Before:

 

	Lord Justice Brooke:
	This is the judgment of the court to which each of us has contributed.
	1. Conditional Fee Agreements: the History
	(i) The Courts and Legal Services Act 1990Acts
1.	Until Parliament intervened by legislation in 1990 it was always considered to be contrary to public policy, and therefore unlawful, in this jurisdiction for the financial reward which a lawyer received for his services in connection with litigation to vary depending on the outcome of the litigation.
2.	In 1988 the Report of the Review Body on Civil Justice (1988, Command Paper 394, at paras 384 to 389) encouraged the Lord Chancellor to re-examine the prohibition on what it described as "contingency fees and other forms of incentive scheme". In 1989 the government took this suggestion forward, first in a Green Paper and then in a White Paper later that year. These developments led in turn to the enactment of the Courts and Legal Services Act 1990Acts ("the 1990 Act"). In section 58 of that Act Parliament decided to permit conditional fee agreements ("CFAs") in relation to the provision of advocacy or litigation services in certain narrowly prescribed circumstances.
3.	This section provided the enabling machinery. It was brought into force in July 1993. Two years later CFAs became lawful for the first time. They could only lawfully be made in connection with one or other of the six types of legal proceedings mentioned in article 2(1) of the Conditional Fee Agreements Order 1995 ("the 1995 Order"). They also had to comply as to form with the Conditional Fee Agreements Regulations 1995 ("the 1995 Regulations").
4.	When he sought approval of the 1995 Order in the House of Lords (HL Hansard, 12 June 1995, p 1544) the then Lord Chancellor said that the whole purpose of permitting conditional fees in these cases was to extend access to justice. He also wished to increase consumer choice. He had sought to balance the need for clients and solicitors to be free to reach an agreement which reflected their mutual interests according to individual circumstances with the need for a framework which provided appropriate protection for the client. His aims could not be achieved by stifling the scheme with over-regulation.
5.	Against this background the 1995 regulations were comparatively simple. In short, a lawful CFA had to be in writing and state:
	"(a)  the particular proceedings or parts of them to which it relates …;  (b)   the circumstances in which the legal representative's fees and expenses … are payable;  (c)   what, if any, payment is due –     (i)  upon partial failure of the specified circumstances to occur;  (ii)  irrespective of the specified circumstances occurring; and  (iii)  upon termination of the agreement for any reason;  (d)   the amount payable in accordance with sub-paragraphs (b) or (c) above or the method to be used to calculate the amount payable; and in particular whether or not the amount payable is limited by reference to the amount of any damages which may be recovered on behalf of the client." (regulation 3)
6.	The agreement also had to state that immediately before it was entered into the legal representative had drawn the client's attention to the four matters specified in regulation 4(2). One of these matters related to the circumstances in which the client might be liable to pay the fees and expenses of the legal representative in accordance with the agreement (regulation 4(2)(b)).
7.	In those days legal aid was available for those of limited means for a much wider range of legal proceedings than it is today. Although the 1995 Order prescribed that fees might be increased (in the event of success) to a maximum of 100%, the Law Society encouraged its members to limit the amount they actually recovered by way of success fee to 25% of the damages recovered. It was not possible between July 1995 and April 2000 for a successful client to recover her solicitor's success fee from the other side. We have been advised by our assessor (see para 43 below) that solicitors for the most part accepted the Law Society's recommendations.
8.	In 1998 a new Conditional Fee Agreements Order repealed the 1995 Order. This made CFAs permissible in all proceedings other than criminal proceedings and the family proceedings specified in section 58(10) of the 1990 Act. By a parallel development litigants were being encouraged to obtain legal expenses insurance to protect them from costs orders in favour of the other party if they were unsuccessful. Here, too, they were not able to recover the premium they paid for such insurance from the other party by way of costs if they were successful in the litigation.
	(ii) Three forces at work in the late 1990s
9.	In the closing years of the last century three forces were at work in parallel with the civil justice reforms associated with Lord Woolf's name which led from his final report on Access to Justice in 1996 through the Civil Procedure Act 1997Acts to the implementation of the Civil Procedure Rules in April 1999. These three forces were characterised by a greater willingness to look critically at the old shibboleths which used to prohibit any kind of "contingency fee agreement"; a feeling that more should be done by way of consumer protection for clients who found themselves saddled with financial commitments they did not anticipate when they entered into one of the new CFAs; and the government's desire to move with all reasonable speed towards a radical reform of the demand-led state-funded arrangements for both legal advice and legal aid in litigation.
10.	As to the first of these forces, in February 1998 this court decided the case of Thai Trading Co v Taylor [1998] QB 781. A solicitor had agreed with his wife in March 1993 that he would act for her in litigation on the understanding that he would only recover his profit costs if she succeeded in the action. Millett LJ, with whom Kennedy and Hutchison LJJ agreed, held that this agreement did not offend public policy. He distinguished this type of agreement from a contingency fee agreement which entitled a solicitor to a reward over and above his ordinary profit costs if he won. The latter was an arrangement which had always been condemned by English courts as tending to corrupt the administration of justice.
11.	The Solicitors' Practice Rules 1987 provided that a solicitor engaged in any contentious business might not enter into any arrangement to receive a contingency fee (being defined as a fee payable only in the event of success in the proceedings). Millett LJ, however, was of the view that the fact that a professional rule prohibited a particular practice did not of itself make the practice contrary to law. In saying this he overlooked the decision of the House of Lords in Swain v The Law Society [1983] 1 AC 598 where it was made clear that the Solicitors' Practice Rules had the force of a statute, being rules made by the Council of the Law Society with parliamentary sanction for the protection of that section of the public who might be in need of legal advice, assistance or oversight. Indeed, failure to comply may result in a complaint to the Solicitors Disciplinary Tribunal (Solicitors Act 1974, s 31(2)).
12.	In November 1998 the Divisional Court in Hughes v Kingston upon Hull City Council [1999] QB 1193 declined to follow the Thai Trading decision for this reason. This court had not, however, pronounced on the matter when what was to become the Access to Justice Act 1999 ("the 1999 Act") was going through Parliament. Parliament decided to put the position beyond doubt when it provided in section 27 of that Act that a new section should be substituted for the existing section 58 of the 1990 Act, and that it should say in terms that:
	"(1)   A conditional fee agreement which satisfies all of the conditions applicable to it by virtue of this section shall not be unenforceable by reason only of its being a conditional fee agreement; but … any other conditional fee agreement shall be unenforceable."
13.	Rule 8 of the Solicitors' Practice Rules 1990, as amended, now provides that:
	"(1)   A solicitor who is retained or employed to prosecute or defend any action, suit, or other contentious proceedings, shall not enter into any arrangement to receive a contingency fee in respect of that proceeding, save one permitted under statute or by the common law." (Emphasis added)
14.	The words we have emphasised were added in January 1999, following the Thai Trading decision. The inclusion of the last five of them soon proved to be unnecessary. In November 1999 this court finally put to rest any lingering confusion. In Awwad v Geraghty & Co [2001] QB 570 it refused to follow Thai Trading and made it clear that there would no longer be any common law developments in this field. Now that Parliament had modified the law which had prohibited all arrangements for receiving a contingency fee in relation to litigation services, there was no room for the court to go beyond that which Parliament had now permitted (per May LJ, with whom Lord Bingham of Cornhill CJ agreed, at p 600D-E).
	(iii) The Access to Justice Act 1999
15.	In the meantime the Lord Chancellor had initiated a public debate about the ways in which alternative methods of funding litigation and access to justice might be taken forward, particularly in the light of the pending withdrawal of legal aid from a wide field of litigation. During 1998 this debate was triggered off by the publication of a consultation paper in March and the publication of the responses to that consultation four months later. The debate then flowed into Parliament, and in July 1999 the 1999 Act was enacted. Part I created the arrangements for the new Legal Services Commission, and Part II, which is of concern on these appeals, is entitled "Other Funding of Legal Services".
16.	It is unnecessary for the purposes of this judgment to consider the whole of the new arrangements. This court has in any event already covered much of the ground in its judgment in Callery v Gray (No 1) [2001] EWCA Civ 1117(Bailii) at [10]–[13]; [2001] 1 WLR 2112, and in the more detailed examination that followed this passage in that judgment. For present purposes it is sufficient to concentrate only on section 27 of the 1999 Act, which is headed "Conditional Fee Agreements".
