Case No: HQ15X03193
Neutral Citation Number: [2016] EWHC 1681 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 14/07/2016

Before :

MRS JUSTICE SLADE DBE

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Between :

	FPH LAW (A Firm)	Claimant	
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	MARTYN ROBERT BROWN 
(Trading as Integrum Law)	
Defendant	

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Mr Nicholas Jackson (instructed by Irvings Solicitors) for the Claimant
Mr Andrew Nicol (instructed by Integrum Law) for the Defendant

Hearing dates: 4 May 2016

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Judgment
MRS JUSTICE SLADE DBE : 
1.	The Claimant firm of solicitors seeks damages for breach of contract from a former partner in the firm. The claim is based on an alleged breach of an undertaking given by the Defendant to the Claimant on 13 August 2009 (“the Undertaking”) on the transfer of certain client files to him following his retirement as a partner with the firm. By his Amended Defence the Defendant avers that the Undertaking did not apply to the file at issue in these proceedings, that of Mr Douglas. The Claimant alleges that the Undertaking applies to this file. The Defendant set up his own practice as a solicitor and was to continue to act for those clients whose files were transferred. 
2.	The proceedings concern a Conditional Fee Agreement entered into by the Claimant with a client, Mr Douglas, on 18 December 2009 (“the CFA”), arranged by the Defendant when he was a partner in the Claimant firm. The file of Mr Douglas was transferred to the Defendant. The proceedings for which the Claimant and then the Defendant represented Mr Douglas settled with an agreed sum in damages being paid to him by Jarvis plc, who were also to pay his costs to be assessed if not agreed. No agreement was reached as to the sum of costs to be paid. The main issue in dispute was whether Regulation 4 of the Conditional Fee Agreements Regulations 2000 (“the Regulations”) had been complied with. On 18 November 2011 District Judge Smedley held that it had not and disallowed the Claimant’s profit costs. 
3.	In the proceedings brought by the Claimant against the Defendant, on 2 December 2015 Deputy Master Partridge ordered that: 
“There be determined as a preliminary issue the question of whether the Claimant may seek to recover damages for the loss of a chance to receive a sum from the paying party in respect of costs incurred under a CFA in respect of which no costs were recovered on detailed assessment in consequence of non-compliance with regulation 4 of the Conditional Fee Regulations 2000 by reason of public policy or otherwise.”
At the hearing of the preliminary issue before me the Claimant was represented by Mr Nicholas Jackson and the Defendant by Mr Andrew Nicol.  The question of whether the Undertaking applied to the transfer of the file of Mr Douglas from the Claimant to the Defendant formed no part of the preliminary issue and was not the subject of any argument before me. That question remains in dispute between the parties on which this judgment does not seek to express a view. 
Outline Facts
4.	These facts are not in dispute and are taken from the skeleton argument prepared by Mr Jackson. 
1)	Paul Douglas suffered an injury at work on 18 August 2003. 
2)	Mr Douglas engaged the Claimant to pursue personal injury proceedings against his employer Jarvis plc. 
3)	On 3 October 2003 the Defendant, then a partner in the Claimant prepared a CFA for the engagement of the Claimant by Mr Douglas. 
4)	On 15 August 2006 proceedings were issued by Mr Douglas against Jarvis plc. 
5)	The Defendant, on 31 July 2009, as a partner in the Claimant retired and set up in practice as a solicitor on his own account. By the Undertaking the Defendant agreed to preserve a lien over the files of the Claimant’s clients taken with him for the purpose of recovery by the Claimant of whatever fees and disbursements are properly recoverable under the terms of their retainer with the client in respect of the file. It asserted by the Claimant but contested by the Defendant that these included the file of Mr Douglas. By the Undertaking the Defendant agreed: 
“(5) 	to provide an update on the progress of such file, in brief but adequate terms at the conclusion of every succeeding three month period… 
(6) 	to provide [the Claimant] with reasonable information about any significant developments in respect of the file including but not limited to offers to settle…”
6)	One of the files which was transferred to the Defendant was that of Mr Douglas. 
7)	On 18 December 2009 Mr Douglas entered into a CFA with the Defendant in his new firm. 
8)	On 13 January 2011 Mr Douglas’ claim was compromised, on terms which provided for Jarvis plc to pay a sum to Mr Douglas and to pay his costs which were to be subject to detailed assessment if not agreed. 
