The Court of Appeal has confirmed in Candey Ltd v Bosheh & Anor that a client who entered into a conditional fee agreement (CFA) with a solicitor, does not owe a duty of good faith to that solicitor. It also came to light that parties will not be prevented from keeping privilege in any case where false statements have been made to the court and their solicitor.
The Case
The claimant solicitors, Candey, entered into a CFA with one of the defendants in relation to ongoing fraud litigation. That litigation was settled by way of a ‘drop hands’ deal, with the effect that, under the terms of the CFA, Candey was not entitled to recover any of their costs. The solicitors then sought to recover their fees of over £3 million by bringing a number of claims against their former client, including one for deceit and for breach of a supposed duty of good faith for resolving the litigation under those terms. This claim heavily relied on confidential and privileged material from the underlying action.
The High Court held that the solicitors were not entitled to rely on the client’s confidential and privileged material and found that there was no implied duty of good faith owed by the client.
The Appeal
On appeal, the Court of Appeal upheld this finding. Under the CFA, the former client was not obliged to uphold a duty of good faith, nor was this the case under the ordinary retainer. In any case, this term was not breached by settling on more advantageous to themselves than the solicitors.
It also held that Candey could not rely on the iniquity exception to the legal professional privilege, which prevents a party from asserting privilege in relation to documents brought into circulation to further a fraud or crime. According to the Court of Appeal, even taking the solicitors’ case at its highest, the alleged false statements related back to the original fraud alleged against the clients. The case was not taken out of the ordinary run by a new or different fraud. If there was any dishonesty at this point, the case would remain inside the ordinary confines of the professional business matter of advising a client and following instructions. The Court, therefore, struck out as inadmissible the privileged material contained in Candey’s witness statements, exhibits and Particulars of the claim.
For all the latest news and insights into recent developments in the legal world, visit our blog.