17.	The method by which Parliament chose to proceed was by repealing section 58 of the 1990 Act and substituting two new sections, 58 and 58A. This parliamentary device meant that these new provisions found themselves in Part II of the 1990 Act, which takes its signature tune from its opening sub-section. This provides, so far as is material, that:
	"17   (1)   The general objective of this Part is the development of legal services in England and Wales (and in particular the development of … litigation … services) by making provision for new or better ways of providing such services and a wider choice of persons providing them, while maintaining the proper and efficient administration of justice."
18.	We have already recited the substituted section 58(1) in full (see para 12 above). Section 58(2) makes it clear that for the purposes of this legislation a CFA is an agreement with a person providing advocacy or litigation services which provides for his fees and expenses, or any part of them, to be payable only in specified circumstances (section 58(2)(a)). This covers the Thai Trading type of agreement. Further, a CFA provides for a success fee if it provides for the amount of any fees to which it applies to be increased, in specified circumstances, above the amount which would be payable if it were not payable only in specified circumstances (section 58(2)(b)). Sections 58(4) and 58(5) make further provision with which we need not be at present concerned.
19.	Section 58(3) and section 58A(3), on the other hand, lie close to the heart of the matters we have to decide. Section 58(3) provides:
	"(3)  The following conditions are applicable to every conditional fee agreement –     (a)   it must be in writing;  (b)   it must not relate to proceedings which cannot be the subject of an enforceable conditional fee agreement; and  (c)   it must comply with such requirements (if any) as may be prescribed by the Lord Chancellor."
20.	Section 58A(3), for its part, provides:
	"(3)   The requirements which the Lord Chancellor may prescribe under section 58(3)(c) –     (a)   include requirements for the person providing advocacy or litigation services to have provided prescribed information before the agreement is made; and  (b)   may be different for different descriptions of conditional fee agreements (and, in particular, may be different for those which provide for a success fee and those which do not)."
21.	It will be seen that the general effect of these two sections, situated in a part of the statute which promotes the parliamentary purpose of making provision for new or better ways of providing litigation services, is to "legalise" by virtue of section 58(1) any CFA which satisfies all the conditions applicable to it. If a CFA does not satisfy all these conditions it will be unenforceable.
	(iv) The indemnity principle
22.	Defendant liability insurers, who have viewed with disfavour the increased financial burden imposed on them by a combination of the "front-end loading" of the Woolf reforms and the new liability to pay ATE premiums and success fees to successful claimants pursuant to other provisions contained in Part II of the 1999 Act, have seized the opportunity of challenging the enforceability of many CFAs by pointing to breaches of one or more of the "conditions applicable to it". They argued that, even if they only succeeded in establishing a single breach, they could escape liability to pay any of the costs (and possibly also the disbursements) that were referable to the unenforceable CFA. In other words, it is not only the solicitor's success fee which is at risk, but the cost of all the solicitor's services (or the services of counsel, if rendered under an enforceable CFA), which may on occasion run to many thousands of pounds.
23.	Liability insurers were able to take this course through the operation of the indemnity principle (for which see Harold v Smith 5 H&N 381, 385; Gundry v Sainsbury [1910] 1 KB 645, 649 and 653; and General of Berne Insurance Co Ltd v Jardine Reinsurance Management Ltd [1998] 1 WLR 1231). This common law principle, by which a paying party cannot be ordered to pay a receiving party more by way of costs than the receiving party is himself liable to pay, is now enshrined in statute, so far as solicitors are concerned, by section 60(3) of the Solicitors Act 1974Acts which provides:
	"A client shall not be entitled to recover from any other person under an order for the payment of any costs to which a contentious business agreement relates more than the amount payable by him to his solicitor in respect of those costs under the agreement."
24.	In 1999 Parliament showed itself well aware of the possible application of the indemnity principle in the context of the reforms it introduced in the 1999 Act, because by section 31 it provided that:
	"In Section 51 of the Supreme Court Act 1981ActsActs (costs) in subsection (2) (rules regulating matters relating to costs) insert at the end 'or for securing that the amount awarded to a party in respect of the costs to be paid by him to such representatives is not limited to what would have been payable by him to them if he had not been awarded costs'."
	This section, however, has not yet been brought into force. (It will be noticed that these two sections state the principle in different ways, but that need not concern us for the purposes of these appeals.)
	(v) Concerns about consumer protection
25.	In the autumn of 1999, therefore, the way was clear for the Lord Chancellor to prepare new regulations pursuant to the substituted section 58(3) of the 1990 Act. In the meantime there had been two significant developments in relation to matters of consumer protection (the second of the forces we mentioned in para 9 above). The first was the publication by the Law Society in September 1999 of the Solicitors' Costs Information and Client Care Code ("the Client Care Code"). The other was the publication of a research study by Stella Yarrow and Pamela Abrams, funded by the Nuffield Foundation, entitled "Nothing to lose? Clients' experiences of using conditional fees".
26.	The effect of the Client Care Code was to require solicitors to be much more open in the way they explained to their clients their methods of charging for their services and the potential liabilities their clients might face. "Costs information" was to be given to the client at the outset of any matter, and also at appropriate stages thereafter, and any information given orally was to be confirmed to the client in writing as soon as possible.
27.	The Yarrow and Abrams study provided a snapshot of the experiences of 40 clients and 20 solicitors under the CFA regime that was introduced in 1995. It will be remembered that under this regime clients had to pay their solicitor's success fee out of the damages they recovered (subject to the 25% cap on such recovery which was recommended by the Law Society). This study revealed a considerable degree of ignorance among clients about the ways CFAs worked. Most of them had not been involved in litigation before, and the expression "no win, no fee" could lead to false expectations that no other costs were involved. The authors felt that the 1995 Regulations did not set out in sufficient detail solicitors' obligations to inform clients. Although they were aware of the introduction of the Client Care Code it was yet to be seen what impact this would have.
28.	It was in this climate that the Lord Chancellor issued a new consultation paper in September 1999 entitled "Conditional Fees: Sharing the Risks of Litigation". Three of the questions posed in that paper were whether a solicitor should be under an obligation to explain a CFA to the client in addition to providing written information about it; whether he should be required to discuss with the client the desirability of insurance cover in a CFA; and whether he should be under an obligation to advise on the relative advantages and disadvantages of the available insurance products.
29.	In February 2000 the Lord Chancellor published the government's conclusions following this consultation. Although the Law Society and the senior costs judge (see para 84 of that publication) had told the government that they believed the new Client Care Code adequately covered the need to provide additional information about CFAs, the government decided on balance to prefer the views put forward by other respondents and to strengthen that part of the new regulations which required the provision of such information. It also decided to "draw on the example of the solicitors' Client Care Code" to require the legal representative to provide explanations of the different possibilities open to the client on the insurance front. This part of the paper (para 83) concludes:
	"If the legal representative recommends a particular product, but also has an interest in doing so, for example because he or she will receive a commission or is a member of the insurer's panel of solicitors, then this must also be disclosed to the client."     (vi) The Conditional Fee Agreements Regulations 2000
30.	Because the government was committed to introducing its reforms to the legal aid scheme at the beginning of April 2000, it had no opportunity for consultation on the detailed drafting of the new regulations. Instead, the Conditional Fee Agreements Regulations 2000 (SI 2000 No 692) (which we will call quite simply "the CFA Regulations" or "the new Regulations" in view of their importance in this case) were laid before Parliament on 9th March 2000, and came into force 23 days later. The Conditional Fee Agreements Order 2000 was made on 20th March, as was a commencement order which brought sections 27-30 of the Access to Justice Act 1999 into force on 1st April. Mr Guy Mansfield QC, who appeared for two of the claimants and who in a different capacity was concerned on behalf of the Bar Council in these matters, told us that it was his recollection that copies of the new regulations were sent by the Lord Chancellor's Department to the Bar Council and the Law Society for the first time about a week before they were due to come into force. They differed from their predecessors in a number of significant respects.