9)	On 30 March 2011 the Defendant served a bill of costs in the total sum of £84,050.72 which included both his own and the Claimant’s costs. 
10)	On 26 April 2011 Jarvis plc’s solicitors offered £55,000 in respect of costs. In their letter of offer to the Defendant the solicitors challenged the validity of the Claimant’s CFA by reference to Regulations 3 and 4 of the Conditional Fee Agreements Regulations 2000 (“the Regulations”) and requested disclosure. The offer was rejected. 
11)	On 5 May 2011 the solicitors orally increased the offer to £64,000 and repeated their concern about the validity of the CFA. The Defendant rejected the offer. On 6 May 2011 the solicitors confirmed their offer of £64,000 in writing. 
12)	On 6 May 2011 the Defendant notified the Claimant that he had rejected both offers. He suggested a counter-offer of £77,000 with a view to settlement at £73,000. The Defendant’s letter to the Claimant made no reference to the solicitors’ challenge to the validity of the CFA. 
13)	On the same day the Defendant wrote to the solicitors asserting compliance with Regulation 4 of the Regulations but did not disclose any documents. 
14)	On 9 May 2011 the Claimants authorised an offer of £77,000 to settle the claim for costs. 
15)	On 10 May 2011 the Defendant made an offer to the solicitors of £78,000. 
16)	On 16 May 2011 the solicitors increased their offer to £70,000. 
17)	On 24 May 2011 the solicitors for Jarvis plc served their Points of Dispute which included a challenge to the Claimant’s CFA on the grounds of non-compliance with Regulation 4 of the Regulations. 
18)	The Defendant replied to the Points of Dispute on 7 June 2011. 
19)	On 12 July 2011 the solicitors served Supplemental Points of Dispute again asking questions pertinent to compliance with Regulation 4. On 27 July 2011 the Defendant answered the challenge that there was no provision in the CFA for the Claimant to increase their charging rates to Mr Douglas by writing that it states: 
“The present hourly rates are:- making it clear that the rates quoted are current. 
The Defendant wrote:
“The Claimant accepts that the agreement does not say for example, that ‘these rates may be increased’ etc. but the use of the word ‘current’ implies this.”
The Defendant disclosed two pages of the CFA. 
20)	The Bill of Costs served by the Defendant on behalf of Mr Douglas included an item of 6 minutes for preparing the CFA on 3 October 2003. 
21)	On 18 November 2011 at the hearing of the detailed assessment of costs, District Judge Smedley adjudged the CFA unenforceable for non compliance with Regulations 4(2)(c) and 4(2)(e)(ii) and accordingly disallowed all the Claimant’s profit costs. The District Judge made an adverse costs order against the Claimant in the sum of £5,000. 
22)	The Claimant issued proceedings against the Defendant on 4 February 2014. 
The Contentions of the Parties on the Preliminary Issue 
5.	Both parties agreed that the judgment of DJ Smedley is binding. The Claimant does not seek to circumvent it. 
6.	Mr Jackson contended that the judgment of DJ Smedley was declaratory of the enforceability of the CFA from the date that it was delivered, 18 November 2011. If the Defendant had complied with his contractual obligation Mr Douglas’s claim for costs would have settled at a time when there was no declaration that the CFA was unenforceable. There would have been no hearing to decide its enforceability. Mr Nicol contended that the judgment of DJ Smedley was declaratory of the legality and enforceability of the CFA and had effect from its inception. 
7.	Both counsel agreed that the effect of the judgment of DJ Smedley that the Claimant did not comply with Regulation 4 was that the CFA was unenforceable against Mr Douglas. Mr Nicol further contended that in addition to being unenforceable the decision had the effect that the CFA was illegal and void from the date it was entered into. 
8.	It was not in doubt that the indemnity principle applied. If Mr Douglas was not obliged to pay costs to the Claimant under the CFA, Jarvis plc would not be obliged to make a payment in respect of those costs to Mr Douglas. 
9.	Mr Jackson contended that even if the CFA between Mr Douglas and the Claimant was void on grounds of non-compliance with Regulation 4 that would not have invalidated on grounds of illegality any compromise between Mr Douglas and Jarvis plc of his claim for costs. In this regard counsel relied on the judgment of the Court of Appeal in Binder v Alachouzos [1972] QB 151, in particular the judgment of Lord Denning MR at page 158E. Mr Jackson adopted the distinction drawn by Foskett J in The Law and Practice of Compromise 8th edition, in which the author wrote at paragraph 4-72: 
“There is a distinction between a compromise which is itself illegal and a compromise of dispute which gives rise to questions of illegality. The former, of course, falls within the general principle stated above. The latter will ordinarily be upheld.”
