Plevin v Paragon Personal Finance Ltd and another (No 2) [2017] UKSC 23

The Supreme Court has allowed the recovery of a pre LASPO success fee and an after the event insurance premium despite variations to the underlying conditional fee agreement and insurance policy after that date.

The background of this case is that in 2008 the Claimant (Mrs Plevin) entered into a conditional fee agreement with her original firm of solicitors, to cover all proceedings up to and including trial. An after the event insurance policy was taken out to cover legal expenses and liability for the other side’s cost up to and including the “trial period”. Subsequently there were two technical changes of solicitor. The Claimant’s original firm of solicitors changed due to organisational changes within the firm and its business was successively transferred in 2009 and 2012 respectively to new firms of solicitors. The new firm wrote to Mrs Plevin informing her about the change, referring to the CFA and saying that they would “continue to represent you on the same terms and conditions as previously.” Mrs Plevin plainly assented to that by continuing to instruct them.

In August 2013, the Court of Appeal having given leave to appeal from the dismissal of Mrs Plevin’s case by the trial judge, the Claimant and her Solicitors entered into a deed of variation extending the CFA to cover the conduct of the appeal. Also the Claimant topped up the ATE to cover an appeal to the Court of Appeal. In January 2014 there was a further deed of variation to cover the appeal to the Supreme Court after the Court of Appeal allowed the appeal.

The costs in the Supreme Court were assessed at an amount which included the solicitors’ success fee under the conditional fee agreement and the ATE premium.

The First Defendant (Paragon) argued that the two variations were new agreements entered into after 1 April 2013 for the provision of litigation services after that date. They were not, therefore, covered by the transitional provisions of section 44(6) of LASPO.

The matter was referred to a single justice of the Supreme Court who referred it to a panel of justices of the Supreme Court for review.

The Supreme Court, by a majority of 4 to 1, upheld the costs assessment of the costs officers. The majority held that the CFA entered into with the Claimant’s original solicitors was correctly assigned.

It was found that the success fee had been properly included in the assessment of costs. Both deeds were expressly agreed to be a variation of the conditional fee agreement, leaving all its terms unchanged except for the addition to the coverage of a further stage of the litigation and a change in the amount of the success fee.

It was also found that despite of the fact that the ATE policy was topped up after 1 April 2013 to cover the Court of Appeal and Supreme Court appeals, the ATE premium was properly included in the assessment of costs.

Lord Sumption said as follows: “The purpose of the transitional provisions of LASPO, in relation to both success fees and ATE premiums, is to preserve vested rights and expectations arising from the previous law. That purpose would be defeated by a rigid distinction between different stages of the same litigation. It may or may not be reasonable to expect an insured party who fails at trial to abandon the fight for want of funding. That will depend mainly on the merits of the appeal. But an insured claimant who succeeds at trial and becomes the respondent to an appeal is locked into the litigation. Unless he is prepared to forego the fruits of his judgment, which by definition represents his rights unless and until it is set aside, he has no option but to defend the appeal. The topping-up of his ATE policy to cover the appeal is in reality part of the cost of defending what he has won by virtue of being funded under the original policy. The effect, if the top-up premium is not recoverable, would be retrospectively to alter the balance of risks on the basis of which the litigation was begun.”

Thereafter Lord Sumption concluded: “In my opinion, if there has been ATE cover in respect of liability for the costs of the trial, the insured is entitled after the commencement date to take out further ATE cover for appeals and to include them in his assessable costs under the 1999 costs regime.”

Conclusion : Additional liabilities can be recovered in cases where the original CFA (which is assigned post-LASPO) pre-dates LASPO.

Summary prepared by Tanya Bland