Hodgson v Imperial Tobacco Ltd

A conditional fee agreement complying with the statutory scheme does not alter a legal representative’s ordinary duties to the client or the court. Nor does it ordinarily expose the representative to a greater risk of a personal costs order. Its terms are normally irrelevant, and need not be disclosed, unless a properly founded application puts personal liability or the agreement’s validity or contents in issue.

A pre-emptive order debarring costs applications should not grant advance immunity or exclude every jurisdiction under which such an order could properly be made. Chambers hearings are private but not secret. Courts should facilitate public access and information as far as practical. A blanket restraint on lawyers’ media comments is wrong where it replaces the ordinary contempt inquiry with rigid compliance and unjustifiably impairs open justice.

The claimants brought personal-injury claims against tobacco companies, alleging that cigarettes manufactured by the defendants had caused their cancers. Their solicitors and counsel acted under conditional fee agreements, without external funding or insurance against an adverse costs liability.

Popplewell J refused the claimants’ request for an order debarring the defendants from seeking personal costs orders against their legal representatives, save for a wasted-costs order. He also ordered that neither the parties nor their advisers should comment to the media on the litigation without the court’s leave.

The claimants appealed. The central issues were whether a conditional fee agreement justified protective relief or disclosure, and whether the restriction on communications with the media was a lawful and appropriate response to the risks of publicity in substantial multi-party litigation.

1. The appeal was allowed in part. The court refused the proposed debarring order, but quashed the order restricting comments to the media.

2. A valid conditional fee agreement under the Courts and Legal Services Act 1990 is enforceable if it complies with the prescribed requirements. It does not otherwise change the relationship between lawyer and client. The lawyer remains obliged to disregard personal interests when advising and acting, and the client retains the decision whether to commence, continue, discontinue or compromise proceedings.

3. Lawyers acting under a conditional fee agreement are no more vulnerable to a personal costs order than lawyers acting under an ordinary retainer, unless the agreement falls outside statutory protection. The court identified the wasted-costs jurisdiction, the inherent jurisdiction, and the general costs jurisdiction under section 51 of the Supreme Court Act 1981. As Tolstoy-Miloslavsky v Aldington [1996] 1 WLR 736 made clear, those were the possible heads of jurisdiction. A debarring order would have had to exclude them and would therefore have been an empty vessel. It would also have created inappropriate advance immunity.

4. The court did not decide whether conditional fee agreements were protected by legal professional privilege. It held, however, that absent exceptional circumstances and a properly founded application for personal costs, their existence and terms were irrelevant to the litigation and were not required to be disclosed.

5. Hearings in chambers are private, not secret. Subject to exceptional cases, the public should be given access where practical and should be able to obtain information about what occurred, including any judgment or order. The judge retains a practical discretion as to access, but must give effect to open justice.

6. The blanket media restraint was wrong in principle. It displaced the ordinary contempt inquiry, which requires the court to balance protection of the administration of justice against freedom of expression and press freedom. The risk posed by communications with the media did not justify that rigid restriction. Greater openness in interlocutory proceedings was the preferable means of avoiding ill-informed reporting.

• Court of Appeal (Civil Division) — Allowed the appeal in part. It upheld Popplewell J’s refusal of a debarring order, but quashed the order preventing parties and their advisers from commenting to the media without leave.
• Queen’s Bench Division — Popplewell J, on 10 October 1997, refused a debarring order concerning potential personal costs liability of the claimants’ legal advisers and imposed the media-comment restriction.