SOLICITOR DID NOT HAVE GOOD GROUNDS TO TERMINATE THE RETAINER UNDER A CFA: CLAIM FOR £16,200 IN COSTS FAILS

February 1, 2021 · by · in Applications, Assessment of Costs, Conditional Fee Agreements, Conduct, Costs

I am returning to the judgment of Master Haworth in  Murray & Anor v Richard Slade and Company Ltd [2021] EWHC B3 (Costs). This time looking at the decision in relation to termination of a conditional fee agreement. The Master held that the client had not terminated the agreement. The agreement had been terminated by the solicitor with no good reason. Consequently the solicitor was not entitled to costs.  Again this case provides another object lesson to solicitors as to the care that has to be taken to run a case that a retainer has been terminated.

 

“At no time did the Defendant advise the First Claimant that the request he made in his email of 6 July 2018 would cause the retainer to be terminated or advise him of the consequences of termination.  Furthermore, the Defendants accepted in the October 2018 correspondence that the retainer continued. They then terminated the retainer at some unknown date for an alleged repudiatory breach without setting out the terms of that breach or providing the First Claimant with notice.”

THE CASE

The claimant (“client”) was seeking an assessment of the defendant’s (“solicitors”) costs. One issue was the claim by the solicitors for fees following, the solicitor said, a conditional fee agreement that the client had terminated.

THE CONDITIONAL FEE AGREEMENT

The Master set out the terms of the dispute between the parties and the conditional fee agreement itself.  The client’s case was put in this way.

