protection given by the right to cancel, and would potentially be open to abuse, if the court was obliged to treat the agreement as being "made" at some date subsequent to the operative decision only because it contained a condition which as of that date was not satisfied.

15. The Appellant's notice pleads five grounds of appeal but Mr Matthew Smith for the Appellant, who did not appear below, or plead the grounds of appeal, says that they can be condensed into a single point. That is that the question of when the contract was made for the purpose of the Regulations was a mixed question of fact and law on which different views were reasonably possible, and accordingly that Judge Denyer was not entitled to hold that District Judge Britton's decision had been wrong.

16. I am afraid I cannot accept that submission. There is no dispute as to the primary facts, which include the facts about the intentions of the Appellant and Mrs Underhill; indeed that evidence was unchallenged. The question is whether on the basis of those facts the parties became legally committed so that the contract was made on 9 December. That is a matter of the legal analysis, or characterisation, of what happened, to which there can only be one correct answer. It follows that Judge Denyer was not only entitled but obliged to overturn the decision of District Judge Britton and that this appeal must be dismissed.

17. Like Judge Denyer, I reach this decision with regret. It means that Wards will not recover at all for the legal services which they rendered to the Appellant and which procured her very substantial damages. It is clear that she was entirely satisfied with their services and is dismayed at the fact that they will go unrewarded. District Judge Britton, who had occasion to review the file, also spoke highly of the service which the Appellant had evidently received from Wards generally and Mrs Underhill in particular. The outcome is all the harder because Mrs Underhill only attended at the Appellant's home because her injuries meant that it was difficult for her to come to Wards' offices. It is difficult to think that a case like this falls within the mischief of the Regulations. Indeed we are told that they have now been replaced by regulations which are somewhat less inflexible. But the fact is that the relevant provisions are clear, and on a strict, albeit unsympathetic, view Wards should have been aware of them and complied with their obligations under them.

18. LADY JUSTICE SHARP: I agree.

19. LORD JUSTICE LONGMORE: I also agree. My Lord's judgment shows that the indemnity principle contained in section~60(3) of the Solicitors' Act 1974 is still alive and well. That subsection provides:

"A client shall not be entitled to recover from any other person under an order for payment of any costs to which a contentious business agreement relates more than the amount payable by him to his solicitor in respect of those costs under the agreement."

20. That principle has only been mitigated in the context of conditional fee agreements by a rule of court now contained in CPR 44.1(3) which provides:

"Where advocacy or litigation services are provided to a client under a conditional fee agreement costs are recoverable under parts 44 to 47 notwithstanding that the client is liable to pay the legal representative's fees and expenses only to the extent that sums are recovered in respect of the proceedings, whether by way of costs or otherwise."

21. If, therefore, there are reasons other than those mentioned in CPR 44.1(3) why sums are not payable by the client to his solicitor, such as in this case that the conditional fee agreement falls foul of a cancellation of contracts made in a consumer's home or place of business regulations 2008, the indemnity principle still applies (see Hollins v Russell [2003] 1 WLR 2487, paragraph 92). That is a misfortune for solicitors who do not comply with those regulations, but it was, for better or worse, the law of the land while those regulations were in force. The court has been informed by Mr Mallalieu, on behalf of the Respondents, that the 2008 Regulations have now been replaced by, as my Lord has said, the Consumer Contracts (information, cancellation and additional charges) Regulations with effect from 13 June 2014. But this case has to be decided pursuant to the 2008 Regulations.

For the reasons that my Lord has given, this appeal must be dismissed.