At the consequentials hearing in the case of 4VVV Ltd & Ors -v- Nicholas Spence & Ors [2024] EWHC 3035 (comm) the defendants challenged the enforceability of any costs order or payment on account made against them.The claimants had instructed their solicitors under a Conditional Fee Agreements (CFA). The defendants argued that a failure to provide pre contractual information – a breach of  Regulation 13 -rendered the claimants' fee agreements unenforceable; and as such, the claimants were not liable to pay their solicitors, thus, under the indemnity principle, could not recover any legal costs against the defendants. 

Mr Justice Foxton found that while there was a breach, such breached did not invalidate the contracts and the CFAs were still enforceable. Specifically:

  1. Regulation 13(5) contemplates that the effect of non-compliance with parts of Regulation 13 will be that the consumer is not liable for particular costs arising under the contract. ‘This provision would be superfluous (and its limited scope positively misleading) if the effect of non-compliance with Regulation 13(1) was that there was no binding contract at all.’
  2. Regulation 14 focuses on electronic contracts and specifies remedies for breaches of certain obligations but does not state that all non-compliance nullifies the contract, except in narrowly defined circumstances.
  3. Regulation 18 implies that contracts remain binding despite non-compliance, allowing consumers to sue for breach of implied terms.
  4. Regulation 31 anticipates contracts being binding even if pre-contractual information is omitted, with remedies such as extended cancellation periods for consumers.

The judgment confirms that breaches of the regulations governing consumer contracts do not automatically invalidate CFAs

At the consequentials hearing in the case of 4VVV Ltd & Ors -v- Nicholas Spence & Ors [2024] EWHC 3035 (comm) the defendants challenged the enforceability of any costs order or payment on account made against them.The claimants had instructed their solicitors under a Conditional Fee Agreements (CFA). The defendants argued that a failure to provide pre contractual information – a breach of  Regulation 13 -rendered the claimants' fee agreements unenforceable; and as such, the claimants were not liable to pay their solicitors, thus, under the indemnity principle, could not recover any legal costs against the defendants. 

Mr Justice Foxton found that while there was a breach, such breached did not invalidate the contracts and the CFAs were still enforceable. Specifically:

  1. Regulation 13(5) contemplates that the effect of non-compliance with parts of Regulation 13 will be that the consumer is not liable for particular costs arising under the contract. ‘This provision would be superfluous (and its limited scope positively misleading) if the effect of non-compliance with Regulation 13(1) was that there was no binding contract at all.’
  2. Regulation 14 focuses on electronic contracts and specifies remedies for breaches of certain obligations but does not state that all non-compliance nullifies the contract, except in narrowly defined circumstances.
  3. Regulation 18 implies that contracts remain binding despite non-compliance, allowing consumers to sue for breach of implied terms.
  4. Regulation 31 anticipates contracts being binding even if pre-contractual information is omitted, with remedies such as extended cancellation periods for consumers.

The judgment confirms that breaches of the regulations governing consumer contracts do not automatically invalidate CFAs