“IN CONTRACT YOU BARGAIN FOR A RESULT”: JUDGE UPHOLDS COMPANY’S CLAIM FOR 20% OF COMPENSATION RECEIVED

I am grateful to Martin Hirst for sending me a copy of the judgment of  HHJ Holmes in NC Investigating Services  Ltd -v- Crossley (1st March 2024), a copy of which is available here  OT APPROVED, MHIRST, H1QZ65P0, NCINVESTIGATION, CROSSLEY, 01.03.24 (SOEND) – J v4.   It is a case where the judge upheld a claim by an investigator for 20% of  compensation received following the defendant being a victim of fraud.

“In contract, you bargain for a result. Sometimes you can promise too much, and lose money. Sometimes, it turns out to be easier than you think and it becomes a windfall, but you cannot rewrite contracts after the event.”

THE CASE

The defendant had lost £300,000 as a result of a sophisticated fraud.  He contacted a solicitor who, in turn, recommended he contact an investigator to make enquiries.  The defendant starting dealing with the claimant.

THE DEFENDANT’S AGREEMENT WITH THE CLAIMANT

An agreement was entered into whereby the defendant would pay the claimant £5,000 plus 20% of all damages received.

THE DEFENDANT’S RECOVERY

The defendant recovered full compensation from their bank and a further £600 for injury to feelings.

THE ACTION BETWEEN THE CLAIMANT AND THE DEFENDANT

Once the defendant had recovered the damages the claimant sought the fees that were due. The defendant refused to pay.  There were a number of arguments put forward by the defendant.  In particular the defendant argued that there had been breaches of the Consumer Protection from Unfair Trading Regulation 2008. It was alleged that the agreement was unfair and represented an aggressive commercial practice.

THE JUDGE’S DECISION: NO UNFAIR PRACTICE AND JUDGMENT FOR THE CLAIMANT

9. In my judgment there are a number of matters upon which I need to make factual
findings. First, what was said at the meeting on 29 November 2018 that might have
induced Mr Crossley to enter into the contract? Secondly, are any of the matters set out
as being misrepresentations, established? Thirdly, what was the extent of the
contractual obligations upon NCIS? Fourthly, was the payment from NatWest as a
consequence of the work undertaken by NC Investigations? Fifthly, was the money
received from NatWest compensation or reimbursement? Once I have made those
findings, I can then turn to whether or not any of the breaches of the regulations are
established, or any breaches of the Misrepresentation Act are established.
30. On the pleaded allegations, Mr Crossley accepts that Mr Casey did not describe ITUS
as dodgy at the meeting on 29 November 2018. To use his phrase, he was trying to
blacken their name. I am not satisfied that Mr Casey said that ITUS would overcharge
for the work. He may have gone as far as to say that he had his own company. There
is a dispute as to whether that was raised first by the Crossleys or whether by Mr Casey,
but in my judgment nothing turns on that. All parties agree that there was a discussion
about Mr Casey’s own company during the course of that meeting.
31. On the balance of the evidence that ultimately Mr Crossley, and certainly his son, gave
about that meeting, the essence of what was said was that ITUS would in essence put

an additional markup on whatever it was that Mr Casey was going to charge, and that
is no doubt true. Ultimately, the business model that Mr Casey had with ITUS was that
they would introduce clients to him, that he would provide a quotation for the work,
and ITUS would add a proportion on top as payment for their introduction. There is
nothing surprising about that business relationship. There is nothing wrong about it,
and if you strip out that markup there will no doubt be a reduction for the customer.
All of that, in my judgment, is entirely true.
32. Mr Casey accepts that he said that the investigation would be complex and potentially
very expensive. At that stage, Mr Casey having only just been given some of the
documents, that was not an untruthful statement. It was potentially complicated and it
was potentially expensive. I am certainly not sure that it was untrue, which it would
need to be to amount to a misrepresentation.
33. I accept that Mr Casey may have said words to the effect of him having the same level
of investigators as ITUS. It may not have been the whole truth, given the size of the
two companies. The two companies did not employ investigators plural, and it is not
untrue that ITUS was of similar size, or the same size, as Mr Casey’s own company.
34. The matters sent out at paragraph 7 of the amended defence are the points made in the
email of 14 December 2019. None of those matters are demonstrably false. Indeed,
what they are, are expressions of opinion, such as, that they had a fair to good chance
that they would be able to assist the First Defendant, although recovering not all of his
losses. It was unlikely that the First Defendant would recover more than £100,000, that
it would be a long hard fight. Those are opinions, and I am not satisfied that any of
those representations are false or misleading.
35. I also have to consider fair dealing. Mr Casey set out his position in writing on at least
two occasions before the contract was signed on 4 February 2019. He provided fee
options. Whilst one can understand why Mr Crossley took the option that he did, the
smallest amount upfront and the potential largest amount if the money was recovered,
there is no suggestion that £15,000 would not have been a fair fee for the work that Mr
Casey was prepared to undertake. Indeed, the last document that we looked at in
evidence this morning was a quotation obtained from NCIS that £20,000 would have
been a fair figure for them to quote. Mr Casey was prepared to do the work for £15,000.
36. I am also entirely satisfied that Mr Crossley understood what these options were, and
I am sure of that because Mr Crossley said that he wanted to make sure that Mr Casey
worked for his money, and he therefore went for the option that incentivised him the
most. Mr Crossley was perfectly entitled to take that view, and who knows, he may
actually be right. It may well be that Mr Casey went the extra mile to ensure that he
recovered as much money as he could, and therefore received the greatest return
himself.
37. I also find that the purpose of the contract was to recover compensation. That is what
it says. The contract says:
“In order to achieve the ultimate goal of receiving a significant amount
of compensation.

