Court of Appeal Confirms Retrospective Effect Of CFA Despite Lack Of Express Term

MOHINDER SINGH & ORS V DAVID INGRAM (IN HIS CAPACITY AS THE LIQUIDATOR OF MSD CASH AND CARRY PLC) [2025] EWCA Civ 264

In Mohinder Singh & Ors v David Ingram, the Court of Appeal considered the retrospective effect of a CFA between a liquidator and his solicitors, Boyes Turner LLP. The case arose from litigation concerning allegations of void dispositions and fraudulent conduct by former directors of MSD Cash and Carry PLC. The key issue was whether the CFA, signed in March 2015, could retrospectively cover legal work performed since March 2012. Both the Costs Judge and High Court had previously determined the CFA was retrospective. The Court of Appeal, led by Lord Justice Coulson, comprehensively rejected the appellants’ challenge, finding that the CFA’s wording clearly demonstrated retrospective intent. The court emphasised that there is no legal requirement for a CFA to explicitly use the word “retrospective” and that ordinary principles of contractual interpretation should apply.

“The CFA was concerned primarily with the work – the work by BT – which it covered. Clause 2.1 provided that the work that was covered was BT’s work on the Claim. The Claim was defined as the respondent’s claim against the appellants which had been in existence since before the CFA was agreed. No division was made […] on its face, the CFA covered all the work done and to be done in respect of the Claim.”

Citations

Woods v Capita [2017] AC 1173 The proper construction of a commercial contract required consideration of the words used in their contractual context and factual background, applying an objective standard. Lukoil Asia Pacific (PTE) Ltd v Ocean Tankers (PTE) Ltd (“Ocean Neptune”) [2018] EWHC 163 (Comm) The court’s task in contractual interpretation was to ascertain the objective meaning of the language used, considering the contract as a whole and, where appropriate, preferring the construction consistent with business common sense. Birmingham City Council v Forde [2009] EWHC 12 A conditional fee agreement could have retrospective effect, as solicitors and their clients were entitled to make agreements covering work already carried out. Motto v Trafigura [2011] 1 WLR 657 In the absence of a clear contractual term to the contrary, a solicitor-client agreement naturally presumed payment for future work rather than for work already done. Holmes v Alfred McAlpine Homes (Yorkshire) Ltd [2006] 3 Costs LR 466 For a contract to be backdated effectively, it required an express provision stating that it applied to work undertaken from a prior date. Northern & Shell PLC v John Laing Construction Ltd [2002] EWHC 2258 (TCC) A contract’s retrospective effect could be established by implication where the context demonstrated an intention to cover past work. Garbutt v Edwards [2005] EWCA Civ 1206 A solicitor’s breach of professional conduct rules did not automatically render the retainer unenforceable, nor did it relieve a paying party of their obligation to pay reasonable costs. Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101 Evidence of the factual matrix was admissible to clarify contractual meaning, but it could not contradict or override the express contractual wording. Tartsinis v Navona Management Co [2015] EWHC 57 (Comm) Comparisons with other contracts were of limited assistance in determining the construction of a particular contract, as each agreement was interpreted within its own specific factual context.

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Key Points

A Conditional Fee Agreement (CFA) may have retrospective effect if its wording expressly or clearly provides for such retrospectivity, and no special wording is required for this purpose. [19, 28-29]
The construction of a CFA follows general principles of contractual interpretation, with the court considering the words used in the context of the agreement as a whole, and in light of the factual matrix known to the parties at the time of the contract. [13, 29]
A solicitor’s breach of regulatory duties, such as failing to advise a client on the retrospective effect of a CFA, does not affect the enforceability or proper interpretation of the agreement. Any such breach may be a matter for regulatory scrutiny but does not provide grounds for avoiding contractual cost liabilities. [22-24, 29]

The existence of a prior retainer does not prevent a subsequent CFA from having retrospective effect, provided the CFA expressly or clearly covers prior work. [26, 156-161]
A CFA that defines the relevant claim or proceedings in terms that include earlier legal work can be interpreted as applying to work completed before the formal agreement was executed, unless the language expressly indicates otherwise. [29, 178-179]

“The Costs Judge’s conclusion as to the construction of the CFA can be found at [178]-[179] in these terms: ‘Further, “the Claim” is referenced under the definition for “Basic Charges”, which “means the charges of [Boyes Turner] for the work done by [Boyes Turner] for the Client in relation to the ‘Claim’ as reflected in [Boyes Turner’s] standard terms of engagement letter…”. I note that in direct contrast with counsel’s earlier CFA, there is no express term that the solicitor CFA covers only work which post-dates the CFA, and there is no reference to work ‘to be’ done. The CFA simply permits remuneration for work done by the solicitor where that work relates to the ‘Claim’, with no distinction drawn between past work and future work.’”

