Champertous agreement

R (on the Application of Factortame and others) v Secretary of State for Transport, Environment and the Regions (No 8) ([2002] EWCA Civ 932; TLR 9 July)

Following the finding of the House of Lords that the Government was liable to compensate the claimants for losses sustained as a result of the UK’s breach of EC law in preventing the claimants from fishing in UK territorial waters the claimants entered into agreements with a firm of chartered accountants to prepare and submit the claimants’ action for damages in return for 8% of the final settlement received by the claimants. On the assessment of the costs the Government contended that the agreement with the accountant was a contingency fee agreement and therefore unenforceable as being champertous. In upholding the agreement, the court found there was nothing in s58 of the Courts and Legal Services Act 1990, relating to conditional fee agreements, which suggested it was intended to apply the provision of services ancillary to the conduct of litigation. The arrangement provided for the use of independent experts and therefore the experts were not acting on a contingency fee basis, which would be highly undesirable. It would be in a very rare case indeed that the court would be prepared to consent to an expert being instructed under a CFA.