WHO SACKED WHO? HIGH COURT DECISION AS TO WHETHER THE CLIENT OR THE SOLICITOR ENDED THE RETAINER

In Walsh v Greystone Financial Services Ltd [2019] EWHC 2573 (Ch) Mr Justice Nugee had to decide whether it was the client or the solicitor who ended the retainer.

THE CASE

At the end of a trial at which the claimant had been unsuccessful his solicitors wrote to him indicating that they no longer wished to act for him. In response he instructed a new firm of solicitors.  Because of the principles relating to a solicitor’s lien it was important to determine whether it was the solicitors who terminated the retainer or the client.

THE CORRESPONDENCE

The judge set out the relevant correspondence.
    1. The relevant material can be fairly shortly stated. Coyle White Devine, who had incurred liabilities to counsel, eventually, after failing to secure payment from Mr Walsh of everything that they considered they were entitled to, served him with a statutory demand. Mr Walsh took separate advice from Crofts in relation to the statutory demand and has indeed brought, with their assistance, an application to set aside the statutory demand. That is not before me and is due to be heard, I believe, in October. However, in those circumstances, on 13 June 2019, Coyle White Devine wrote to Mr Walsh and having explained that a solicitor is only entitled to terminate the retainer for good reason, such reasons including a refusal by the client to pay an interim bill in a contentious matter, they continued:
“In all the circumstances, it is now abundantly clear that Coyle White Devine cannot continue to act for you in relation to the claim against Greystone Financial Services Limited or any other matters. Accordingly, and with regret, please treat this letter as notice of termination of your retainer with CWD. We are required to provide you with reasonable notice of termination which, in the circumstances, I consider to be seven days. Accordingly, your retainer will terminate on 20 June 2019. That said and as previously advised, we do not intend to carry out any further work on your matters pending termination. For completeness, I have enclosed a notice of change which I would invite you to complete, sign, and return by 4.00 p.m. on 14 June 2019 notwithstanding the termination period. To this end and where we are unable to carry out any further work, it is not appropriate for CWD to remain on the court record. If you have alternative legal representatives such as Crofts Solicitors, they can file and serve a notice of change on all of the parties. For the avoidance of doubt, should I not receive a notice of change by 4.00 p.m. on 14 June 2019, I will be obliged to make a formal application to be removed from the court record as acting for you the costs of which will be sought from you. I hope that this will not be necessary.”
    1. Then he referred to the lien which Coyle White Devine intended to exercise and expressed his regret at having to write a letter in those terms. Enclosed with the letter was a draft notice of change which provided for Mr Walsh to give notice that his legal representative, Coyle White Devine, had ceased to act for him and that he would now be acting in person. However, in fact, on the next day, Crofts Solicitors replied to Mr Sheehan and enclosed a notice of change in which it gave notice that it, Croft Solicitors Limited, had been instructed to act on behalf of Mr Walsh in place of Coyle White Devine. That was signed on behalf of Crofts Solicitors.
    2. The covering letter, under the heading “Notice of change of legal representatives” said:
“Please find enclosed by way of service notice of change of legal representative… Our client’s position in respect of your termination of retainer is fully reserved.”
    1. It then dealt with the intention to exercise a lien and took the point that:
“As you have terminated the retainer with our client in a matter where there is a continuing litigation, the usual position would be for you to hand over the papers to us in return for a suitable undertaking to hold the same until resolution of the issue of costs. This is in order to avoid interference with the course of justice and to prevent prejudice to our client. We invite you to adopt that course of action.”
  1. I need not refer to any more of the correspondence. It is clear from that that the initiative of a termination of a retainer came from Coyle White Devine in the letter of 13 June giving, as solicitors need to, a reasonable period of notice, in that case seven days, and that if nothing else had been done, the contract would have come to an end on 20 June. It was also apparent that, in fact, the contract came to an end on 14 June as Crofts had been instructed in place of Coyle White Devine.

THE PREVIOUS SOLICITOR’S ARGUMENTS

The judge considered, and rejected, the argument that it was the client who had brought the retainer to an end by instructing new solicitors.

  1. Mr Gupta’s submission is that although the letter of 13 June made it clear that the contract would otherwise terminate on 20 June, it was technically Mr Walsh’s decision to bring the contract to an end on 14 June and therefore he was the one who should be regarded as terminating the retainer. I have already indicated in the course of argument that I do not accept that submission. Whatever would have been the case had Mr Sheehan of Coyle White Devine’s letter simply stopped by saying, “We are bringing the contract to an end on the 20th” and Mr Walsh had reacted by bringing it to an end earlier, in the circumstances of this case, Mr Sheehan positively invited Mr Walsh to change solicitors on the 14th notwithstanding what he calls the termination period and, indeed, backed up that invitation by a threat that if that was not done by 4.00 p.m. the next day, Mr Walsh would be exposing himself to a risk of further costs. It may be that, in fact, Mr Sheehan would not have recovered any costs if he had jumped into court before the 20th, but he certainly does not say in his letter that he will wait until the 20th to see if notice of change is filed. He makes it clear that Mr Walsh will be putting himself at risk as to costs unless notice of change is filed on the 14th.
  2. In those circumstances, it seems to me that it would be a triumph of form over substance to regard the contract as, in effect, terminated by Mr Walsh. The analysis which I prefer to adopt is that it was Coyle White Devine who chose to bring the contract to an end. I express no views and I have heard no argument on whether they were or were not justified in doing so but whether or not they were justified in doing so, it was their decision to bring the contract to an end, coupled with an invitation to Mr Walsh to effectively abridge the termination period from seven days to one day, an invitation which he accepted. That does not, in my judgment, mean that he is to be regarded as the one who brought the retainer to an end. It was Coyle White Devine who did so.