Achara Tripipatkul v WH Lawrence Ltd (trading as WH Lawrence Solicitors)
| Jurisdiction | England & Wales |
| Judge | Brown |
| Judgment Date | 20 July 2021 |
| Neutral Citation | [2021] EWHC B13 (Costs) |
| Court | Senior Court Costs Office |
| Docket Number | Case No: SC-2020-APP-00039 |
[2021] EWHC B13 (Costs)
IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE
Royal Courts of Justice
Strand, London, WC2A 2LL
Costs Judge Brown
Case No: SC-2020-APP-00039
Mr. Robert Marven QC (instructed by Defendant) for the Defendant
Hearing date: 28 April 2021
Draft sent out: 23 June 2021
Judgment Approved by the court
Introduction
The Defendant, a limited company, is a firm of solicitors practising from offices in Chancery Lane. The Claimant is an experienced property investor and the freeholder of several properties, including 45 Wilton Crescent and 45 Belgrave Mews, London, a mansion block in Central London. On 20 December 2017, the Claimant instructed the Defendant pursuant to a written retainer of the same date, to act for her in relation to a dispute with a long leaseholder in the ground and first floor flat at 45 Wilton Crescent, a Mr Paraskevas (‘the Respondent’).
The dispute was litigated in the First Tier Tribunal (Property Chamber) (‘the FTT’). On 11 February 2020 after the handing down of the decision of the FTT, at a time when an appeal from the decision of the FTT was in contemplation and shortly before the time limit for appeal was to expire, the parties entered into an agreement as to fees (‘the Agreement’). The terms of the Agreement are set out below at [58] and provide, inter alia, for a fixed fee of £250,000 plus VAT in respect of work done or to be done by solicitors.
The parties agree that the Agreement is a ‘contentious business agreement’ within the meaning of section 59 of the Solicitors Act 1974 (‘the 1974 Act’). The issue I am required to determine is whether, pursuant to section 61 of 1974 Act, the terms of this Agreement were unfair or unreasonable and, if so, whether the Agreement should be set aside or the sums which are to be paid under it, reduced.
The context in which the issue arises is a Part 8 claim issued on 7 July 2020 by the Claimant whereby she sought the delivery up of a final bill pursuant to section 68 of the 1974 Act or a detailed assessment pursuant to section 70 of the 1974 Act of various bills which are said to have been delivered to the Claimant by the Defendant. In its defence to these claims the Defendant relies upon the Agreement: it is said that the sums due are fixed, and hence a liquidated sum, and that the Agreement may be sued upon such that the Defendant's costs are not subject to any such assessment. The Claimant says that the Agreement should be set aside and seeks a declaration to this effect. At a directions hearing on 16 October 2020, Costs Judge Nagalingam determined that the issue raised as a defence to the claim for an assessment should be determined as a preliminary issue, effectively in the terms set out above.
Included in the hearing bundle are three witness statements from Mr Lawrence: he is the managing partner of the defendant solicitors and had conduct of the Claimant's claim. He was involved in discussions and email communications with the Claimant and Mr. Kan. Mr. Kan is an accountant and is said by the Claimant to have been an old friend of hers helping her out with her financial arrangements but not paid for his work: the bundle contains a witness statement from Mr. Kan (prepared for the purpose of setting aside a statutory demand obtained by the Defendant in respect of its claim for costs) and three from the Claimant. A direction was made on 16 October 2020 that any application to cross examine the makers of the witness statements be made by 4 pm on 11th December 2020, but neither party so applied. The Claimant has also provided disclosure, pursuant to a direction, of documents relating to (non-privileged) communications with Mr Kan in respect of dealings with the Defendant.
The witness statements contain a significant amount of argument and assertion as well as a considerable amount of detailed evidence. I have considered all the points made, even if I have not specifically mentioned all of the points and evidence in this decision. If I have not mentioned them it is because I did not consider them sufficiently central or important to deal with them expressly in what has turned out to be a lengthier judgment than might be anticipated.
Within the material provided to me there was reference to information which was privileged. I think it appropriate to refer to some of it in my judgment generally but I have excluded it from my judgment in public 1.
