Plevin v Paragon Personal Finance Ltd [2017] UKSC 23

Following Mrs Plevin's successful PPI mis-selling claim, the Supreme Court considered whether her solicitors' success fee and ATE insurance premium remained recoverable after LASPO 2012, where the CFA and policy had been varied to cover appeals post-commencement. The court held they were recoverable.

Facts

Mrs Plevin had successfully appealed to the Supreme Court against Paragon Personal Finance Ltd in November 2014, with costs awarded in her favour. The assessed costs totalled £751,463.84, including a £31,378.92 success fee and a £531,235 ATE insurance premium, against a substantive recovery of only £4,500.

Mrs Plevin’s solicitors, Miller Gardner, had entered into a Conditional Fee Agreement (CFA) with her on 19 June 2008, supported by an After the Event (ATE) insurance policy concluded on 29 October 2008. The firm underwent two organisational changes: in July 2009 it became an LLP, and in April 2012 it transferred its business to a limited company. The CFA was varied by deeds in August 2013 and January 2014 to cover the Court of Appeal and Supreme Court proceedings respectively. The ATE policy was correspondingly “topped up” after LASPO came into force on 1 April 2013.

Paragon applied under Rule 53 of the Supreme Court Rules 2009 for review of the costs assessment on two grounds of principle.

Issues

Three issues arose:

1. Whether the CFA had been validly assigned to the successive Miller Gardner entities, such that there was an effective retainer when Supreme Court costs were incurred.
2. Whether the success fee was recoverable under the transitional provisions of section 44(6) of LASPO 2012, given that the deeds of variation extending the CFA to the appeals were executed after the commencement day.
3. Whether the ATE premium was recoverable under section 46(3) of LASPO 2012, given that the top-up amendments to the policy were made after the commencement day.

Arguments

Paragon’s submissions

On assignment, Paragon argued that the transfer agreements only conveyed “Work in Progress” meaning partly completed work to the transfer date, and did not validly transfer the CFA to the successor entities. On the success fee, Paragon contended that the deeds of variation were new agreements entered into after 1 April 2013 for litigation services to be provided after that date, falling outside section 44(6). On the ATE premium, Paragon argued that the trial and the appeals constituted distinct “proceedings” for the purposes of section 46(3), so that no pre-commencement policy existed in relation to the appeal proceedings.

Mrs Plevin’s submissions

Mrs Plevin contended that the transfer agreements plainly intended to transfer the business as a going concern, and in any event the successor firms confirmed continuation on the same terms. She argued the deeds of variation were genuine amendments to the subsisting CFA, related to the same underlying “matter”. She submitted that “proceedings” in section 46(3) included the entire action through all levels of the court hierarchy.

Judgment

Assignment of the CFA

Lord Sumption (with whom Lady Hale, Lord Clarke, Lord Carnwath and Lord Hodge agreed on this point) held the assignment argument had no merit. Clause 2.1 of the 2009 transfer agreement transferred work in progress “to the intent that the Buyer shall from the Transfer Date carry on the Business as a going concern.” Paragon’s restrictive interpretation would have left clients with only a defunct shell firm. In any event, Mrs Plevin had assented to continuing instruction on the same terms after each transfer.

Recoverability of the success fee

Lord Sumption held that “the matter that is the subject of the proceedings” in section 44(6) referred to the underlying dispute. The deeds of variation related to the same underlying dispute, albeit at appellate stages. Applying the test in Morris v Baron & Co [1918] AC 1, the deeds varied rather than discharged and replaced the original CFA. The CFA still subsisted, the deeds were expressly described as variations, and only the coverage and success fee amount were altered. There was no “artificial device” to circumvent LASPO.

Recoverability of the ATE premium

The majority observed that while trial and appeals are treated as distinct proceedings for awarding and assessing costs (citing Masson, Templier & Co v De Fries [1910] 1 KB 535; Wright v Bennett [1948] 1 KB 601; Hawksford Trustees Jersey Ltd v Stella Global UK Ltd (No 2) [2012] 1 WLR 3581; and Gabriel v BPE Solicitors [2015] AC 1663), the meaning of “proceedings” depends on statutory context. In ordinary language, proceedings are brought in support of a claim and continue until that claim is finally disposed of at whatever judicial level.

The purpose of the LASPO transitional provisions was to preserve vested rights and expectations arising under the previous law. A claimant who succeeds at trial and becomes respondent to an appeal is “locked into the litigation” and must defend the judgment to retain its fruits. To deny recovery of top-up premiums would retrospectively alter the balance of risks on which the litigation was begun.

Lord Sumption addressed the difference in language between section 44(6) (“the matter that is the subject of the proceedings”) and section 46(3) (“the proceedings”). The presumption that different wording reflects different meaning is weaker than the presumption of consistent usage and was displaced here: “matter” was used in section 44(6) because solicitors’ retainers commonly extend beyond litigation services, whereas costs insurance policies are inherently linked to specific litigation. No rational reason existed for limiting transitional protection in section 46(3) to a particular litigation stage.

Lord Hodge’s dissent

Lord Hodge agreed on assignment but dissented on the transitional provisions. He considered that both provisions were designed to protect only the pre-existing contractual rights and expectations as they stood at commencement day. If the pre-existing CFA or policy did not cover appellate stages, the transitional protection should not extend to subsequent variations or top-ups. He acknowledged the unfairness to a successful claimant forced to defend an appeal without the benefit of cover, quoting Macbeth, but found that the words Parliament used did not support a broader interpretation.

Implications

The decision confirms that where ATE cover and a CFA were in place for trial before 1 April 2013, subsequent amendments and top-ups extending cover to appeals continue to attract recoverability under the pre-LASPO costs regime. The judgment provides authoritative guidance on the construction of the LASPO transitional provisions, particularly section 46(3), and clarifies that “proceedings” in that subsection embraces the litigation as a whole, not merely a single stage.

The judgment is significant for litigants and insurers dealing with legacy CFA and ATE arrangements, particularly where successful claimants must defend judgments on appeal. It recognises the practical reality that a successful claimant cannot easily abandon litigation without forfeiting their judgment, and ensures the transitional regime is not undermined by appellate stages occurring after commencement.

The court also affirmed orthodox principles on contractual variation versus discharge (per Morris v Baron & Co), and confirmed that genuine variations of subsisting agreements take effect according to their terms, not as fresh contracts. The decision is closely tied to its statutory context, and Lord Hodge’s dissent highlights that the textual differences between sections 44(6) and 46(3) remain a matter on which reasonable judicial minds may differ.

Verdict: Paragon’s application for review of the costs assessment was dismissed by majority (Lord Hodge dissenting on the transitional provisions). The Supreme Court confirmed the assessment of the costs judges, holding that the CFA had been validly continued through the successor firms, the success fee was recoverable under section 44(6) of LASPO, and the ATE premium was recoverable under section 46(3) of LASPO.

Source: Plevin v Paragon Personal Finance Ltd [2017] UKSC 23