31.	Regulation 2 is very similar to regulation 3 of the 1995 Regulations (for which see para 5 above). It starts by saying that a CFA "must specify" as opposed to "an agreement shall state". The first three matters that have to be specified are very similar to their predecessors. Regulation 2(1)(d) refers to:
	"the amounts which are payable in all the circumstances and cases specified or the methods to be used to calculate them and, in particular, whether the amounts are limited by reference to the damages which may be recovered on behalf of the client."
	This differs from regulation 3(d) of the 1995 Regulations in using the conjunction "whether" rather than "whether or not".
32.	Regulation 2(2) of the new Regulations provides that:
	"(2)   A conditional fee agreement to which regulation 4 applies must contain a statement that the requirements of that regulation which apply in the case of that agreement have been complied with."
	This is similar to regulation 4(1) of the 1995 Regulations, which required a CFA to state that various specified matters had been drawn to the client's attention immediately before the agreement was made.
33.	Regulation 3 of the new Regulations contains requirements for the contents of CFAs providing for success fees. For the purposes of this judgment it is necessary only to set out the terms of regulations 3(1) and (2)(a):
	"(1)   A conditional fee agreement which provides for a success fee –     (a)   must briefly specify the reasons for setting the percentage increase at the level stated in the agreement, and  (b)   must specify how much of the percentage increase, if any, relates to the costs to the legal representative of the postponement of his fees and expenses.  (2)   If the agreement relates to court proceedings, it must provide that where the percentage increase becomes payable as a result of those proceedings, then –     (a)   if –     (i)   any fees subject to the increase are assessed, and  (ii)   the legal representative or the client is required by the court to disclose to the court or any other person the reasons for setting the percentage increase at the level stated in the agreement,     he may do so …"
34.	Regulation 4 is a considerably expanded version of regulation 4 of the 1995 Regulations, as foreshadowed in the paper setting out the government's conclusions. It provides, so far as is material:
	"4.   Information to be given before conditional fee agreements made:     (1)   Before a conditional fee agreement is made the legal representative must –     (a)   inform the client about the following matters, and  (b)   if the client requires any further information, advice or other information about any of these matters, provide such further explanation, advice or other information about them as the client may reasonably require.  (2)   Those matters are:     (a)   the circumstances in which the client may be liable to pay the costs of the legal representative in accordance with the agreement,  (b)   the circumstances in which the client may seek assessment of the fees and expenses of the legal representative and the procedure for doing so,  (c)   whether the legal representative considers that the client's risk of incurring liability for costs in respect of the proceedings to which the agreement relates is insured against under an existing contract of insurance,  (d)   whether other methods of financing those costs are available, and, if so, how they apply to the client and the proceedings in question,  (e)   whether the legal representative considers that any particular method or methods of financing any of all of [the costs in respect of the proceedings to which the agreement relates] is appropriate and, if he considers that a contract of insurance is appropriate or recommends a particular such contract –     (i)   his reasons for doing so, and  (ii)   whether he has an interest in doing so.  (3)   Before a conditional fee agreement is made the legal representative must explain its effect to the client.  (5)   Information required to be given under paragraph (1) … about the matters in paragraph 2(c) and the explanation required by paragraph (3) must be given both orally and in writing."
35.	It will be noted that regulation 4(2)(e)(ii) gives effect to the government's identification of the need for a legal representative to disclose any interest he may have when he recommends a particular insurance product.
36.	Both the Law Society and the Bar Council published new model forms of CFA very soon after the new Regulations came into effect. The Law Society's April 2000 model CFA was replaced three months later by their July 2000 model CFA. The later model made a change to a provision in the earlier model which has come under attack in these proceedings. No doubt if the new Regulations had not been introduced in such a rush the Law Society would have had more time to identify any imperfections in their original draft. Time, however, did not allow for this. It is against this background that we have to consider the merits of the defendants' contentions that any such imperfection rendered the whole CFA unenforceable and the solicitor who achieved a successful result for his client without a fee left seriously out of pocket.
	(vii) Two other contemporary concerns
37.	Before we consider the appeals there are two other contrasting contemporary concerns that we should mention. The first is that the government was also concerned at the same time with the activities of unregulated claims assessors who had no legal qualifications and who were acting for clients usually on a "no win, no fee" contingency basis. This may be linked to a perception that people are becoming too "litigation minded", pursuing compensation for minor injuries which they would previously have shrugged off. On the other hand there was the growing perception in some quarters that traditional methods of conducting legal business were regarded quite widely as being not particularly "client-friendly", and that many people who had suffered injuries through someone else's fault were not pursuing their right to compensation for this reason.
38.	In early 2000 the Lord Chancellor published the report of a committee chaired by Mr Brian Blackwell into the first of these matters. The committee reported that one claims management company believed that 11.2 million accidents occurred in this country each year, and that in over two million of these the injured person blamed someone else for the accident. Only 350,000 made compensation claims, so that on this reckoning there was a potential market of 1.7 million additional claims for personal injury compensation each year. Although the committee noted certain deficiencies in the services rendered by some of these unregulated claims assessors, the majority of the committee considered that it had not unearthed sufficient public disquiet about their activities to justify a ban on their activities, particularly as such a ban could restrict consumer choice and access to justice.
39.	The views of one experienced solicitor on this developing scene are best reflected in the evidence given by Mr Stewart McCulloch in the TAG cases. He is head of the personal injury department in a firm of solicitors in Huyton, and has had 18 years' experience in that field of practice. He described how the higher levels of client care and service demanded in the 1990s by both legal expenses insurers and the Legal Aid Board demanded a level of investment in IT systems which could only be supported by an increase in the volume of work undertaken by the firm. The demise of legal aid and the arrival of the new ways of doing business facilitated by Part II of the 1999 Act persuaded him that there was a pressing need to be able to process cases in large numbers without diluting quality.
40.	He was of the view that his profession would have to look at innovative ways of providing a national or regional service without losing the essential qualities previously offered to clients on the basis of a bespoke local service. His hope was that in this way access to justice would be maintained and that a higher quality service would emerge in time such as would also reduce the number of hopeless claims.
	2. The six appeals
	(i) The issues they raise
41.	To an increasing degree defendant liability insurers have not been content merely to scour CFAs for defects when they have been produced to them. They have also been demanding to see the claimant's CFA during the assessment proceedings. Resistance to this demand has also led to a significant amount of litigation. We understand that whereas disputed assessments were once comparatively rare, they have now become commonplace.
42.	Because of the prevalence of these challenges, the Civil Appeals Office have brought together a number of different appeals that illustrate different elements of the trench warfare which is now being waged between claimants' solicitors and solicitors acting for liability insurers before district judges and circuit judges up and down the country. Most of them have now come to this court as second appeals because they raise important points of practice. One, an appeal from Master Hurst, the senior costs judge, has been directed to be heard by this court as a first appeal for similar reasons.
43.	It was agreed between the parties that the appeals raised three distinct issues:
	(i)   the circumstances in which a court should put a receiving party in detailed assessment proceedings to its election, so that it must choose whether to disclose its CFA to the paying party or to endeavour to prove its claim by other means (Pratt v Bull; Worth v McKenna);  (ii)   the proper construction of the words "satisfies all of the conditions applicable to it" in section 58(1) of the 1990 Act and whether any costs or disbursements are recoverable from a paying party in the event of non-compliance with the CFA Regulations (all cases);  (iii)   whether, on particular facts, the requirements contained in one or other of regulations 2, 3 and 4 of the CFA Regulations were not complied with (Hollins v Russell (reg 2), Tichband v Hurdman (regs 2 and 3), Pratt v Bull, Dunn v Ward and The Accident Group ("TAG") Test Cases (reg 4));     Master Hurst sat as our assessor for the first two days of the hearing, when we were concerned with issue (i) and the first four appeals mentioned under issue (iii), and we benefited from his wise advice.
	(ii) The concerns of the interveners
44.	Before we come to consider and determine these six appeals, there are two other matters to which we must refer. In addition to the parties the Civil Appeals Office, on Brooke LJ's instructions, invited submissions from a few representative organisations who were known to have an interest in the outcome of these appeals. As a result we received helpful written submissions from the Association of Personal Injury Lawyers ("APIL"), the Motor Accident Solicitors' Society ("MASS"), and the Forum of Insurance Lawyers ("FOIL"). We also received helpful written and oral submissions from the Law Society.