That was the purpose of this contract. He sets out what he intends to do, and that is the
six prongs that I have already referred to, but it is important that the paragraph under
those six prongs is not overlooked, which says:
“We must however remain flexible throughout what could be a
painstaking process where tactics might have to be varied and our
methodology remain fluid depending on what develops throughout the
process.”
38. It is also the basis of the payment structure. The payment is based on compensation. It
could have had a provision that said, and you get a £5,000 bonus upon the identification
of the person who perpetrated the fraud. It could have said that, but it does not. It is
entirely premised on the basis that the purpose of this contract is to obtain
compensation for Mr Crossley. The reality is that it was inevitably going to be so. The
police have far more tools at their disposal for the detection of crime. They can apply
to the courts for bank statements, and telephone records. They have the power to search
properties, the powers to arrest and interview under caution. None of those power are
available to somebody like Mr Crossley. The prospect of Mr Crossley identifying the
perpetrators without police assistance were diminishingly small.
39. The best prospect was to help the police and try and keep the police investigation going
and it does seem that investigation has now found a number of people who were
involved. Whether they found the people who were in charge, or whether they found
the people who were directly involved with Mr Crossley, I do not know. I also do not
know whether the investigation is still ongoing, but Mr Casey did liaise with the police
and whether the police officer was dismissive about the file that was produced, and
whether he wanted it in electronic form or not, does not seem to me to make a material
difference. Mr Casey did what could be done, which was to gather the information, and
keep the police interested. That ultimately, it seems to me, is what he did.
40. In contract, you bargain for a result. Sometimes you can promise too much, and lose
money. Sometimes, it turns out to be easier than you think and it becomes a windfall,
but you cannot rewrite contracts after the event. There are some legal rules that allow
the courts to step in. Misrepresentation, fraud, unfair consumer practices, are amongst
them but, in my judgment, there was no misleading commercial practice and no
misrepresentation in this case. The contract was for recovery of money and money was
recovered.
41. There was an argument advanced yesterday that the only compensation recovered was
£600, and the remainder was reimbursement. It does not seem to me that any of these
parties understood the contract to mean that when they entered into it. Indeed, I asked
Mr Crossley about it yesterday, as to whether he had done the maths of £300,000 and
20% of it, and he clearly had. Indeed, Mr James Crossley said something very similar
when he gave his evidence today.
42. Ultimately therefore, the defence and counterclaim fail on their facts, because, for the
purposes of the regulations, I am not satisfied that NCIS has engaged in any practice
which contravenes the requirements of professional diligence or materially distorts the
economic behaviour of the average consumer with regard to the product. There is no
indication that there has been an omission or a misrepresentation that had any impact
at all on the contract in this case. I would have found, as indeed was conceded by
counsel on behalf of the Claimant this morning, that Mr and Mrs Crossley were

vulnerable, and the court needs to be alert to any sharp practice or exploitative
behaviour but the key factors are the Mr Crossley had lost £300,000, he had a natural
desire for compensation and justice, and he was capable of being exploited on that
account and on account of his age.
43. On that latter point, Mr Crossley came across to me as a man who is no fool. He said
a number of times that he is uneducated, and he may not have a string of formal
qualifications, but he is also an experienced man of business who remains sharp and
knows one end of a contract from another. In my judgment he got what was contracted
for, and there was no actionable misrepresentation and no breach of the regulations.

44. Turning to the amount of money that the Claimant is entitled to, he is entitled to
compensation of 20% of the sums recovered, which was £300,600.00. 20% of that is
£60,120.00 and there will be judgment in that sum. There will be interest pursuant to
section 69 of the County Court Act, running from 28 days after the invoice as per the
term in the contract, that is just over three years. When that invoice was produced,
interest rates were 0.1%, and they did not begin to rise significantly until the middle of
2022, but they are now 5.25%. It would be possible to work out, on all the increases in
those interest rates, precise figures, but I am going to allow 2% for three years which
is a further £3,607.20.
45. There will therefore be judgment for the Claimant in the sum of £63,727.20.