Key Findings In The Case

The Conditional Fee Agreement (CFA) was found to be retrospective in nature, as it expressly covered all legal work done by Boyes Turner (BT) on the Claim, dating back to 30 March 2012, without distinguishing between past and future work. [29, 178-179]
The respondent, Mr Ingram, always understood the CFA to be retrospective, in line with prior similar arrangements with BT, where legal fees were dependent on the realisation of assets in insolvency cases. [161, 167]
The existence of earlier contractual retainers between the respondent and BT, dating from 2011 and 2012, did not preclude the later CFA from having retrospective effect, as was intended by the parties. [156-161]

While there was a prior oral agreement that BT’s charges could be waived or reduced if no assets were realised, this could not constitute a valid CFA as CFAs must be in writing. The written CFA superseded any informal prior arrangements. [157, 179]
Although the appellants argued that BT failed to advise the respondent about the retrospective effect of the CFA, this did not affect its enforceability. Any such failure, if it occurred, was a possible regulatory breach but did not alter the contract’s binding effect. [22-24, 29]

“Mr Ingram’s evidence is that at all stages he as the Claimant understood the written CFA would be retrospective and that this was consistent with previous instructions of Boyes Turner, and consistent with a common pattern of work undertaken in insolvency cases where the instructed solicitor risked going unpaid or underpaid if assets in the insolvency could not be sufficiently realised”

Background

In 2015, David Ingram, acting as the liquidator of MSD Cash and Carry PLC, initiated proceedings against former directors and associates of the company, alleging misappropriation of assets. The appellants had allegedly engaged in deceitful practices, such as void dispositions and false credit notes, which were intended to diminish the assets available to the respondent. His Honour Judge Hodge KC, presiding over the original trial, rendered a judgment strongly against the appellants. The appellants were depicted as dishonest and deceitful witnesses, resulting in adverse findings documented in the judgment, ([2018] EWHC 1325 (Ch)).

Subsequently, Judge Hodge KC ordered the appellants to pay the respondent’s costs on an indemnity basis. This order was predicated on the appellants’ conduct, which was deemed highly inappropriate for standard commercial litigation, ([2018] EWHC 4033 (Ch)). The assessment of costs involved a contentious process requiring multiple hearings. Central to the dispute was the validity and scope of a Conditional Fee Agreement (CFA) established between the respondent and his solicitors, Boyes Turner LLP (BT) on 24 March 2015. The Costs Judge, Nagalingam, dealt with numerous aspects over seven hearings.

At the fifth hearing on 20 September 2021, the Costs Judge addressed whether the CFA had retrospective effect. This determination involved examining the agreement’s text and considering detailed testimonies from the respondent and Mr Branson, a former solicitor at BT. On 3 December 2021, the Costs Judge concluded the CFA was indeed retrospective, relying on the operative wording of the CFA and the historical professional relationships, ([SCCO ref: PN1904239]). Subsequently, the appellants unsuccessfully appealed this decision before Lavender J in the High Court, ([2023] EWHC 3488 (KB)). The appellants then advanced a second appeal focusing exclusively on the issue of the CFA’s retrospectivity, bringing the case to the Court of Appeal.

Costs Issues Before the Court

The primary issue before the Court of Appeal was whether the CFA agreed upon in March 2015 between the respondent, as the liquidator of MSD Cash and Carry PLC, and Boyes Turner LLP, had retrospective effect. If retrospective, the CFA would authorise BT to claim fees for work undertaken prior to the formal adoption of the CFA, dating back to March 2012. The appellants challenged the legitimacy of this retrospectivity, arguing that the agreement did not explicitly or implicitly cover past services.

The Parties’ Positions

The appellants contended that the CFA was not retrospective, grounding their argument on several points:

The CFA lacked an express term providing for retrospective application.
The Costs Judge purportedly failed to weigh properly or consider pertinent factual matrix aspects, such as previous retainer agreements and the asserted absence of commercial imperative for retrospectivity.
Submissions emphasised regulatory duties, suggesting Boyes Turner LLP breached its obligations by not clearly informing the respondent that the CFA would cover past work.

The respondent countered, asserting that the CFA indeed intended to encompass work performed from March 2012 onwards. Key positions included:

The clear language within the CFA, specifying it covered all work on the Claim as defined from the date of initial engagement in March 2012.
The historical relationship and understanding between the parties, particularly between the respondent and Mr Branson, which supported a pattern of retrospective agreements in similar insolvency cases.
Submissions referenced statutory provisions that allow retrospective agreements and previous case law affirming such contractual scopes.

The Court’s Decision

The Court of Appeal upheld the decisions of the Costs Judge and Lavender J, concluding that the CFA was retrospective. The analysis focused on several foundational factors:

Contractual Interpretation: The court reaffirmed established principles of contractual interpretation, emphasising the importance of clear language and context. Clause 2 and Clause 4 of the CFA explicitly included the definition of “the Claim” as covering work from the initial engagement date of March 2012. The court found that the terminology used in the CFA, when read with the applicable definitions, conveyed a clear intent of retrospective effect.
Statutory Provisions: Under Section 59 of the Solicitors Act 1974, CFAs may validly encompass past work. The court referenced statutory authorisation allowing such retrospective effect, supported by case law examples where courts recognised validity in CFAs covering prior work.
Fact Matrix and Commercial Sense: The historical context and professional relationship between the respondent and his solicitors. The understanding and conduct of both parties evidenced consistent practices concerning retainer agreements and retrospective coverage in insolvency cases. The court accepted these factual elements as reinforcing the CFA’s retrospective coverage of work.
Regulatory Duties and Client Awareness: The appellant’s argument on regulatory non-compliance did not establish grounds affecting the CFA’s interpretation. The court reiterated that alleged breaches of professional obligations were primarily matters for regulatory scrutiny and did not impinge on contractual terms agreed upon understanding their retrospective intent. The respondent’s comprehension and consistent practice of retrospective agreements further nullified concerns about uninformed consent.

Consequently, the appeal against the retrospective application of the CFA was dismissed.

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