45.	APIL's paper in particular described vividly the difficulties faced by claimants' solicitors up and down the country as a consequence of defendant insurers' uncompromising tactics. The Association has 5,000 members who are solicitors and barristers practising on behalf of claimants in the fields of personal injury and clinical negligence. They thought that we might be helped by knowing of the experience of their members in the daily operation of the CFA Regulations, and how issues such as those now being argued were having and might yet have, in their opinion, a significant impact on citizens' access to justice.
46.	It appears that 40 to 60% of the CFA caseload of a significant number of members of APIL is now affected by technical challenges like these, which often evaporate as the date of detailed assessment approaches. These tactics are delaying the payment of costs. This leads inevitably to a serious effect on cash-flow for those undertaking professional work of this kind, and a backlog of fee recovery work not only in members' offices but also in local courts. Their submission contained the following comments:
	"… Our members talk about the uncertainty of undertaking claimants' personal injury work when it is impossible to know whether they will ever be paid for the work they are doing. … A disproportionate amount of solicitors' time is being spent sorting out these cases … [Our members] fear that their clients are fast losing confidence in the legal system, seeing 'technical challenges' as a means of depriving them of what has been recovered for them, if indeed they understand the matter at all … Many of our members have used the word 'bewildered' to describe their clients' states of mind when told about these challenges … Many of our members have indicated that they will not seek to recover any costs from the client in the event that the CFA is technically invalid. The loss will fall on the solicitor, who has done a competent job for his client and recovered damages for him, but will not be paid at all."
47.	We should also point out that the delay and uncertainty will have damaging effects for those claimants who have paid, or borrowed money to pay, for disbursements on such things as medical reports and any ATE insurance premiums. One of the parties wrote to draw our attention to this particular problem.
48.	APIL fear that in the medium or longer term many of their members will simply not continue to offer legal services under CFAs. While not seeking to defend CFAs which are substantially defective, APIL urged us to adopt an approach to these appeals which would tend to uphold the enforceability of the CFAs as between solicitor and own client and to avoid bestowing windfalls on defendant insurers at the expense of claimants' solicitors in the short term and of access to justice in the longer term. We received a similar message, couched in varying terms, from the other bodies representing solicitors, and in particular from the Law Society. The Society's views deserve particular weight, as they represent all solicitors, acting for all kinds of party in all kinds of litigation. CFAs are now being used in many different types of case, including complex commercial litigation far removed from the simple personal injury claims in the cases before us. Whatever the approach to emerge from these cases, it must be appropriate to the wide variety of circumstances in which CFAs are now being made.
	(iii) The concerns of the House of Lords
49.	On the other side of the coin, defendant insurers drew our attention to the anxieties expressed by different members of the House of Lords in Callery v Gray (Nos 1 & 2) [2002] UKHL 28(Bailii); [2002] 1 WLR 2000 in relation to the opportunities for abuse opened up by the new legislative regime. These stemmed largely from the fact that the client is unlikely to be very concerned about the details of a CFA because no liability will fall on her. If she wins, she will recover her costs, plus any additional liabilities, from the defendants. If she loses, she will be protected from paying the other side's costs by ATE insurance, which will often cover her own costs as well. If it does not, her solicitors will not charge her anything. Concerns about potential abuse are contained, for instance, in the speeches of Lord Bingham (at paras 5 and 10) and Lord Nicholls (at paras 12-16).
	(iv) Matters of common ground
50.	By the end of the four-day hearing into these six appeals, it was clear that there was common ground on two important matters. The first was that the maxim that the law does not care about very small matters must be applied when a court considers whether there has been compliance with any of the CFA Regulations or what the effect of non-compliance will be. The second was that except to the extent discussed in paras 83 - 84 below the European Convention of Human Rights has no part to play in our consideration of these appeals. Although the applicability of Article 1 of the First Protocol to the Convention was much canvassed in some of the skeleton arguments, it was eventually conceded by the claimants that neither the claimants' nor their solicitors' potential right to recover costs under a questionable CFA could possibly constitute "possessions" within the meaning of that article. The Strasbourg case of Marckx v Belgium (1979) 2 EHRR 330, 350 para 50 is clear authority for the proposition that where there are no property rights which pre-exist the interference complained of, the article is not engaged.
	3. Disclosure of CFAs
51.	In Pratt v Bull and Worth v McKenna, the paying parties sought to resist liability for any of the costs ordered against them on the grounds that the CFAs under which such costs were claimed were unenforceable by virtue of section 58 of the 1990 Act, and that accordingly it would be in breach of the indemnity principle to award any costs against them in the assessment of costs. Judge Cotterill and Judge Marshall-Evans QC were both of the view that the CFA entered into by the receiving party need not be disclosed to the paying party because the solicitor to the receiving party had certified on the bill of costs presented for assessment in the usual way that the costs claimed therein did not exceed the costs which the receiving party was required to pay to the receiving party's solicitors. In addition, they both found that the paying party had not demonstrated to their satisfaction any real ground for challenging the enforceability of the CFA and accordingly that this certificate raised a presumption that the indemnity principle was not infringed. The presumption was only a rebuttable presumption, but in the circumstances there was nothing to rebut it.
52.	The starting point is section 58(1) of the 1990 Act (set out at para 12 above). Section 58 has to be read with the indemnity principle in mind, which (as explained at paras 22 and 23 above) itself has statutory force. It follows that the paying party will not be liable to pay costs to the receiving party if the fees sought by the solicitor are sought under a CFA which is not rendered enforceable by section 58(1). This section does not provide that such an agreement shall be unenforceable only as between the paying party and his solicitor. We deal with the argument that it should be so construed in paragraphs 92 to 95 below. For present purposes, it is enough to say that if that were its construction, it would cut across the well-established indemnity principle.
53.	Accordingly, we must take it to be the policy of Parliament that the paying party should be protected by the indemnity principle in relation to the CFA entered into by the receiving party. In other words, that he should be entitled to object to paying costs which he has been ordered to pay if they are made payable by a conditional fee agreement which is not rendered enforceable by section 58(1).
54.	It is not as we see it the policy of the Act to allow recovery of success fees come what may, or to allow fees under a CFA to be recovered from the paying party come what may, even if that is necessary to ensure the financial viability of CFAs. Nor is it a question of the paying party being the only real policeman of CFAs, even though in practice, the receiving party is unlikely to have any incentive to take the point that the agreement between him and his solicitor is unenforceable. There is nothing to suggest that the paying party is the gatekeeper chosen by Parliament to ensure compliance with section 58(1).
55.	In order to explain our conclusions, it is necessary to describe the practice on assessment as respects the disclosure of documents to the paying party or his solicitors. Although all relevant documents must be filed with the court, there is no automatic disclosure of these documents to the paying party. However, paragraph 40.14 of the Costs Practice Directionpdp-47 provides (in relation to detailed assessment) as follows:-
	"40.14    The court may direct the receiving party to produce any document which in the opinion of the court is necessary to enable it to reach its decision. These documents will, in the first instance, be produced to the court, but the court may ask the receiving party to elect whether to disclose a particular document to the paying party in order to rely on the contents of the document, or whether to decline disclosure and instead rely on other evidence."
56.	Reference to the case law demonstrates the circumstances in which the court will exercise its discretion under this rule. In Goldman v Hesper [1988] 1 WLR 1238, the Court of Appeal held that it would be rare to exercise this discretion under Order 62, rule 29 of the Rules of the Supreme Court 1965, which contained provisions now to be found in CPR 47.6 and that part of the Costs Practice Directionpdp-43 that relates to CPR Part 47. By lodging his documents with the court, the claimant waived his legal professional privilege to that extent. If there was a challenge in good faith to any item of costs, the taxing master could put the receiving party to his election and if the document was produced disclosure would be for the specific purpose of taxation of costs only. Accordingly, the privilege could be asserted on other occasions thereafter.
57.	This procedure was based on the judgment of Hobhouse J in Pamplin v Express Newspapers Ltd [1985] 1 WLR 689. At pages 696 to 697, Hobhouse J held:
	"The [costs judge] does not have any power to order discovery to be given: he does not have any power to override a right of privilege. But it is the duty of the [costs judge] if the respondent raises a factual issue, which is real and relevant and not a sham or fanciful dispute to require the claimant to prove the facts on which he relies. The claimant then has to choose what evidence and to what extent he will waive his privilege. That is a choice for the claimant alone. The [costs judge] then has to decide the issue of facts on the evidence. In considering whether he is satisfied by the evidence, the [costs judge] will no doubt take into account that the claimant may have a legitimate interest in not disputing the most obvious or complete evidence and may prefer to rely on oral evidence rather than producing privileged legal documents."