“No Entitlement to Costs
These costs were incurred pursuant to a Conditional Fee Agreement dated in or around 23 August 2016 which covered a “claim against the opponent for professional negligence against a former solicitor”, the full terms of which will be referred to on assessment.
It is asserted by the Defendant that the retainer was terminated by requesting the return of his papers, however no evidence has  been adduced to show that such request was made or that, if it was, it was made in such a way that it amounted to a termination.
Whilst the First Claimant accepts that a request for the papers may have been made – possibly verbally – such request was not made with a view to terminating the retainer, but borne out of frustration about lack of progress.  It is denied that the Claimants, or either of them, terminated the retainer in June 2018 or at any point thereafter.
In fact the Claimants have subsequently urged the Defendant to continue with the case, but the Defendant has refused to do so, and has thereby terminated in the retainer in such a way that it is not entitled to any payment.
The First Claimant’s frustration at the lack of progress was understandable.  In particular –
  • Work on preparing the letter of claim was not commenced until around May 2017.
  • It was duly sent on 27/10/17.
  • The response on 02/02/18 was that the letter of claim contained insufficient information on causation to enable a proper response.
  • Whilst there was a subsequent discussion with Counsel, nothing more of substance happened until June 2018
  • The delays were, no doubt, caused or contributed to by the high turn-over of fee earners dealing with the matter.
  • All of this was against a background of the Defendant confirming that, in respect of at least one aspect of the claim [increased costs due to loss of the file], the case was good.
  • In respect of the other aspect [the tax claim] instructions were provided when sought to deal with the causation issues.
Defendant’s Reply
It is denied that the Claimants did not terminate the retainer but in any event their conduct gave the Defendant grounds to terminate the retainer in their own right.
The Defendant invites the Court to note that only the First Claimant was the client in relation to this matter.
In relation to the First Claimant’s termination of the retainer, the Defendant relies upon the First Claimant’s complaint by email dated 04/07/18 which is already in the First Claimant’s possession.  The references in that email to the “Alf” matter relate to the claim which the First Claimant wished to bring against Hodders, his former solicitors, for professional negligence.  It should be noted that in that complaint the First Claimant indicates that the second limb of it relates to “release of file(s) regarding the Alf case and your assurances regarding future progress should we choose to seek another firm of solicitors to take up the case”.”
  1. The First Claimant first instructed the Defendants in connection with this claim in or about 2016.  The conditional fee agreement was not entered into until August 2016.  On the basis that no progress had been made in relation to the claim, Mr Preen on behalf of the First Claimant, made a complaint to the Defendant by letter on 14 June 2017, and in December 2017, after further complaints by the First Claimant, this resulted in the £7,000 reduction in fees referred to paragraph 9.  The First Claimant at paragraphs 7.13-7.15 of his witness statement makes further complaints as to the way in which the Defendants were handling the Hodders claim.
  2. The First Claimant in his witness statement states:
“7.19  By this stage in June 2018 the Defendant had had the response to the letter of claim for more than four months and no further progress had been made at all.  It is notable that in this email Mr Slade says that the case, insofar as it related to Hodders’ failure to deal with restrictions in property, was a good one and that he expected to win it.  It was only at that stage that Mr Slade asked for an explanation of how I assessed the level of loss on the tax aspect of the claim.  This information had already been provided by Mr Preen however, not least by provision of the file of papers in July 2017.
7.20  Dissatisfied with the situation, Mr Preen and I met with Mr Slade on 3 July 2018.  Mr Slade’s sole focus at the meeting was on getting in payment of the disbursements that he said were outstanding, including Counsel’s fee.  He seemed to have very little interest in our complaints about lack of progress in the Hodders case and its history of delays and having documents overlooked.  He wanted payment of what he said were his outstanding charges and everything else was conditional upon that.