It was submitted that before the judgment of DJ Smedley there was a dispute between Mr Douglas and Jarvis plc as to whether the CFA with the Claimant was unenforceable. Accordingly an agreement between those parties to compromise the claim for costs would have been enforceable. Mr Jackson submitted that even if Mr Douglas had then attempted to impugn the CFA, having sought and recovered such costs from Jarvis plc on the basis that he was liable to pay the Claimant’s fees under the CFA, the court would not then have allowed Mr Douglas to challenge its validity. 
10.	Mr Jackson contended that it is unsurprising that the authorities decided before the enactment of Section 58 of the Courts and Legal Services Act 1990, now substituted by Section 27 of the Access to Justice Act 1999, treated any contingency fee agreement entered into by a solicitor for litigation services as unlawful. Before these provisions, solicitors’ contingency fees were regarded as contrary to public policy and therefore unlawful as explained by Lord Denning MR in Wallersteiner v Moir (No 2) [1975] QB 373 at page 394A. 
11.	Mr Jackson contended that the judgments in Wallersteiner (No 2) and Awwad v Geraghty & Co [2001] QB 570 in which Schiemann LJ held at page 593F that acting for a client in pursuance of a conditional normal fee agreement in circumstances not sanctioned by statute was against public policy no longer were to be followed after the enactment of the Access to Justice Act 1999. That Act reflected a change in public policy. 
12.	Counsel referred to Rees v Gateley Wareing [2015] QB 2179 as illustrating the change brought about by the 1999 Act. After the implementation of the 1999 Act, public policy no longer decried retainers of the nature of CFAs. If they did not comply with regulations they were unenforceable because of regulatory non-compliance not because they were contrary to public policy. Mr Jackson submitted that there is no authority after the 1999 Act which establishes that a non-compliant CFA is illegal. Counsel recognised that Lewison LJ in Rees avoided being drawn into the debate as to whether non compliant CFAs were contrary to public policy. 
13.	Mr Jackson urged me to express a view on the measure of damages to be recovered by the Claimant if I were to find in favour of the Claimant on the preliminary issue. He contended that the Claimant founds their case on contract based on breach of the Defendant’s Undertaking to them. It is not founded upon their CFA with Mr Douglas. They are entitled to be put in the position they would have been in had the contract been performed. 
14.	It was contended that if the Claimant had performed his obligations under the contract in the Undertaking and informed them that Jarvis plc had raised an issue about the validity of the CFA the Claimant would have authorised a settlement of the claim for costs for a lesser figure than that advanced by the Defendant. A settlement with Jarvis plc for that lesser figure would have been enforceable. Consideration would have been provided by forbearance to sue for costs which were in dispute as in Allied Maples Group v Simmons & Simmons [1995] 1 WLR 1602. 
15.	Mr Nicol submitted that notwithstanding the removal of the offence of champerty from the criminal law, CFAs which did not comply with the statutory exceptions were contrary to public policy and illegal. Counsel submitted that a CFA which complied with the Regulations was “potentially an island of legality in a sea of illegality”. He relied upon Awwad v Geraghty & Co (a firm) [2001] QB 570 in which Schiemann LJ at page 578A accepted the submission that Section 58 of the Courts and Legal Services Act 1990 merely rendered legal some conditional fee agreements which complied with statutory provisions. Of the Access to Justice Act 1999, which is relevant for the issue under consideration in this case, Schiemann LJ observed that “the situation had been tidied up”. 
16.	Mr Nicol also relied upon the judgment of Lewison LJ in Rees in which the Judge referred at paragraph 52 to Trendtex Trading Corporation v Credit Suisse [1980] QB 629 in which Oliver LJ emphasised the importance of a solicitor’s status as an officer of the court and held at page 663: 
“There is, I think, a clear requirement of public policy that officers of the court should be inhibited from putting themselves in a position where their own interests may conflict with their duties to the court by agreement, for instance, of so called ‘contingency fees’.” 

Lewison LJ continued at paragraph 535 commenting on Section 58 of the Courts and Legal Services Act 1990 that it: 
“… authorises certain kinds of conditional fee agreement and invalidates ‘any other conditional fee agreement’. If an agreement does not fall within the definition of a ‘conditional fee agreement’ it is neither authorised by section 58 nor expressly invalidated by it.”