58.	In the later case of Hazlett v Sefton Metropolitan Borough Council [2000] 4 All ER 887, the principle that there must be a genuine dispute raised by the paying party was reiterated by the Divisional Court (Lord Bingham of Cornhill CJ and Harrison J). Harrison J, giving the judgment of the court, said (at p 893):
	"The need for a complainant to give evidence to prove his entitlement to costs rather than relying on the presumption in his favour will not, however, arise if the defendant simply puts the complainant to proof of his entitlement to costs. The complainant would be justified in relying on the presumption in his favour. It would be necessary for the defendant to raise a genuine issue as to whether the complainant is liable for his solicitors' costs before the complainant would be called upon to adduce evidence to show that he is entitled to his costs."
	The court also held that:
	"… there is normally a presumption that the complainant will be personally liable for his solicitors' costs and it should not normally be necessary for the complainant to have to adduce evidence to that effect." (page 892).
59.	Indeed, when the bill of costs is served, it is required to contain a certificate as to accuracy to the effect that the costs claimed in the bill do not exceed costs which the receiving party is required to pay to the solicitors presenting the bill. In Bailey v IBC Vehicles Ltd [1998] 3 All ER 570, the status of the certificate was elevated. In that case, the claimant succeeded in obtaining damages for personal injuries incurred in the course of his employment. The defendants agreed to pay damages together with costs to be assessed. The claimant was assisted financially by his union. When the bill was presented, the defendants objected to the hourly rate and to the claimant's solicitors' mark up and asked for evidence that the bill was not in breach of the indemnity principle. In due course a letter was produced to the court from a union representative which stated that the union's relationship with the solicitor was on the basis that the solicitors were entitled to make a full solicitor/client charge. Nonetheless, the district judge held that they were entitled to disclosure of the relevant material. The Court of Appeal (Butler-Sloss, Henry and Judge LJJ) were clearly very concerned about the prospect of satellite litigation in assessment proceedings. The court held that there was no breach of the indemnity principle merely because the successful litigant was a member of a trade union which provided financial support. It was accepted by the paying party that the costs judge was entitled, if he saw fit, to be provided with the information that he needed. Judge LJ held:
	"The [costs] officer is exercising a judicial function with substantial financial consequences for the parties. To perform them he has trusted properly to consider material which would normally be protected from disclosure under the rules of legal professional privilege. If after reflecting on the material available to him, some feature of the case alerts him to the need to make further investigation or causes him to wonder if the information with which he is being provided is full and accurate he may seek further information. No doubt he would begin by asking for a letter or some form of confirmation or reassurance as appropriate. If these were to prove inadequate he might then make orders for discovery or require affidavit evidence … It would theoretically be open to him to order interrogatories. However, if the stage had been reached where interrogatories might reasonably be ordered the conclusion that the receiving party had not been able to satisfy the [costs] officer about the bill or some particular aspect of it would seem inevitable … An emphatic warning must be added against over-enthusiastic deployment of these powers, particularly at the behest of the party against whom the order for costs has been made … The danger of 'satellite litigation' is acute. As far as possible consistent with the need to arrive at a decision which does broad justice between the parties it must be prevented or avoided and additional effort required of the parties to keep to the absolute minimum necessary for the [costs] officer properly to perform his functions." (pages 572 to 573).
60.	The court attached considerable importance to the fact that solicitors are officers of the court and that they are trusted not to mislead the court or to allow it to be misled. Accordingly, the court indicated that it would expect solicitors to disclose the existence of a limit on the fees which they could recover from their client. Judge LJ said:
	"They would not have produced a signed bill of costs which included a claim for 'reasonable' costs which would have fallen foul of the indemnity principle … In the ordinary case in which a 'client care letter' has been provided (and certainly if and when the client care letter becomes obligatory) the hourly rate claimed on the bill of costs should coincide with the terms of that letter … [I]n view of the increasing interest taken in this issue by unsuccessful parties to litigation, coupled with the developing practice in relation to conditional fees, the extension of the 'client care' letter and contentious business agreements under section 60(3) [on the Solicitors' Act 1974], in future, copies of the relevant documents (where they exist) or a short written explanation … should normally be attached to the bill of costs. This will avoid skirmishes which add unnecessarily to the costs of litigation." (page 575).
61.	Our assessor has drawn our attention to paragraph 40.2(i) of the Costs Practice Directionpdp-43, under which (if there is a dispute as to the receiving party's liability to pay costs to her solicitor) a copy of the client care letter must be produced to the costs judge. He tells us that the client care letter is also from time to time disclosed to the paying party. The client care letter, however, is not the same as the conditional fee agreement although a conditional fee agreement is often an integral part of the client care letter as we shall see in the Accident Group cases.
62.	Henry LJ also highlighted the importance of the signature by the solicitor to the bill of costs:
	"In so signing he certifies that the contents of the bill are correct. That signature is no empty formality. The bill specifies the hourly rates applied, and the care and attention uplift claimed. If an agreement between the receiving solicitor and his client … restricted (say) the hourly rate payable by the client, that hourly rate is the most that can be claimed or recovered on [detailed assessment] … The signature of the bill of costs under the rules is effectively the certificate by an officer of the court that the receiving party's solicitors are not seeking to recover in relation to any item more than they have agreed to charge their client … For the avoidance of doubt, I also agree that the [costs] officer may and should seek further information where some feature of the case raises suspicions that the whole truth may not been told. And the other side of a presumption of trust afforded to the signature of an officer of the court must be that breach of that trust should be treated as a most serious disciplinary offence." (p 575)
63.	The principles established in the case law we have just described have been seized upon by the respondents both here and below. They contend in essence that, once the solicitor has certified the accuracy of the costs due to his firm, the onus switches to the paying party to show some genuine ground why that certificate may be inaccurate. Specifically this would mean that the paying party in relation to a CFA would have to show some grounds why it may be unenforceable notwithstanding section 58(1) of the 1990 Act.
64.	In our judgment, the Bailey decision is distinguishable. It was directed to a very different type of challenge. The paying party was not saying that there was no liability at all to pay any costs to the receiving party. The challenge was directed to the hourly rate and mark up being applied. The challenge to a bill of costs must surely move several ratchets up the scale once the challenge changes from a challenge to the figures produced to a challenge to the principle of paying anything at all. It is, of course, true that in respect of many items in a bill the paying party cannot be sure that they are properly incurred without sight of the underlying document. But in most cases the solicitors' certificate as to accuracy will be sufficient (see para 65 below) and paying parties are frequently content to rely on the costs judge. A potential challenge to the whole of a bill by reason of its non-compliance with section 58 of the 1990 Act is of a very different order.
65.	The second reason for distinguishing the Bailey decision is that the matters which are normally the subject of a certificate as to accuracy are conventional matters. They would include such matters as whether particular advice related to the proceedings, or the correctness of the charging rates. The position is very different with CFAs made under the new Regulations. These introduced a level of complexity as then unknown. Moreover, many of the matters required to be covered by the Regulations are not conventional costs matters at all. This can be seen from the contents of the Regulations and the particular issues which have arisen in the appeals in Tichband v Hurdman, Hollins v Russell and Dunn v Ward.