7.21  He said that if the outstanding amounts were paid, then I had two options for progressing the Hodders case, which were –
7.21.1  For him to continue with the case, which he would deal with personally, and which he was confident that he and he alone could win, or
7.21.2  For the papers to be released without charge if I wanted to go elsewhere, but on the basis that if the case was ultimately won, he would be entitled to his fees under the terms of the Conditional Fee Agreement.
7.22  The firm implication was that, if the disbursements were not agreed and paid, no further work would be undertaken on the Hodders case.  This was the way in which Mr Slade had dealt with me previously in December 2017, when I was told that if there was an unresolved dispute he could not continue to act.  I felt pressurised into making payments that I did not, at that point, believe to be due.”
  1. At paragraph 7.25 he goes on to say:
“It was not a termination of the retainer, I wanted, and still want the Hodders case to be progressed.  But I was not prepared to accept the delays that had already taken place or tolerate being held over a barrel in respect of the Hodders case because there were fees allegedly due under an entirely different charging arrangement that I disputed.”
  1. Mr Slade concludes at paragraph 49 of his witness statement:
“Mr Murray maintains that the firm’s CFA in the claim against Hodders was terminated by the firm in circumstances whereby in his letter dated 4 July 2018 he demanded the return of his papers.  I took that letter as termination of the CFA but refused to release the papers until the bills had been paid.”
  1. On 16 May 2018 Mr Slade emailed Mr Murray in the following terms:
“I’ll call this afternoon.  I have been tied up in meetings.  I have lined up a different barrister – my age and someone I’ve known for years and who knows HHJ Gerald very well – who is already working on a hand-over from …  ”
  1. On 17 May 2018 the First Claimant emailed Mr Slade at 13.30 as follows:
“I’ll give you full permission to negotiate with their barrister up to £30K.  We both know she won’t accept that, should hold us in better stead with the Judge.  I would like to know what the new barrister thinks of the whole case.”
  1. On 4 July 2018 the First Claimant emailed Mr Slade following the meeting at the Defendant’s offices the previous day.  The email recalls poor progress and lacklustre enthusiasm in the “Alf” case (which is a reference to the Hodders case) and records the following:
“I wholly and completely dispute the disbursement charges mentioned above and ask that in order to avoid this matter being made formal, you release the “Alf” file without caveat and remove the two disbursement charges and confirm this within five working days of this letter.”
  1. In response to correspondence from the First Claimant’s costs lawyers, on 16 October 2018 Mr Slade dealt with the Hodders matter in the following way:
“In relation to the Hodders matter, we take it that our retainer has indeed been terminated because Mr Murray has asked for the return of the papers.  Please confirm.  Those papers are subject to our lien because, of course, bills have been rendered and are outstanding in relation to the claim by Mrs Murray in respect of while they were directed to the company, Mr Murray is personally, jointly and severely liable and has signed a personal guarantee.”
  1. In the papers provided to me for assessment by the Defendant there is an email dated 26 October 2018 headed “Without Prejudice” which contains the following:
“4.  James either pays the draft bill in the Hodders matter and I transfer the files to the firm of his choosing, or (if he wishes) continues to instruct my firm to deal with the matter on the terms of the CFA.  If the latter (which I do not encourage but will go along with if that’s what he wants) some agreement will have to be made with Jann Preen who has, to date, sought to disrupt the course of my work to James’s disadvantage.”
  1. The relevant provisions of the Conditional Fee Agreement relating to termination are as follows:
“14.3  Richard Slade & Company can end this agreement if the client does not meet its responsibilities.  If this happens, the client will have to pay Richard Slade & Company fees at the normal rates for the work done to the termination date and disbursements.
14.4  Richard Slade & Company can end this agreement if it believes the client no longer has a reasonable prospect of success.  If this happens, the client will only have to pay Richard Slade & Company fees at the discounted rates and disbursements.
14.5  The clients’ death before the claim is resolved will bring this agreement to an end.  Richard Slade & Company will be entitled to recover its fees at the discounted rates and the disbursements up to the date of the client’s death from the client’s estate.”

