Half life

It is now more than five years since the inelegantly named Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008 were repealed, it having been belatedly realised by government, that it was inefficient and unfair, to break a series of contractual butterflies upon the wheel of statutory unenforceability. Yet this year so far, I have had two cases, where it is arguable that conditional fee agreements (CFAs) were unenforceable for failing to comply with the provisions of the regulations.

I suspect that the reason why the regulations continue to have a half-life, is that in the context of many big value personal injury cases, it is relatively common for a solicitor to visit a client at home in order to take instructions and obtain a CFA, not least because at the time of instruction, the client may be unable to crawl on his shattered limbs into a solicitor’s office for such purposes. In consequence, the bills of costs which are being raised 5 years later, are large and significant bills, which may have at their heart the fatal flaw of an unenforceable retainer.

Regulation 5 provides as follows:

These Regulations apply to a contract, including a consumer credit agreement, between a consumer and a trader which is for the supply of goods or services to the consumer by a trader and which is made—

(a)during a visit by the trader to the consumer’s home or place of work, or to the home of another individual;

(b)during an excursion organised by the trader away from his business premises; or

(c)after an offer made by the consumer during such a visit or excursion

The key provision is (a) which provides, that the regulations apply where a CFA is “made” during a visit to a client’s home. There is no requirement that a CFA need be signed by either party as a matter of statutory formality. That requirement lapsed with the repeal of the Conditional Fee Agreements Regulations 2000.

Moreover it need not be signed to be “made”. The test formulated by the Court of Appeal in the case of Robertson v Swift [2012] EWCA Civ 1794 and applied in Cox v Woodlands Manor Care Home Limited [2015] EWCA Civ 415 is when the Claimant was “legally committed” to the agreement. Evidence that a CFA has been “made” even where not signed, can  be gleaned inferentially, through a solicitor undertaking work on the case immediately after the visit.

Once the regulations apply, focus shifts to the crucial question as to whether adequate notice has been given of the statutory right to cancel contained in the regulations:

Regulation 7 provides:

7.—(1) A consumer has the right to cancel a contract to which these Regulations apply within the cancellation period.

(2) The trader must give the consumer a written notice of his right to cancel the contract and such notice must be given at the time the contract is made except in the case of a contract to which regulation 5(c) applies in which case the notice must be given at the time the offer is made by the consumer.

(3) The notice must—

(a)be dated;

(b)indicate the right of the consumer to cancel the contract within the cancellation period;

(c)be easily legible;


(i)the information set out in Part I of Schedule 4; and

(ii)a cancellation form in the form set out in Part II of that Schedule provided as a detachable slip and completed by or on behalf of the trader in accordance with the notes; and

(e)indicate if applicable—

(i)that the consumer may be required to pay for the goods or services supplied if the performance of the contract has begun with his written agreement before the end of the cancellation period;

(ii)that a related credit agreement will be automatically cancelled if the contract for goods or services is cancelled.

(4) Where the contract is wholly or partly in writing the notice must be incorporated in the same document.

(5) If incorporated in the contract or another document the notice of the right to cancel must—

(a)be set out in a separate box with the heading “Notice of the Right to Cancel”; and

(b)have as much prominence as any other information in the contract or document apart from the heading and the names of the parties to the contract and any information inserted in handwriting.

(6) A contract to which these Regulations apply shall not be enforceable against the consumer unless the trader has given the consumer a notice of the right to cancel and the information required in accordance with this regulation.

(emphasis added)

Part 1 of Schedule 4 provides as follows:

The identity of the trader including trading name if any.

The trader’s reference number, code or other details to enable the contract or offer to be identified.

A statement that the consumer has a right to cancel the contract if he wishes and that this right can be exercised by delivering, or sending (including by electronic mail) a cancellation notice to the person mentioned in the next paragraph at any time within the period of 7 days starting with the day of receipt of a notice in writing of the right to cancel the contract.

The name and address, (including any electronic mail address as well as the postal address), of a person to whom a cancellation notice may be given.

A statement that notice of cancellation is deemed to be served as soon as it is posted or sent to a trader or in the case of an electronic communication from the day it is sent to the trader.

A statement that the consumer can use the cancellation form provided if he wishes.

Mere non-compliance is not enough. Instead,  the principle of de minimis non curat lex applies to enforceability challenges of this nature. The issue before the court is always whether there has been a material breach of the regulations, judged at the time the notice of the right to cancel was given.  The question that the court should ask is per Hollins v Russell [2003] 1 WLR 2487 at paragraph 107:

The key question, therefore, is whether the conditions applicable to the CFA by virtue of section 58 of the 1990 Act have been sufficiently complied with in the light of their purposes. Costs judges should accordingly ask themselves the following question:

“Has the particular departure from a regulation pursuant to section 58(3)(c) of the 1990 Act or a requirement in section 58, either on its own or in conjunction with any other such departure in this case, had a materially adverse effect either upon the protection afforded to the client or upon the proper administration of justice?”

If the answer is “yes” the conditions have not been satisfied. If the answer is “no” then the departure is immaterial and (assuming that there is no other reason to conclude otherwise) the conditions have been satisfied.

Of course, the further point that arises is one of systemic risk: because most CFAs are standard form documents, a failure to put into place a properly drafted cancellation notice, may not be confined to a single case but might affect many cases within a solicitor’s caseload.

Given the lengthy period within which catastrophic personal injury claims progress, I predict that the half life of these regulations will continue for some years yet.

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