66.	Our third reason for distinguishing the Bailey decision is that the measure of detail provided by a solicitors' bill in normal circumstances is far greater than the information which the paying party will receive about the success fee under the Civil Procedure Rules and the Costs Practice Directionpdp-43. The only documents under those rules which have to be served on the paying party merely because there is a success fee are:-
	Form N251 (this confirms that particular claims are funded by a conditional fee agreement of a specified date providing for a success fee. The requirement to produce this information is duplicated by paragraph 19.4(2) of the Costs Practice Directionpdp-43)     The solicitors' bill showing the amount of the success fee     A statement showing the amount of the costs which have been summarily assessed or agreed and the percentage increase which has been claimed in respect of those costs (paragraph 32.5(1)(a) of the Costs Practice Directionpdp-43)     A statement of the reasons for the percentage increase given in accordance with regulation 3(1)(a) of the CFA Regulations (paragraph 32.5(1)(b) of the Costs Practice Directionpdp-43). The receiving party may disclose the risk assessment schedule for this purpose     Where points of dispute are served, information about other methods of financing the costs which were available to the receiving party (paragraph 35.7 of the Costs Practice Directionpdp-47)
67.	In addition, the paying party will have the assurance of the certificate as to accuracy attached to the bill. However, the information listed above is extremely basic. There is, for example, no requirement in the CPR or the Costs Practice Directionpdp-43 to specify or disclose the circumstances in which the success fee became payable. Obviously, the solicitor certifying the accuracy of the bill cannot properly certify its accuracy if a success fee has not become payable. However, the condition of the payment of a success fee may not be success in obtaining an order for the payment of damages. It may be conditional, for example, upon receipt of some of those damages. Yet details of the circumstances in which the success fee becomes payable for the purpose of section 58(2) of the 1990 Act are not required to be served on the paying party. In a summary assessment only the risk assessment schedule forming part of the CFA is required to be produced to the court (paragraph 14.9(3) of the Costs Practice Directionpdp-43).
68.	In our judgment, the solicitors' certificate as to accuracy, important though it is, may not be sufficient where the quality and quantity of the information served on the paying party about the success fee is less than would be made available in respect of the other aspects of the bill in the case of an assessment where there is no additional liability claimed.
69.	Our fourth reason for distinguishing the Bailey decision is that the question whether the CFA complies with the 1990 Act is principally a matter of law. The question whether costs are properly claimed and the amount of the charging rates and like issues raised by conventional bills are generally questions of fact likely to be within a solicitor's peculiar expertise. Matters of law are not. That factor, too, would lead to the conclusion that the certificate as to accuracy may not be sufficient in the context of CFAs.
70.	Fifthly, there are policy reasons for not extending the Bailey decision to CFAs. Given the complexity of the new Regulations, it is not appropriate to impose on costs judges or district judges the responsibility of acting as a filter to see that the regulations are complied with in every respect. This would be both a complex and time-consuming task, particularly as this would require reference to other documents (for example, attendance notes). Checking whether the CFA complies with the Regulations is likely to consume considerable court resources. Moreover, there will be many cases in which the costs judge or district judge simply cannot be satisfied that the regulations were fully complied with.
71.	In all the circumstances, we have come to the conclusion that the Bailey decision should not be extended beyond the facts with which it was dealing, namely that of a conventional bill, so as to obviate disclosure of the CFA as the norm. As we see it, where there is a CFA, a costs judge should normally exercise his discretion under the Costs Practice Directionpdp-43 and the Pamplin procedure so as to require the receiving parties (subject to their right of election preserved by paragraph 40.14 of the Costs Practice Directionpdp-47 and the Goldman case) to produce a copy of their CFAs to the paying parties in order that they can see whether or not the Regulations were complied with and (where a CFA provides for a success fee) whether the liability of the receiving party to pay that success fee is indeed enforceable. We consider that this is appropriate where receiving parties may claim more than they would otherwise be entitled to in circumstances in which their whole claim may turn out to be unenforceable. Non-compliance may be sufficient to remove the paying party's liability. The court is entitled and bound to have regard to the interests of paying parties, and those to whom they pass on the costs (see in this connection the concerns of the House of Lords referred to in para 49 above), as well as those of receiving parties. If these appeals are a fair measure of CFAs in general use, it is apparent that mistakes in complying with the Regulations are not uncommon. In these circumstances we consider that greater transparency is desirable. As Brandeis J, the great justice of the Supreme Court of the United States, once remarked extrajudicially, sunlight can often be the best of disinfectants.
72.	If the CFA contains confidential information which is not required to be disclosed for the purposes of fairly determining the receiving party's claim to costs, for example privileged material with respect to issues other than those which have been disposed of by the settlement of the claim, the costs judge may permit that material to be redacted before service. There may be other circumstances which lead the costs judge to conclude that in the particular case he should not exercise his discretion in the manner indicated. However, as we have stated, the receiving party should normally be put to her election to produce the CFA to the paying party or rely on other evidence.
73.	We have considered carefully the concern expressed in the Bailey decision about satellite litigation. Any satellite litigation generated in any circumstances results in an application of resources for collateral purposes and thus may absorb money and court resources which could be more usefully deployed. It is neither fair to the receiving party nor to other litigants that the courts' resources should be tied up in satellite litigation. However, the concern expressed about satellite litigation in the Bailey case applies with less force in the present situation: first, there is already considerable satellite litigation about disclosure which our approach should avoid; and secondly, however, on our interpretation of section 58(1) (see paras 106-109 below) there will be far less incentive for paying parties to raise an issue of non-compliance.
74.	Our conclusions do not necessitate any amendment to paragraphs 14.3 (summary assessment) or 40.14 (detailed assessment) of the Costs Practice Directionpdp-43. In our view the combination of the indemnity principle and a significant increase in the paying party's liabilities results in there ordinarily being a sufficient ground in cases involving a CFA (whether or not the CFA contains a success fee) for the paying party to require the receiving party to be put to her election to produce the CFA or rely on other evidence.
75.	The contention of the appellants is that the respondents are in any event not entitled to claim legal professional privilege in respect of their CFAs. In the alternative, they submit that the CFA has to be disclosed because the receiving party is seeking to rely on it. They rely on a passage from the judgment of Pumfrey J in South Coast Shipping v Havant BC [2002] 3 All ER 779 at p 793, para 29, where the judge held, with respect to privileged material produced to the Costs Judge:
	"Once a document is of sufficient importance to be taken into account in arriving at a conclusion as to recoverability, then, unless otherwise agreed, it must be shown to the paying party or the receiving party must content himself with other evidence."
	Mr McLaren QC, who appeared for the appellants in these cases, also referred us to Dickinson (T/A John Dickinson & Finance) v Rushmer (T/A F J Associates) [2002] 1 Costs LR 98, in which Rimer J took the view that a client care letter was not privileged. Mr McLaren argued that by the stage of the assessment of costs, any privilege has been exhausted.
76.	We have heard very little argument in response to the appellants' argument on privilege. In Worth v McKenna it was common ground in the court below that the CFA was privileged. Accordingly, the point cannot be taken in that appeal at this stage. In Pratt v Bull, Mr Dingle did not put it at the forefront of his argument that the CFA is privileged. He contends in general terms that the appellants seek to conduct a fishing expedition into privileged documents. It was unnecessary for him to argue the question of privilege because of his contention on the effect of the certificate as to accuracy. The Law Society contends in its skeleton argument that the CFA is subject to both advice privilege and litigation privilege but this submission was not amplified orally. Accordingly, we have not heard full argument on the question of privilege.
77.	Legal professional privilege protects confidential communications between a solicitor and his client for the purpose of obtaining and giving legal advice. There is a separate litigation privilege when litigation is contemplated, as it was in these cases at the time when the conditional fee agreements were signed. If it is clear that there is a sequence of exchange of information, the court has not adopted "a narrow or nit-picking approach to documents and has ruled out an approach which takes a record of communication sentence by sentence and extends the cloak of privilege to one and withholds it from another" (per Lord Bingham of Cornhill CJ in R v Manchester Crown Court ex parte Rogers [1999] 1 WLR 832). However, legal professional privilege does not apply to every document generated in the course of a retainer. There must actually be a communication between the solicitor and the client. In R v Manchester Crown Court ex parte Rogers, the police had sought disclosure from the applicant's solicitors of any record of the time at which the applicant arrived at the solicitors' premises on a particular date and like documents. The Divisional Court held that such records would not be privileged because they did not relate to legal advice or the subject matter of legal advice. The facts of the present case are not analogous to the record of appointment in that case. We have also considered the very recent decision of this court in Three Rivers District Council v Bank of England [2003] EWCA Civ 474(Bailii), [2003] 1 WLR 210, which was concerned with legal advice privilege, but there was no suggestion in that case that privilege did not attach to direct communications between a solicitor and his client.
