CFA glitch

Ghannouchi v Houni Ltd and others SCCO 16 December; LSG 11 March

SCCO Master Seager Berry held that the Law Society’s model CFA agreement is defective in that it states that regulation 3 of the CFA Regulations 2000 (SI 2000 No 692) (relating to recovery of costs from the client where they are agreed by the parties or assessed) applies only to the success fee, but in fact the Master held that it applies to all fees. The Master said that his decision could have an adverse effect on the hundreds of thousands of occasions on which the Law Society’s model agreement was being used or adapted. That was the bad news. The good news is that applying the test in Hollins v Russell (22/ LL p73) that a CFA would only be unenforceable if the defect had a materially adverse impact on the client or on the administration of justice, the Master found that did not apply in this case and therefore the CFA was enforceable.