Mr Nicol rightly said that Lewison LJ did not decide whether a CFA which did not comply with the Regulations was illegal as well as being unenforceable. However counsel submitted that whether the CFA was illegal as well as unenforceable or just unenforceable it could not be relied upon by the Claimant to found a claim. 
17.	Mr Nicol contended that once DJ Smedley had declared the CFA to be unenforceable it is to be regarded as such from its inception. If the CFA was not illegal but unenforceable there may have been a brief moment when the CFA could have been relied upon in negotiating a settlement between Mr Douglas and Jarvis plc. This was once negotiations on a settlement had started but before the judgment of DJ Smedley. However once DJ Smedley decided that the CFA was unenforceable it was unenforceable from the moment it was entered into. Accordingly it could not be relied upon in settlement negotiations. Mr Nicol relied upon Mulkerrins v Pricewaterhouse Coopers [2003] 1 WLR 1937 to contend that the Claimant was bound by the decision of DJ Smedley that the CFA was unenforceable and that they could not recover damages for loss of the opportunity of recovering sums in respect of an unenforceable CFA. 
18.	Mr Nicol contended that the Claimant could not have enforced the CFA against Mr Douglas. It would be unconscionable for a solicitor in a damages claim such as is being pursued in this case, to recover compensation in respect of costs which could not be sought from his client. Public policy would preclude the recovery of such damages. It would be unconscionable for a solicitor to recover compensation for breach of contract in order to recover compensation for loss of a chance to obtain a settlement in respect of costs based on an unenforceable CFA. 
Discussion and Conclusion 
19.	The competing contentions of the parties on the preliminary issue may be summarised in this paragraph with those of Mr Jackson for the Claimant being listed first.  
For the Claimant
1)	A compromise of the CFA costs claim reached between Mr Douglas and Jarvis plc would have been valid and enforceable. 
2)	If the Defendant had performed his obligation under the Undertaking the costs claim would have settled without any need for the validity of the CFA to be determined by a court. In any event the determination that the CFA was unenforceable only had effect from the date of the judgment of DJ Smedley. The Claimant had been obliged to act in compliance with his Undertaking before then and the costs issue would have been compromised. 
3)	The loss of the chance of a compromise of the claim for costs caused recoverable damages. 
For the Defendant
4)	A compromise of the claim by Mr Douglas against Jarvis plc for costs would have been invalid because the CFA was unlawful or at least unenforceable from the date it was entered into. 
5)	In any event the effect of the judgment of DJ Smedley was that the CFA was unenforceable not just from 11 November 2011 but from its inception. 
6)	Under the indemnity principle Mr Douglas was not entitled to recover costs from Jarvis plc which he was under no obligation to pay. 
7)	In light of the above the loss of a chance alleged by the Claimant had no value. 
20.	Any compromise of the costs claim by Mr Douglas against Jarvis plc would have to be supported by consideration. The consideration would be forbearance to pursue the costs claim. The claim for costs is based on the indemnity principle. If Mr Douglas was not obliged to pay the Claimant under the CFA he would not be entitled to recover any such costs from Jarvis plc. If he was not entitled to recover costs from Jarvis plc any compromise of such claim for costs would be unenforceable against Jarvis plc as unsupported by consideration and of no value to Mr Douglas or the Claimant. 
21.	The question of whether the claim for costs by Mr Douglas had any value depends upon whether he was obliged to pay the Claimant costs under the CFA. 
Is the CFA illegal as contended by the Defendant? 
22.	A CFA provides for a contingency fee. A solicitor will be entitled to an enhanced payment if a party whom he represents in contentious business succeeds. Such an agreement was regarded as champertous as the solicitor has an interest in the outcome of litigation. Lord Denning MR in Wallersteiner v Moir (No 2) [1975] 1 QB 373 explained the position of such agreements before the enactment of Section 58 of the Courts and Legal Services Act 1990 as substituted at paragraph 394A Section 27(1) of the Courts and Legal Services Act 1999 Lord Denning MR held: 
“It was suggested to us that the only reason why ‘contingency fees’ were not allowed in England was because they offended against the criminal law as to champerty: and that, now that criminal liability is abolished, the courts were free to hold that contingency fees were lawful. I cannot accept this contention. The reason why contingency fees are in general unlawful is that they are contrary to public policy as we understand it in England.”
Lord Denning MR held that contingency fees were unlawful because at the time of determination of Wallersteiner (No 2) agreements for such fees were contrary to public policy. 