78.	We note that in Hodgson v Imperial Tobacco [1998] 1 WLR 1056 the issue arose in the course of litigation whether the CFA was privileged but by the time the case came to the Court of Appeal, the defendants had abandoned their application for disclosure. The Court of Appeal (Lord Woolf MR, Aldous and Chadwick LJJ) considered that it was inappropriate to express any concluded view on the question whether a CFA is at any stage of the proceedings subject to professional privilege. Lord Woolf, giving the judgment of the court, said this (at p 1067D-F):
	"Before expressing a view we would like to have had before us a claim for privilege specifying the grounds upon which it is based. We would also like to hear the full argument that was not presented on this appeal in view of the approach now adopted by the defendants to their seeking to inspect the CFAs. We recognise that a distinction might exist between the position in relation to any advice given to a client about the advisability of entering into a CFA and the document itself. However, what follows from what we have said as to the effect of CFAs means that absent exceptional circumstances which we cannot envisage, unless and until the other party to the proceedings makes an application for an order making the legal advisers personally liable for costs, the existence or the terms of a CFA are of no relevance to the issues and the proceedings. They are therefore on that ground not required to be disclosed."
79.	This court, too, is being asked to consider the question of privilege in the absence of a claim specifying the grounds relied on. As in the Hodgson case, it is undesirable for us to express a view on privilege when the matter has not been fully argued. Indeed, as we see it, given the Pamplin procedure, it is not necessary for us to express a view on privilege. As we have explained above, we consider that the costs judge has ample powers which he should normally exercise to put the receiving party to her election as to whether to produce a copy of the CFA to the paying party.
80.	We conclude, therefore, that if, in costs proceedings, a party seeks to rely on the CFA, as a matter of fairness she should ordinarily be put to her election under the Pamplin procedure. (This procedure applies whether or not the document is privileged. It is no answer to an exercise of the discretion to contend that the document is privileged.) This is not simply because of the fact of reliance but because of the centrality of the CFA in an assessment of costs in which a CFA is relied upon. If the party does not wish to produce the CFA, she can theoretically undertake to prove the terms of the agreement in some other way. However, we doubt whether costs judges will in general be prepared to accept merely oral evidence of the existence of such an agreement and its terms. On the other hand, the court has a discretion in putting a party to his election to allow parts of it to be redacted if, for instance, those parts contain material which there is a good case for saying should not be revealed to the other party even for the purposes of the assessment only, and which it would not be unfair to the paying party to withhold. For instance, they may relate to legal advice on matters which have not been resolved by the claims in respect of whose disposal the success fee is claimed (for example, claims in separate proceedings), or further proceedings between the same parties may be anticipated. Moreover, there may be exceptional cases in which the costs judge is prepared to say that no purpose would be served by disclosure of the CFA. However, we have been unable to think of any circumstances in which this might arise, but the possibility exists.
81.	The appellants in the present cases also seek disclosure of the attendance notes prepared by the receiving parties' solicitors showing compliance with regulation 4. We do not consider that these should ordinarily be disclosed. We consider that the costs judge should not require these to be disclosed unless there is a genuine issue as to whether there was compliance with regulation 4. The measure of explanation given to the client is largely a matter of fact and we consider that it is, therefore, appropriate that the paying party should have to rebut the presumption arising from the fact that the receiving party's solicitor, an officer of the court, has signed the certificate of accuracy.
82.	Although the procedure envisages that the costs judge will put a party to her election as to the disclosure of the CFA, now that it is clear from our judgment in this case that this is to be the general practice, we hope that receiving parties will disclose the CFA without more ado. It would obviously lead to further costs and delay if receiving parties were to take an unreasonable view on this issue.
83.	Reliance was also placed on article 6 of the European Convention on Human Rights, the argument being that the paying party was effectively deprived of equality of arms or access to court by denial of access to the CFA and attendance notes. The argument will not now ordinarily arise in relation to the CFA itself. In relation to the attendance notes, the court will, unless it orders disclosure, be proceeding on the basis of a presumption to which the solicitor's certificate of accuracy gives rise. It will not be proceeding on the basis that there is no evidence of compliance with regulation 4. However, the presumption is not irrebuttable. The party seeking to challenge compliance with regulation 4 can raise a genuine issue about this, in which case the costs officer must consider whether in the exercise of his discretion the attendance notes should be disclosed. Once that threshold is reached, the paying party's right of access to court is fully protected (see the Pamplin case). In our judgment, under Convention jurisprudence, the question what evidence the national court considers necessary to support a claim is a question for national law. The paying parties would have to show that they did not receive a fair trial under the procedures established by the national court. We are not satisfied that this would occur in the type of case with which we are at present concerned. Convention jurisprudence does not, moreover, proscribe a process which filters out fanciful claims (Z v UK [2002] 34 EHRR 97).
84.	In South Coast Shipping Co Ltd v Havant Borough Council [2002] 3 All ER 779, Pumfrey J considered the question whether if the costs judge has been shown documents that the paying party had not been allowed to see, there is a breach of article 6 of the Convention. Pumfrey J concluded that if the costs judge had seen the documents and required the receiving party to elect between giving secondary evidence of the retainer and waiving the privilege, there was no incompatibility with the Convention. The judge continued:
	"This is not intended to suggest the costs judge may potentially put the receiving party to its election in respect of every document relied on, regardless of its degree of relevance. I would expect that in the great majority of cases the paying party would be content to agree that the costs judge alone should see the privileged documents. Only where it is necessary and proportionate should the receiving party be put to his election. The redaction and production of privileged documents, or the adducing of further evidence, will lead to additional delay and increased costs."
85.	Since the hearing we have read the judgment of District Judge Harrison in McCreery v Massey Plastic Fabrications Ltd (LTL 21/3/2003). We note that the district judge has given permission to appeal, but as the appeal is not before us it is not appropriate for us to comment in detail on the judgment. We note, however, that the district judge has advocated changes in the practice regarding disclosure of CFAs and risk assessments which go beyond the practice we have laid down in this judgment.
86.	It was also argued on these appeals that by authorising his solicitor to seek reimbursement by the paying party, the receiving party has effectively waived privilege in the documents lodged with the court. This submission was based on Al Fayed v Commissioner of Police for the Metropolis [2001] EWCA Civ 780(Bailii). In this context, we see no reason to depart from the principles as respects privilege established in the Goldman case (see para 56 above).
87.	It follows that in Worth v Mackenna the order of Judge Marshall-Evans must be set aside. In Pratt v Bull paragraph 2(a) of the order of Judge Cotterill must be set aside and paragraphs 2 and 3 of the order of Deputy District Judge Roach restored.
	4. Satisfying the conditions in section 58
88.	All of these cases raise (or in the disclosure cases may raise) the issue of failure to comply with any of the applicable conditions in section 58(3) and (4), including the requirements prescribed by the Regulations. This primarily involves a question of construing section 58(1). This sub-section, it will be recalled, provides that:
	"A conditional fee agreement which satisfies all of the conditions applicable to it by virtue of this section shall not be unenforceable by reason only of its being a conditional fee agreement; but . . . any other conditional fee agreement shall be unenforceable."
	The whole of section 58 was substituted (and section 58A added) by section 27(1) of the Access to Justice Act 1999. Its predecessor, enacted in 1990, had simply provided in section 58(3) that
	"Subject to subsection (6) a conditional fee agreement which relates to specified proceedings shall not be unenforceable by reason only of its being a conditional fee agreement."
	The only provision specifically making a CFA unenforceable was that in subsection (6) dealing with CFAs which contained a success fee greater than the permitted maximum for the proceedings in question.
89.	The new section 58(1) was clearly intended to leave it to Parliament to decide what further inroads might be made into the principle that contingency or conditional fee agreements are unenforceable: see Awwad v Geraghty & Co [2001] QB 570 (para 14 above). It also reflected Parliament's assessment of the state of public policy in this area: see R (Factortame Ltd) v Secretary of State for Transport (No 8) [2002] EWCA Civ 932(Bailii) at [61]; [2002] 3 WLR 1104. The question for us is whether it was also intended to render unenforceable a CFA which did not comply in every particular with the requirements of the section and of regulations made under powers contained in the section.
