New ruling on 'no win no fee' for tribunals protects access to justice

17 June 2010

Today's ruling to allow contingency fee agreements (CFAs) in tribunal cases has been hailed as a victory for access to justice by the Law Society.

In a judgment handed down today by Master Hurst, Senior Costs Judge in Tel-Ka Talk Limited v The Commissioners of Her Majesty's Revenue & Customs, the use of CFAs, or no win, no fee arrangements in tribunal cases has been ruled lawful.

The Law Society intervened in this case because the issue as to the validity of CFAs as a method of funding for tribunal cases was of great significance to ensuring access to justice and important to the solicitors' profession.

Law Society President Robert Heslett said:

"It was essential for the courts to allow CFA arrangements with solicitors to be valid in such cases in order to allow companies and individuals to fulfil their right to a fair hearing in a tribunal. With many businesses facing cash flow problems and needing to take legal action, access to justice should not be denied.

"CFAs provide a valuable means of supporting access to justice where no other means of funding proceedings are available. By not allowing CFAs our justice system would have been dealt a serious blow."

In this case Tel-Ka Talk Limited (the company) had appealed against decisions of HM Revenue and Customs (HMRC) to refuse repayment of VAT input tax credit claimed by the company.

As a result of the withholding of VAT, the company suffered cash flow difficulties, and experienced difficulty in funding the legal costs of the tribunal hearings.

The solicitors agreed to continue to act on a contingency fee basis and entered into a non-contentious business agreement. The contingency fee arrangement enabled the company to continue to pursue its claim and recover the VAT repayment it was owed by HMRC.

Notes:

The legality of contingency fees before tribunals is implicitly acknowledged in the Solicitors Code of Conduct 2007 (particularly rules 2.04, 11 and 24.01). The Society believes that there are many thousands of such arrangements entered into by hundreds of solicitors before such tribunals every year.