WAS THE RETAINER TERMINATED?

The Master held that the client’s conduct did not amount to a termination of the agreement.  The solicitor appeared to have terminated the agreement with no valid reason under the terms of the CFA.  The solicitor was, therefore, not entitled to any costs.

Termination of the Retainer
  1. On 3 July 2018 the First Claimant and Mr Preen met with Mr Slade.  The evidence, which I accept, is that Mr Slade was solely focussed on dealing with the outstanding disbursements in the Counsel’s fee bill rather than addressing the issues raised by the First Claimant in respect of the Hodders claim.  He offered two scenarios to resolve the First Claimant’s complaint:
  2. i)If the disbursements were paid, he would continue with the case personally, or
  3. ii)The files would be released without charge, if the First Claimant wished to instruction other solicitors on the understanding that if the claim was won, the Defendant would be paid pursuant to the terms of the CFA.
  4. The 4 July email, in my view, dealt with both the Counsel’s fee claim and also the lack of progress in the Hodders claim.  In my judgment the retainer was not terminated by this email.  The email was a complaint whereby the First Claimant offered to have the files released on the basis that the outstanding disbursements were dropped. 
  5. The response from the Defendant is the email of 8 August 2018.  That email did not state the retainer had been terminated, nor advise the First Claimant of the potential consequences that would arise from a termination of the retainer.  To my mind most of that email relates to the unpaid Counsel’s fee and goes on to state:
“This brings me to the present.  There is a bill to pay in the sum of £20,000.  If that bill is paid and the payments by American Express are left undisturbed, that will be the end of the matter.  The retainer can be concluded in an orderly way and the files made available for collection or transfer to a different firm.”
  1. In my judgment, the email presumes the retainer still exists and refers to how the retainer might end, not that it has ended.
  2. Matters continued and on 3 October 2018 the First Claimant’s costs lawyers wrote to the Defendant confirming their instructions and explicitly stating that their instructions did not amount to a termination of the retainer.  The first time there is any mention of a termination was in the reply of the Defendant in October 2018 when Mr Slade stated:
“In relation to the claim against Hodders, your client terminated the retainer by demanding the return of the files.”
  1. This correspondence continued and on 16 October 2018 the Defendant, in a letter to the First Claimant’s costs lawyers, stated:
“In relation to the Hodders matter we take it that our retainer has indeed been terminated because Mr Murray asked for the return of papers.  Please confirm.”
  1. In response the First Claimant’s costs lawyers replied on 25 October:
“Once again, your retainer has not been terminated.”
  1. On 26 October in a without prejudice email from Mr Slade to the First Claimant’s costs lawyers which was provided to me in the bundle for assessment, the letter records:
“James either pays the draft bill in the Hodders matter and I transfer the files to the firm of his choosing or (if he wishes) continues to instruct my firm to deal with the matter on the terms of the CFA.  If the latter (which I do not encourage but will go along with if that’s what he wants) some agreement will have to be made with Jann Preen who has to date sought to disrupt the course of my work for James to James’s disadvantage.”
  1. On 6 November 2018 in correspondence with the First Claimant’s costs lawyers Mr Slade stated:
“If Mr Murray wishes us to lift the suspension of our service, he will have to make the payment requested.”
  1. On 12 December 2018, Mr Slade in a letter to the First Claimant’s costs lawyers goes on to say:
“We therefore accept your client’s repudiatory breach of our retainer as bringing that retainer to an end.  We shall transfer the sum of £10,000 held on our client’s account as part payment of our outstanding bill and draw up and send in final bills.”
  1. The provisions of termination in the CFA are set out in paragraph 14 of the agreement.  The First Claimant could end the CFA at any time.  If he did not continue the claim, he was liable to the Defendant for any work done at normal rates.  If he continued with the case and wins, he would also have to pay the success fee for the work already completed.
  2. The Defendant could end this agreement if the First Claimant did not meet its responsibilities.  If that happened the First Claimant would have to pay the Defendant’s fees at normal rate for work done to the termination date and disbursements.
  3. In my judgment the Defendants were conflating two issues.  First, the alleged outstanding disbursements in the Counsel’s fees claim which had been raised as interim statute bills and secondly the complaints in relation to the Hodders case.  In my judgment there was no basis whatsoever for the Defendant to terminate the CFA on the ground of any failure to pay costs. Any sums owed could only relate to the Counsel’s fee claim and could not relate to the Hodders case.  The Defendant had not given the First Claimant notice of any breach of his responsibilities under the provisions of paragraph 14.3 of the CFA in any event.
  4. I am satisfied that the First Claimant did not terminate the retainer by seeking the return of his files.  I accept the First Claimant’s evidence that the First Claimant and Defendant at that time were negotiating a complaint which was caused by the Defendant’s poor service.  At no time did the Defendant advise the First Claimant that the request he made in his email of 6 July 2018 would cause the retainer to be terminated or advise him of the consequences of termination.  Furthermore, the Defendants accepted in the October 2018 correspondence that the retainer continued. They then terminated the retainer at some unknown date for an alleged repudiatory breach without setting out the terms of that breach or providing the First Claimant with notice.
  5. In the Points of Reply the Defendant puts his case in the alternative, namely, that if the retainer had not been terminated by the demand for the return of papers, the Defendant was entitled to terminate on the basis of the First Claimant’s conduct namely the letter of 4 July 2018.  In my judgment this argument takes the Defendant nowhere, for the reason that the Defendant was asking the client to confirm whether the CFA had been terminated in the October correspondence and was told that it had not been terminated.  To my mind, that alone does not support the contention that the 4 July email permitted the Defendant to invoke the provisions of paragraph 14.3 of the CFA to terminate the retainer.  Furthermore, there appears to be no evidence, either in Mr Slade’s witness statement or the documents, as to the actual date that the Defendants state they terminated the retainer.
  6. What is clear from the evidence is that the First Claimant, either by himself or through Mr Preen, had made a number of complaints to the Defendants, none of which had led to termination.  Furthermore, there is no evidence, whether documentary or in the witness statement of the Defendants that the First Claimant was at any time advised that his complaints might lead to a termination of the CFA.
  7. For those reasons I disallow the Hodders claim for costs on the basis that the Conditional Fee Agreement was terminated by the Defendants without good cause or on reasonable notice. 
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