23.	The Courts and Legal Services Act 1990 Section 58 as originally enacted read with the Solicitors Practice Rules 1990 provided that subject to compliance with Regulations a “conditional fee agreement” could specify an uplift in specified circumstances of no more than a specified percentage. Section 58(8) originally provided: 
“Where a party to any proceedings has entered into a conditional fee agreement and a costs order is made in those proceedings in his favour the costs payable to him shall not include any element which takes account of any percentage increase payable under the agreement…”
The Court of Appeal in Awwad v Geraghty & Co (a firm) [2001] QB 570 considered a conditional fee agreement entered into in September 1993. The 1990 Act therefore applied. Schiemann LJ made an extensive review of the legislation and the authorities. Although appearing in the 2001 law reports the case was decided in November 1999. An amendment to the 1990 Act was to be introduced by the Courts and Legal Services Act 1999. At page 593E Schiemann LJ expressed a reluctance: 
“… to develop the common law at a time when Parliament was in the process of addressing those very problems.”
On the basis of the 1990 Act and the Regulations in force at the time of the CFA under consideration in Geraghty, September 1993, Schiemann LJ held at page 593F: 
“I would… hold that acting for a client in pursuance of a conditional normal fee agreement, in circumstances not sanctioned by statute, is against public policy.”
May LJ held at page 599D: 
“I do not consider that it was lawful in 1990, apart from the Solicitors’ Practice Rules, for a lawyer to enter into an arrangement to receive a contingency fee.”
May LJ declined to enter into a debate as to whether contingency fees were contrary to public policy. He held at page 600C: 
“In so far as public policy might enter the present debate, I agree with Schiemann LJ’s conclusion. I accept the general thesis in the judgment of Millett LJ in the Thai Trading case [1998] QB 781 that modern perception of what kinds of lawyers’ fee arrangements are acceptable is changing. But it is a subject upon which there are sharply divergent opinions and where I should hesitate to suppose that my opinion, or that of any individual judge, could readily or convincingly be regarded as representing a consensus sufficient to sustain public policy.”
24.	The 1990 Act was amended by the Courts and Legal Services Act 1999. 
25.	The Courts and Legal Services Act 1990 Section 58, as substituted by the 1999 Act, provided: 
“(1) A conditional fee agreement which satisfies all of the conditions applicable to it by virtue of this section shall not be unenforceable by reason only of its being a conditional fee agreement; but (subject to subsection (5)) any other conditional fee agreement shall be unenforceable.”
The Court of Appeal in Rees v Gatley Wareing [2015] 1 WLR 2179 which was concerned with whether an agreement was entered into in 2002 between client and solicitors was for contentious or non-contentious business. As was rightly acknowledged by counsel before me, Lewison LJ, with whose judgment Elias and McFarlane LJJ agreed, did not have to decide whether a conditional fee agreement which did not comply with the 1999 Act and the applicable Regulations was illegal or merely unenforceable. Lewison LJ observed at paragraph 53: 
“Section 58 authorises certain kinds of ‘conditional fee agreement’ and invalidates ‘any other conditional fee agreement’.”
26.	The basis upon which it was contended before me that the CFA was unlawful was that conditional fee agreements are contrary to public policy. It is only those which do not comply with the Regulations which are regarded as lawful. May LJ observed in 1999 that the modern perception of what kinds of lawyers’ fee arrangements are acceptable was changing. Such perception may well have changed in the sixteen years since the judgment in Geraghty & Co. Section 58(1) of the 1999 Act provides that conditional fee arrangements which do not comply with the Regulations are unenforceable. I recognise that this statutory provision does not necessarily preclude such CFAs from also being unlawful. However, having regard to the fact that their illegality would depend upon public policy, in the absence of any clear evidence of public policy on the issue at the material time, October 2003, I am not in a position to decide whether in general CFAs at that time were contrary to public policy and that is only those which complied with the Regulations were “islands of legality in a sea of illegality” as submitted by Mr Nicol. However, I have concluded that the decision as to whether the CFA in this case was illegal as well as unenforceable is not material to the determination of the preliminary issue in this case. 
Would a compromise of the costs claim by Mr Douglas against Jarvis plc have been enforceable? 
27.	In my judgment the answer to this question depends upon whether the judgment of DJ Smedley is to be treated as affecting the enforceability of the CFA from the date on which it was entered into or from the date upon which his judgment was delivered. 
28.	In a claim for breach of contract a party is, so far as is possible, to be put into the position he would have been in had the contract been performed. It is alleged that if the Defendant had performed his obligation under the Undertaking he would have notified the Claimant that Jarvis plc through their solicitors were challenging the validity of their CFA. It is said that the Claimant would then have instructed or authorised the making of an offer which would or may have been accepted.  
29.	In my judgment the enforceability of any compromise of the costs claim by Mr Douglas is to be assessed at the date it would or could have been entered into had the Defendant performed his obligation under the Undertaking. At that point there was an issue between Mr Douglas and Jarvis plc as to the enforceability of the CFA by reason of alleged non-compliance with Regulation 4. On the basis that the Defendant was negotiating with the solicitors for Jarvis plc in good faith and that there was a dispute over the enforceability of the CFA, a compromise of the claim for costs would be enforceable. In my judgment the costs claim by Mr Douglas against Jarvis plc is materially indistinguishable from that in Binder v Alachouzos [1972] 2 QB 151. In that case Lord Denning MR held at paragraph 158E: 
“In my judgment, a bona fide agreement of compromise such as we have in the present case (where the dispute is as to whether the plaintiff is a moneylender or not) is binding. It cannot be reopened unless the lender has taken undue advantage of the situation of the borrower.”
30.	It must be assumed that as a solicitor and officer of the court, the Defendant was negotiating with Jarvis plc in good faith and had a genuine belief that it was reasonably arguable that the CFA was enforceable. It is contended by the Claimant that if the Defendant had performed his obligation under the Undertaking it is likely that a compromise of the claim for costs would have been reached. 
31.	If the costs claim under the CFA was known by the Defendant to be invalid or not believed by him to be valid, Jarvis plc could seek to recover any sums paid under the compromise as made without consideration or under a mistake of fact. Similarly if a sum was paid in respect of CFA costs by Jarvis plc under a compromise, but Mr Douglas successfully challenged the Claimant’s entitlement to recover costs from him, Jarvis plc could seek to recover sums paid by them under a compromise of such claims. There could only be a bona fide claim for CFA costs if, under the indemnity principle, Mr Douglas was obliged to pay the Claimant. 
32.	As was made clear by Mr Jackson in paragraph 5 of his skeleton argument, the claim by the Claimant is founded in contract, based on the breach of the Undertaking. The Claimant’s cause of action accrued when the breach of contract took place. This was before the judgment of DJ Smedley. At that point in time, assuming the Defendant was negotiating with solicitors for Jarvis plc in good faith, in my judgment irrespective of whether at a later stage the CFA was adjudged to be unenforceable or illegal an enforceable compromise with Jarvis plc could have been reached. 
33.	If the Defendant had performed his obligation under the Undertaking there may have been no determination of the enforceability of the CFA in costs proceedings against Jarvis plc. If a compromise of those proceedings had been reached a judgment on the legality or enforceability of the CFA may only have been required if Mr Douglas challenged his obligation to pay costs under the CFA or if Jarvis plc contended that the Defendant had not conducted negotiations in good faith. Accordingly in my judgment whether the failure to comply with Regulation 4 rendered the CFA unenforceable as found by DJ Smedley or also illegal as contended by Mr Nicol, does not affect the claim for breach of contract which is to be determined on the facts at the date of the alleged breach. 
34.	However the assessment of quantum of damages for loss of the chance of a compromise of the claim for costs may be affected by a decision that the CFA was unenforceable. Even if there had been a compromise of the costs claim by Mr Douglas against Jarvis plc, the enforceability of the CFA could have been challenged by Mr Douglas or by Jarvis plc in the circumstances explained above. Questions of whether the Defendant gave full disclosure of the CFA to Jarvis plc, whether he believed the CFA to be enforceable when he was negotiating with Jarvis plc and whether he was under a professional obligation to notify Mr Douglas of the possibility of challenging his liability to pay costs under the CFA may arise. 
Answer to the Preliminary Issue 
35.	The Claimant may seek to recover damages for the loss of a chance to receive a sum from the paying party in respect of costs incurred under a CFA in respect of which no costs were recovered on detailed assessment in the claim by Mr Douglas against Jarvis plc in consequence of non-compliance with Regulation 4 of the Conditional Fee Regulations 2000 by reason of public policy or otherwise. The Claimant can pursue such a claim. Whether it succeeds will be determined at the trial of the claim by the Claimant against the Defendant.