High Court rules that breach of distance selling regulations does not make a CFA unenforceable.
Solicitors must always make sure that their retainers with their clients are enforceable.
Recently, the High Court had occasion to consider the validity of contracts between a solicitor and their client, in the matter of 4VVV Ltd & Ors v Spence & Ors[2024] EWHC 3035 (Comm).
Historically, failure to comply with the regulations on contracts made either in the home, workplace or at a distance had potentially resulted in catastrophic costs consequences for solicitors. In the matter of Cox v Woodlands Manor Care Home Ltd [2015] EWCA Civ 415, the Court of appeal considered a CFA entered into between a solicitor and their client. The Cancellation of Contacts made in a Consumer’s Home or Place of Work etc Regulations 2008 applied at the time the CFA was entered into. The Court found that the CFA was entered into at the client’s home. No written notice of the client’s right to cancel was given to the client by the solicitor, and as a result the Court found that this failure to comply with the regulations made the CFA unenforceable, leaving the solicitor with no costs.
From 13 June 2014 the Consumer Contracts Regulations 2013 replaced both the Consumer Protection (Distance Selling) Regulations 2000 and the Cancellation of Contacts made in a Consumer’s Home or Place of Work etc Regulations 2008. The new regulations set out, at regulation 13, steps that must be taken and the details that must be provided to the client before making a distance contract.
In 4VVV Ltd, the Claimants’ conceded that there was arguably a failure to comply with regulation 13. The High Court found that the words “Before the consumer is bound by a distance contact” within the regulations “simply define the time for performance of the trader's obligation, with the consequences of non-compliance being addressed in other ways.” Compliance with regulation 13 is not a pre-condition to the conclusion of a binding contract. The effect of the breach is simply to extend the cancellation period by 12 months, instead of the minimum 14 days.
This decision does not mean that solicitors can afford to be cavalier about complying with the regulations: far from it. If the cancellation period is extended to 12 months, then it is possible for a client to cancel the contract after significant costs have already been incurred, with the consequent loss of up to 12 months costs. Solicitors must continue to exercise proper diligence and must ensure that they continue to give their clients the best possible advice in respect of costs and funding. However, it does seem to be the case that a failure to comply with the later Regulations will not automatically render a solicitor’s contract with their client unenforceable. The court will now look for an alternative sanction to protect the consumer, which is a welcome development for practitioners.
