Ms Susan Louise Cox v Woodlands Manor Care Home

For the purposes of the Cancellation of Contracts Made in a Consumer's Home or Place of Work Etcetera Regulations 2008, a contract is made when the consumer becomes legally committed. A signed agreement made during a trader's home visit is not deferred merely because it contains a condition governing when obligations take effect or whether the agreement may terminate.

Where the required cancellation notice has not been given, the agreement is unenforceable against the consumer. The indemnity principle then prevents recovery from the paying party of costs which the client is not legally obliged to pay, subject only to the limited conditional-fee exception in the Civil Procedure Rules.

The claimant, who had suffered an accident at work, settled her claim against her employer for £100,000 with costs to be assessed. Her solicitors had acted under a conditional fee agreement, which she signed when the solicitor visited her home.

The agreement was signed while the solicitor awaited the outcome of an application for legal-expenses funding. The solicitors gave no notice of cancellation rights under the relevant Regulations. The Regional Costs Judge held that no contract existed until the funding position was known. On appeal, His Honour Judge Denyer QC held that the agreement had been made at the home visit and was therefore unenforceable for want of notice.

The claimant appealed. The central issue was whether the conditional fee agreement was made when signed at the consumer's home or only when funding was later refused.

Appeal dismissed. The conditional fee agreement was made during the solicitor's visit to the claimant's home and was unenforceable because the required cancellation notice had not been given.

1. Under Regulation 5 of the Cancellation of Contracts Made in a Consumer's Home or Place of Work Etcetera Regulations 2008, the material question is when the consumer became legally committed. The agreement signed on 9 December was legally binding on its face. The parties' evidence could establish that it was conditional on the outcome of the application to DAS, but that condition did not negate an intention to create legal relations.

2. Even on the claimant's case, the condition concerned when the agreement's obligations would take effect, or whether the agreement would terminate if funding were unexpectedly approved. It did not require any further act of acceptance by the claimant. She was therefore legally committed when she signed. This applied the analysis in Robertson v Swift [2012] EWCA Civ 1794.

3. This construction also accorded with the Regulations' consumer-protection purpose. The relevant pressure is exerted when the consumer makes the decision in the trader's presence. Treating formation as postponed simply because an unsatisfied condition remained would undermine the cancellation protection.

4. There was no dispute about the primary facts. Whether those facts meant that the parties were legally committed was a question of legal characterisation with one correct answer. Judge Denyer was therefore obliged to overturn the Regional Costs Judge's contrary conclusion.

5. Longmore LJ added that section 60(3) of the Solicitors' Act 1974 preserved the indemnity principle. CPR 44.1(3) mitigated it only where the client's liability was contingent upon recoveries in the proceedings. It did not permit recovery where the conditional fee agreement was unenforceable for non-compliance with the 2008 Regulations. In that respect, the court applied Hollins v Russell [2003] 1 WLR 2487.

• Court of Appeal (Civil Division) — dismissed the claimant's appeal and upheld the conclusion that the conditional fee agreement was made at the home visit: [2015] EWCA Civ 415.
• Bristol County Court (His Honour Judge Denyer QC) — allowed the respondents' appeal from the Regional Costs Judge and held that the agreement was made when signed at the claimant's home.
• Bristol County Court (District Judge Britton, Regional Costs Judge) — held that there was no legally binding agreement until the legal-expenses insurer's position was known.