90.	Mr Drabble QC, for the Law Society, took the lead in arguing this issue, with the support of counsel for all the receiving parties. He argued that the statutory regulation has two distinct aims. The first is to ensure that CFAs do not have an unacceptable tendency to corrupt public justice - that is to place the legal representative in an intolerable conflict between his own self interest and his duty both to his client and to the court. The second is to protect the client - to ensure so far as possible that she understands what she is letting herself in for and is able to make an informed choice amongst the funding options available to her.
91.	Thus, he argued, the conditions provided for in the section itself were designed to avoid any tendency to corrupt public justice: the agreement must be in writing (s 58(3)(a)), must relate to the right sort of proceedings for any sort of CFA (s 58(3)(b)) or for a CFA with a success fee (s 58(4)(a)), must state the percentage of any success fee (s 58(4)(b)), and that percentage must not exceed the prescribed limits (s 58(4)(c)). The requirements which have in fact been prescribed by the Regulations (for the purpose of s 58(3)(c)), on the other hand, are there to protect the client rather than the wider public interest, although Mr Drabble accepted that requirements might be prescribed which had a wider purpose.
92.	His first submission was that "unenforceable" means only unenforceable in proceedings between solicitor and client, so that it is not open to the paying party to take the point. A great deal of the written and oral submissions to us concerned this point, and in particular the distinction between an unenforceable and an illegal contract. It faces the immediate difficulty that in Dimond v Lovell [2002] 1 AC 384, HL, the defendant was able to resist paying the claimant's car hire charges on the ground that the hire agreement was an unenforceable consumer credit agreement between the claimant and the hirer. It is difficult to see any difference in principle between this situation and that.
93.	In any event, as we have already said at paragraph 52 above, even if correct, this argument would be of no help to the receiving parties because of the indemnity principle. Again, a great deal of the argument before us was directed at qualifying the application of that principle in these cases. Ultimately, however, it became clear that a CFA is a contentious business agreement to which section 60(3) of the Solicitors' Act 1974 (see para 23 above) applies. If the solicitor cannot enforce the agreement against his client, then the amounts provided for in the agreement are not payable by the client at all (as discussed in paras 113 to 116 below, the position as to the ATE premium and disbursements is different). In the present state of the law, therefore, they cannot be recovered from the other side.
94.	It was also argued that this construction of section 58(1) would undermine the policy on access to justice and the statutory objective contained in section 17(1) (see para 17 above). However, this sub-section contains not one purpose but two, increasing access to justice and maintaining a proper and efficient system of justice. These two objectives have to be balanced. It cannot be the case that Parliament was entirely unconcerned with the interests of the other party to the litigation. The replacement section 58, together with section 58A, was enacted at the same time as paying parties were made liable for both the success fee and the ATE insurance premium. These are significant additional liabilities. There are also the concerns referred to in the House of Lords in Callery v Gray (see para 49 above). The requirement that the CFA be in writing and the statutory cap on the success fee, for example, also provide some protection for paying parties.
95.	Accordingly, we reject Mr Drabble's first submission.
96.	Mr Drabble's third submission was that the prescribed requirements should themselves be construed in a realistic way, on the basis that the maker of the delegated legislation should not be taken to have intended that it should be construed in so rigid a fashion as to render the whole CFA unenforceable, and thus the whole of the solicitor's fees irrecoverable, because of a minor breach. More precisely, this submission is that what at first sight might appear to be a breach is not a breach at all because the regulations when properly construed do not require anything different.
97.	He acknowledged that this approach has its disadvantages. The main disadvantage is that it might tempt a court in costs proceedings, where the client herself makes no complaint and has suffered no detriment, to interpret the requirements in such a way as to dilute the protection given; but in other proceedings, where the client had indeed suffered detriment and wished to raise a legitimate complaint against her legal representative, the court would not wish to do this. Mr McLaren showed us that a client may still be at significant risk under a CFA, for example if she refuses a Part 36 offer, or the costs recovered from the paying party do not meet everything in the solicitor's bill, or she has had to pay interest on a loan to fund the ATE premium, or she fails to recover the whole premium. Not all solicitors will be prepared to forego these charges, especially in higher value cases than those with which we are concerned. The need for consumer protection, though reduced under the new scheme, is still real.
98.	An example of this difficulty might be the issue under regulation 2(1)(d) raised in Tichband v Hurdman and Hollins v Russell (see paras 118 to 130 below): from a consumer protection perspective it is more important for a client to be told that there is no cap on the amount in costs for which they might become personally liable than that there is such a cap. The research by Yarrow and Abrams (see paras 25 and 27 above) indicated that clients were confused between conditional fees on the UK model and contingency fees on the American model. They might well assume that the solicitor became entitled to a percentage of the damages recovered rather than an extra percentage of his normal charges. In construing that requirement, it might be said, we should not be tempted to conclude that it is unnecessary to make clear the absence of a cap simply in order to save the CFA.
99.	Another disadvantage of this approach is that it deals only with those points which have so far been raised. Experience has shown and is continuing to show that there is no end to the arguments of paying parties. It is a fair assumption that once one head of the hydra has been slain two more will pop up in its place. Even if in due course it turns out to be unfounded, much time and effort may have been devoted to dealing with it by costs judges up and down the country to the detriment of the efficient administration of justice which was one of the objectives of the 1990 Act.
100.	Hence Mr Drabble's preferred approach was his second submission. The words "satisfies all the conditions applicable to it" in section 58(1) should be construed in a realistic way to reflect the purposes of the legislation. These were to increase access to legal services by making new types of funding arrangements possible, while protecting both the public interest and the interests of clients. Parliament will not have intended to render unenforceable CFAs which fulfilled the first objective without detriment to the second. Hence an agreement which satisfies all the conditions of the primary legislation and substantially if not literally conforms to the prescribed requirements should be held to satisfy the conditions applicable to it. Put another way, an agreement should not be held unenforceable for immaterial breaches of the regulations.
101.	He drew an analogy with the approach to breaches of procedural rules adopted by this court in R v Secretary of State for the Home Department, ex parte Jeyeanthan [2000] 1 WLR 354. At p 358, Lord Woolf MR commented on the conventional distinction between directory and mandatory requirements thus:
	"The position is more complex than this and this approach distracts attention from the important question of what the legislation should be judged to have intended should be the consequences of the non-compliance. This has to be assessed on a consideration of the language of the legislation against the factual circumstances of the non-compliance."
	He concluded his discussion of examples at p 359:
	"It must be remembered that procedural requirements are designed to further the interests of justice and any consequence which would achieve a result contrary to those interests should be treated with considerable caution."
102.	The point is well taken by Mr McLaren that these observations were made in the context of procedural rules which made no express provision for the consequences of breach. By contrast, section 58(1) makes express provision for the consequences of failure to satisfy the applicable conditions. Unlike, for example, the Consumer Credit Act 1974Acts, there is no graduated response to different kinds of breach: it is all or nothing. On behalf of the paying parties both Mr McLaren and Mr Burnett QC (who appeared for the defendants in the TAG test cases) accepted that the principle that the law does not care about very little things applies here. But they urged us not to elaborate it by reference to concepts of materiality derived from public law.
103.	However, we are not here concerned with the interpretation of "unenforceable". That was the subject matter of Mr Drabble's first submission. We are concerned with the meaning of the words "satisfies all of the conditions ...". Mr Drabble also drew a little support from some words of Lord Woolf MR in Hodgson v Imperial Tobacco [1998] 1 WLR 1056, at p 1065. Lord Woolf was pointing out that a legal adviser acting under a CFA should be no more vulnerable to an order for costs against him personally than any other legal adviser, provided that the CFA was inside the protection provided by section 58 (in its original form):
	"If the statutory requirements are complied with the CFA will be valid and enforceable by the legal advisers against a client. If it materially departs from the legislative requirements it will not be enforceable and will not be a CFA which is protected by [the section]." [Our emphasis]
104.	Of course, too much should not be read into an adverb used in the course of arriving at the conclusion that no pre-emptive order was required to protect the solicitor's position. But the case is an early example of the court's desire to further the Parliamentary purpose by respecting rather than suspecting this innovation in funding legal services. The House of Lords has recently reminded us of the principles of purposive construction in R v Secretary of State for Health, ex parte Quintavalle [2003] UKHL 13(Bailii); [2003] 2 WLR 692. Lord Bingham, at para 8, said this: