Does it matter where a CFA is signed?

The answer to the title question is yes…but only to CFAs incepted between 1 October 2008 and 13 June 2014. The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008 (“the Regulations”) were introduced to protect consumers from the sales pressure that might be experienced during perceived “doorstep-selling”.

A Paying Party should check the date the CFA was entered and, if applicable, question whether the CFA complies with the 2008 Regulations – specifically the requirement of the trader to give the consumer written notice of his right to cancel the contract within a specified seven day cancellation period on the date the CFA was signed. (Regulations 5 and 7(2)). A failure to provide a written cancellation notice makes the CFA unenforceable (Regulation 7(6)).

In the absence of a written notice of cancellation of a CFA that is signed at home, the Receiving Party may not recover costs from the Paying Party.

The implications of failing to provide sufficient notice were recently considered in the Court of Appeal, by Lord Justice Longmere, Lord Justice Underhill and Lady Justice Sharp, in the matter of Cox v Woodlands Manor Care Home Limited, on 27 January 2015.

Facts of the Case

Ms Cox received a home visit from her preferred solicitors. Although she had legal expenses insurance under her home insurance policy she was advised by her preferred solicitors that the insurer might require her to use a panel firm prior to the issue of proceedings. During that meeting she signed a CFA, however, no written notice of her right to cancel the agreement was provided.

Ms Cox applied for funding from her legal expense insurer. The exact limitations of the legal expenses insurance policy were not communicated to Ms Cox until after the Letter of Claim was sent to the defendant. Ms Cox’s preferred solicitors, who were not a member of the insured’s panel, then wrote to Ms Cox stating that they would continue to act for her under the terms of the CFA.

Ms Cox recovered £100,000 in damages plus an entitlement to costs, however, upon consideration of Ms Cox’s CFA the defendant questioned the recoverability of Ms Cox’s costs on the basis that the CFA did not comply with the 2008 Regulation as written notice of cancellation was not provided. The defendant, therefore, challenged the recoverability of costs.

At the first detailed assessment, Ms Cox’s solicitors submitted evidence stating that the intention was for the CFA only to come into effect once the relevant funding enquiries had been completed. A letter sent to the claimant stating that the funding enquiries were complete and that they would continue to act under the terms of the CFA was disclosed. District Judge Britten accepted the evidence and held that the CFA between Ms Cox and her solicitors did not come into account until the solicitors completed the funding enquiries in relation to potential legal expenses insurance. Accordingly, the 2008 Regulation did not apply.

The defendant appealed the decision. HHJ Denyer QC granted the appeal and held that the District Judge had erred to find that the CFA came into effect at any date other than the date that it has been signed.

Ms Cox’s solicitors appealed to the Court of Appeal and, after initially being denied, was granted permission to appeal following an oral hearing. Nevertheless, the Court of Appeal upheld the decision of HHJ Denyer QC. It was found that the solicitors’ failure to adhere to regulation 7 was fatal to the enforceability of the CFA. The defendant was therefore not required to settle any costs under the CFA and Ms Cox was under no obligation to pay her solicitors. Also, the fact that a CFA may cease to operate at a later stage because of a future event does not prevent the agreement from having been ‘made’ within the meaning of the 2008 Regulations.

Keoghs Comment

The Regulations were superseded by the Consumers Contracts (Information, Cancellation and Additional Charges) Regulations 2013 and so they only apply to CFAs incepted between 1 October 2008 and 13 June 2014.

However, if a CFA was incepted between 1 October 2008 and 13 June 2014 then it is worth noting where it was signed. lf it was signed at home, then the Cox point is valid if the receiving solicitor cannot produce the written notice required to be given under regulation 7(2).