Claimant's breaches of orders and her debarring
By order of 16 October 2020 the Claimant was required to make an interim payment of £100,000. The Claimant failed to make the payment, and her application for an extension of time for payment was refused by myself on 30 November 2020 with costs payable to the Defendant of £2,500. On 26 February 2021 an order was made that unless payment was made of the sums ordered, the Claimant would be debarred from making further representations in these proceedings in accordance with the jurisdiction considered in Days Healthcare UK Ltd v Pihsiang Machinery Manufacturing Co Ltd [2006] EWHC. This did not lead to any payment and on 16 March 2021 the Claimant was barred from making representations at the hearing. A representative of her solicitors did however attend the hearing (by videolink) on her behalf.
The parties' positions in outline
The Claimant says that the fees payable under the Agreement are grossly excessive for the kind and amount of work that had been done and was to be to be undertaken. Bills were not rendered monthly, as the retainer indicated would occur, and that she was not adequately informed of the work or fees that had been incurred. The Claimant says she took no legal advice in respect of the Agreement and had no opportunity to do so. She did not fully understand the nature of the agreement and she was not experienced in legal matters and entered into the Agreement at what is referred as a ‘pressure point’ in the litigation when she had no real choice but to accept the proposed Agreement put to her by the Defendant.
The Defendant says that it was a simple agreement which was adequately explained. Reliance was placed upon a meeting in which it was said that the Defendant explained the effect of the Agreement to the Claimant. The Agreement needed no further or substantial explanation and there was, in any event, nothing unfair about the mode in which it was obtained. There was, it was said, a long and troubled history of the Claimant failing to pay sums due, indeed, a wilful refusal to pay sums due under the retainer and meet promises to pay. This put the Defendant under time pressure and difficulties, given the need on the part of the solicitors to incur disbursements and to be put in funds. The Defendant, it was said, was entitled at the time of the Agreement to refuse to continue to act for the Claimant at all. The Defendant said that terms were reasonable having regard to past and anticipated future work, the indulgence, as it was put, that the Defendant had already given the Claimant and the further deferment of the date for payment of fees with the risk that there would be further delay and default.
Section 59 and 61 of 1974 Act
Section 59(1) of the 1974 Act provides that:
Contentious business agreements
(1) Subject to subsection (2), a solicitor may make an agreement in writing with his client as to his remuneration in respect of any contentious business done, or to be done, by him (in this Act referred to as a “contentious business agreement”) providing that he shall be remunerated by a gross sum or by reference to an hourly rate, or by a salary, or otherwise, and whether at a higher or lower rate than that at which he would otherwise have been entitled to be remunerated.
Section 61 of 1974 Act provides:
Enforcement of contentious business agreements
(1) No action shall be brought on any contentious business agreement, but on the application of any person who—
(a) is a party to the agreement or the representative of such a party; or
(b) is or is alleged to be liable to pay, or is or claims to be entitled to be paid, the costs due or alleged to be due in respect of the business to which the agreement relates, the court may enforce or set aside the agreement and determine every question as to its validity or effect.
(2) On any application under subsection (1) the court—
(a) if it is of the opinion that the agreement is in all respects fair and reasonable, enforce it;
(b) if it is of the opinion that the agreement is in any respect unfair or unreasonable, may set it aside and order the costs covered by it to be assessed as if it had never been made;
(c) in any case, may make such order as to the costs of the application as it thinks fit.
(3) If the business covered by a contentious business agreement (not being an agreement to which section 62 applies) is business done, or to be done, in any action, a client who is a party to the agreement may make application to a costs officer of the court for the agreement to be examined.
(4) A costs officer before whom an agreement is laid under subsection (3) shall examine it and may either allow it, or, if he is of the opinion that the agreement is unfair or unreasonable, require the opinion of the court to be taken on it, and the court may allow the agreement or reduce the amount payable under it, or set it aside and order the costs covered by it to be assessed as if it had never been made.
……
There is, as others have commented, little modern authority on these provisions (notwithstanding, it might be said, the wide definition of a ‘contentious business agreement’). They are similar in terms to sections 8 and 9 of the Attorneys' and Solicitors' Act 1870 which were considered in In re Stuart, ex parte Cathcart [1893] 2...
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