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Court of Appeal rules defendant Damages Based Agreements (DBAs) are unlawful...

As the economic climate causes a tightening of the belt, it's entirely conceivable that a defendant to civil proceedings may look to alternative ways to fund their defence of a claim. 

However, the 6 July 2022 judgment of the Court of Appeal in Candey v Tonstate Group Ltd & Ors has confirmed that an agreement that a defendant will pay their solicitors a percentage of any sums they successfully resist having to pay the claimant is unlawful and unenforceable.

This is perhaps not surprising to those that have followed the progress of first the Jackson Report, the parliamentary debate and the 2013 DBA Regulations over the past nine years! To qualify as a DBA, the agreement must provide for payment by the recipient of the services if he or she "obtains a specified financial benefit" from the litigation. In this recent case the agreement in question did not meet the requirements for a DBA - the recipient of services being able to hold onto something they already owned was deemed insufficient.  

A defendant cannot look to a DBA as a funding option unless it has a counter-claim against the claimant. There are though other options available to a defendant for funding their defence of proceedings including Conditional Fee Agreements (CFA). However, the availability of a CFA will be dependent upon the defendant's lawyers attitude to risk and their views of the merits of the defence. 

it is not possible for a defendant to litigation to enter into an enforceable agreement with his legal representatives that he will pay them a percentage of such part of the sums or assets claimed from him as he has resisted paying or transferring to his opponents. Such an agreement is not a "Damages-based Agreement" as defined by s.58AA(3) of the 1990 Act and cannot comply with the requirements of the 2013 Regulations


dispute resolution