Litigation Recent Decisions 28/04/98

Conditional fee agreements in arbitrations not champertous

Bevan Ashford v Geoff Yeandle (Contractors) Ltd (in liquidation) (1998)

ChD (Sir Richard Scott V-C) 8/4/9In the context of an application by Originating Summons, the respondent firm, a company in liquidation, had a substantial claim available in arbitration proceedings, but no resources to finance those proceedings. The liquidator entered into an agreement ('the 1997 agreement') with the applicant firm of solicitors (Bevan Ashford), under which the latter agreed to represent the respondent in the arbitration proceedings. The agreement was on the basis that Bevan Ashford would charge disbursements whether or not the proceedings failed, but would charge additional profit costs only if they succeeded. At the same time the liquidator took out an insurance policy to cover liability under any order to pay the costs of the other side in the arbitration. The policy was conditional upon the 1997 agreement being valid and enforceable. In turn, on 17 March 1998, Bevan Ashford entered into an agreement ('the 1998 agreement') with counsel Declan O'Mahoney under which he agreed to represent the respondent firm in the arbitration on the basis of no fee if the arbitration failed and a 50 per cent uplift on his normal fee if it succeeded. Doubts arose as to whether either or both of these agreements fell within the ambit of s.58 and s.119 of the Courts and Legal Services Act 1990 so as to be validated thereby, or whether, if not, either or both of the agreements were champertous and therefore void on grounds of public policy. These proceedings were issued to clarify those doubts, with Alice Robinson appointed as amicus curiae.