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

The Court of Appeal dismissed the appellants' second appeal and held that the conditional fee agreement (CFA) dated 24 March 2015 was retrospective. The court applied ordinary principles of contractual interpretation, reading defined terms into operative clauses and having regard to the factual background reasonably available to the parties. The court concluded that the CFA, read as a whole and with the definition of "the Claim" incorporated, plainly covered the work performed by the solicitors from 30 March 2012 onwards.

Statutory context (section 59 of the Solicitors Act 1974 and section 58(3) Courts and Legal Services Act 1990) and authorities recognising that CFAs can have retrospective effect (notably Birmingham City Council v Forde) supported that conclusion. The court rejected arguments that (i) retrospectivity must be expressed using particular words, (ii) the definition of "the Claim" was merely descriptive, and (iii) matters in the factual matrix or alleged regulatory failures by the solicitors altered the clear contractual meaning. The court also explained that alleged breaches of professional/regulatory duties do not change the proper construction of the CFA.

Background and parties. The respondent, acting as liquidator of MSD Cash and Carry PLC, brought proceedings against the appellants (former directors and associates). Following judgment at trial against the appellants and an indemnity costs order, the respondent sought assessment of his costs. A dispute arose whether the CFA between the respondent and his solicitors, Boyes Turner LLP, dated 24 March 2015, had retrospective effect and therefore covered costs incurred from 30 March 2012.

Procedural history. The issue was determined at seven hearings before Costs Judge Nagalingam (SCCO ref: PN1904239) who found the CFA retrospective. Lavender J (sitting in the High Court with an assessor) dismissed the appellants' appeal ([2023] EWHC 3488 (KB)). The appellants pursued a second appeal to the Court of Appeal, which is the decision reported here.

Nature of the issue / relief sought. The appellants sought to overturn the finding that the CFA was retrospective so as to avoid the respondent's entitlement to recover solicitors' charges and a success fee in respect of work carried out before the CFA was signed.

Issues framed by the court.

• Whether the CFA was, on construction, retrospective.
• Whether retrospectivity had to be expressed in particular words or could be derived from the combination of clauses and definitions.
• What weight, if any, the factual matrix (including prior retainer arrangements and alleged lack of advice by solicitors) should have in interpreting the CFA.
• Whether alleged regulatory breaches by the solicitors affected the validity or effect of the CFA for the purposes of costs assessment.

Reasoning and conclusions. The court applied standard commercial contract interpretation principles (what a reasonable person with the background knowledge available to the parties would understand). The CFA expressly defined "the Claim" as the liquidator's proceedings "in respect of which the firm has been engaged since 30 March 2012" and clause 4.1 made the client liable to pay the firm's charges "for the work done by the Firm in relation to the Claim". Reading the definitions into the operative clauses, the court concluded the CFA covered work done both before and after its date and therefore was retrospective. The court rejected the submission that retrospectivity required an express label or particular drafting formula, and held that statutory provisions do not prevent retrospective CFAs (section 59 Solicitors Act 1974 permits agreements as to remuneration for "contentious business done, or to be done"). The factual findings of the Costs Judge (notably that the respondent understood the CFA to be retrospective and that the parties had worked in that manner previously) supported the contractual construction. Alleged regulatory breaches by the solicitors, and the fact of an earlier retainer or an unenforceable oral agreement, did not alter the CFA's clear meaning and would, at most, engage disciplinary or other consequences distinct from contract construction.

Appeal dismissed. The Court of Appeal held that, on its proper construction, the CFA dated 24 March 2015 was retrospective and plainly covered the solicitors' work on the Claim from 30 March 2012. The ordinary principles of contractual interpretation applied; neither statutory provisions nor alleged regulatory breaches displaced the clear contractual meaning. The factual findings of the Costs Judge that the respondent always understood the CFA to be retrospective supported that construction.

Second appeal to the Court of Appeal (this decision) from Lavender J in the High Court of Justice, King's Bench Division [2023] EWHC 3488 (KB), which itself was an appeal from the Senior Costs Office (Costs Judge Nagalingam SCCO ref: PN1904239). The underlying trial judgment and costs order were given by His Honour Judge Hodge KC ([2018] EWHC 1325 (Ch) and costs judgment [2018] EWHC 4033 (Ch)).