Mohinder Singh & Ors v David Ingram (in his capacity as the Liquidator of MSD Cash and Carry PLC)

A conditional fee agreement is construed by ordinary principles of contractual interpretation. The court identifies objective meaning from the words used, read as a whole and in their available factual context. There is no special rule requiring a CFA to state expressly that it is retrospective or to use the word retrospective. A written CFA may cover contentious work already done, subject to its proper construction. Defined terms may be read into operative clauses. Evidence about negotiations, a party’s understanding or an alleged regulatory breach cannot override clear contractual language. A regulatory breach may have disciplinary consequences, but does not, without more, affect the CFA’s validity or effect.

The respondent, acting as liquidator, succeeded in proceedings against the appellants and obtained an order for costs on the indemnity basis. During the subsequent costs assessment, the Costs Judge found that a CFA entered into on 24 March 2015 had retrospective effect and covered work undertaken from 30 March 2012. Lavender J upheld that conclusion on appeal in [2023] EWHC 3488 (KB).

On second appeal, the appellants argued that the CFA was not sufficiently clear, that its defined terms did not establish retrospectivity, and that the factual background and alleged regulatory failures by the solicitors affected its meaning. The central issue was whether the CFA, properly construed, covered work done before it was signed.

Appeal dismissed. Coulson LJ gave the leading judgment, with Baker and Asplin LJJ agreeing.

1. Applicable principles. A CFA is construed by the ordinary principles applicable to commercial contracts. The court determines the objective meaning of the language used, read as a whole and in the light of background knowledge reasonably available to the parties. There is no heightened interpretative hurdle merely because the agreement is a CFA, and no requirement to use the word retrospective. The observation in Motto v Trafigura [2011] 1WLR 657 was obiter, and any suggestion of a special prospective-only presumption was doubted. Holmes v Alfred McAlpine Homes (Yorkshire) Limited [2006] 3 Costs LR 466 concerned backdating and did not establish a rule requiring express retrospectivity.
2. Statutory framework. Section 59 of the Solicitors Act 1974 contemplates remuneration agreements covering contentious business done or to be done. Section 58(3) of the Courts and Legal Services Act 1990 requires a CFA to be in writing but does not prevent it covering work already carried out. Birmingham City Council v Forde [2009] EWHC 12 supported that conclusion.
3. Construction. The CFA covered the Claim, defined as the respondent’s proceedings in respect of which the firm had been engaged since 30 March 2012. The Basic Charges covered the firm’s work done in relation to that Claim. Reading the defined terms into clause 4.1 was legitimate. The agreement made no temporal distinction between past and future work and was therefore retrospective. Grounds 1, 2 and 3 failed.
4. Factual matrix and regulatory duties. The Costs Judge’s findings about the parties’ previous dealings supported the same construction. Factual background may inform objective meaning but cannot override express terms. The existence of an earlier retainer, an informal arrangement or an absence of commercial necessity did not alter the CFA’s effect. On a second appeal, the court should not make contentious factual findings de novo where they were not sought below. In any event, even an established regulatory breach would concern disciplinary consequences and would not change the interpretation or validity of the CFA as against the paying party. Ground 5 therefore failed. The observation that retrospectivity might arise by implication was obiter because implication did not arise on the facts.

• Court of Appeal (Civil Division): The second appeal was dismissed. The court upheld the conclusion that the CFA was retrospective.
• High Court, King’s Bench Division: Lavender J, sitting with Costs Judge Rowley as assessor, upheld the Costs Judge’s decision in [2023] EWHC 3488 (KB).
• Senior Costs Office: Costs Judge Nagalingam found that the CFA had retrospective effect in the costs assessment proceedings, SCCO ref. PN1904239.
• High Court, Chancery Division: The appellants had been unsuccessful in the underlying proceedings, reported at [2018] EWHC 1325 (Ch), and were ordered to pay indemnity costs in [2018] EWHC 4033 (Ch).