Charles Russell Speechlys LLP v Beneficial House (Birmingham) Regeneration LLP
| Jurisdiction | England & Wales |
| Judge | Mr Justice Cotter |
| Judgment Date | 20 December 2021 |
| Neutral Citation | [2021] EWHC 3458 (QB) |
| Docket Number | Case No: M21Q421 |
| Court | Queen's Bench Division |
[2021] EWHC 3458 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ON APPEAL FROM MANCHESTER COUNTY COURT
ORDER OF HIS HONOUR JUDGE SEPHTON QC
CLAIM E3QZ88HM
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Cotter
Case No: M21Q421
Theo Barclay (instructed by Lewis Silkin) for the Appellant/Defendant
Charles Raffin (instructed by Goldsmith Bowers) for the Respondent/Claimant
Hearing dates: 03 December 2021
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This judgment follows the hearing of an application for permission to appeal the order of HHJ Sephton QC dated 10 th March 2021 to be followed, if granted, by the substantive appeal, as ordered by Mr Justice Soole on 16 th June 2021.
The claim before the learned Judge was for fees for legal services provided to the Appellant in this appeal (being the Defendant below) by the Respondent (the Claimant below) between February and the end of November 2016. Following a trial, HHJ Sephton QC found that there was an implied contractual retainer in place between February 2016 and 15 November 2016, when an express agreement was reached, and entered judgment for the Claimant for a sum to be determined at a detailed assessment. The parties had agreed that if the Defendant was liable to pay the Claimant's fees, the bill would be subject to such an assessment.
The Appellant argues that the outcome of that trial should have been an order that the Claimant's recovery of fees be restricted to work carried out after 15 November 2016, when there was an express agreement in place. The submissions on appeal centred on whether the existence of an implied retainer had been pleaded by the Respondent at trial, and if not, whether the Judge was entitled to find for the Respondent on the basis of a cause of action which had not been pleaded.
Facts
I shall briefly deal with the relevant facts.
The Appellant (“the LLP”) is a limited liability partnership that acted as a vehicle for members to fund the development of a property in Birmingham whilst benefiting from a tax relief scheme. The LLP consisted of investor members and designated members. The designated members included Mr Colin French and a company called Chancery Nominee Services Ltd (“Chancery”). The LLP agreement provided that the designated members did not have authority on their own to bind the LLP.
It is clear that development of the property did not go to plan, as the developer fell into financial difficulties. The role of the developer was key to the success of the project, as it was the pre-payment of funds to the developer that created the tax point upon which the tax relief scheme was based.
On 18 th February 2016, Mr David Thomson, a consultant with the Respondent, a firm of solicitors, received a call from Mr John Fields, a director of Chancery. Mr Fields, calling on behalf of Chancery in its capacity as one of Beneficial's designated members, sought assistance with the potential removal of the developer to the scheme. Mr Thomson duly filled in a due diligence from and opened a file in the name of the LLP.
Initially, not much work was carried out. However, on 28 th July 2016 Mr Thompson received instructions from Mr Peter Nichols, another director of Chancery, to prepare a loan agreement in relation to funds that it was intended would be raised from the LLP's members, to enable the completion of the work to the underlying property. It was the Respondent's case that Mr Thompson and Mr Nichols agreed that Mr Thompson would defer sending a letter of engagement until the scope of the necessary legal works had become clearer. Thereafter, as he set out in his witness statement, Mr Thompson got on with what he has been instructed to do, taking his instructions from the Designated Members. Mr Thompson was also asked to look at the possibility of the LLP acquiring the developer so that it could control the finances and thereby safeguard the scheme.
On 11 th August 2016, Mr Thomson provided advice during a telephone conference regarding the acquisition of the developer. The conference was attended, amongst other people, by Mr Nichols and also Mr William Stockler, a solicitor and member of the LLP, who was subsequently to represent the LLP at hearing below. Correspondence then followed and Mr Thomson carried out a substantial amount of work.
It appears that in late October 2016 or early November 2016, a group of investor members decided that the Designated Members should be replaced. They proposed a resolution to that effect at a meeting of the LLP on 7 th November 2016. A discussion of that proposal was then adjourned until the 17 th November 2016.
When the possibility of this change in Designated Members became apparent, Mr Thomson thought it prudent to have the agreement for the provision of legal services formally recorded, “so that there could be no confusion as to the basis on which he had been instructed to act”. Accordingly, on 11 th November 2016, the Respondent sent Mr Nichols a letter of engagement (“the Engagement Letter”) appending its terms and conditions (“the Standard Terms”). The letter was signed and returned on 15 November 2016.
On 17th November 2016, the investor members of the LLP passed the resolution to replace the designated members. On 23 November 2016, Mr Thomson, acting on behalf of the two designated members (Mr French and Chancery), sent a letter to the investor members arguing that this resolution was invalid.
On 30 th November 2016, the Respondent sent an invoice to the LLP in the sum of £49,179.60. The LLP refused to pay that invoice.
Pleadings
A claim form was issued by the Respondent to the LLP on 9 th November 2018 seeking payment of that sum of £49,179.60, plus interest at the rate of 8% stipulated in the Standard Terms, in respect of its outstanding invoice.
The Defence denied indebtedness and raised a number of issues. The existence of a contract or retainer with the Respondent, as alleged or at all, was denied. It was also averred that Mr Nichols lacked authority to bind the LLP, and that Mr Thomson knew this. It was denied that services were provided to the LLP as opposed to having been provided to individuals. It was also pleaded that the majority of the work allegedly undertaken was carried out before the Engagement Letter was sent on 11 November 2016, and that as this letter only set out the basis for payment for work after it was signed (and that it therefore had no retrospective effect), there was no liability for fees between February 2016 and 15 November 2016.
By an amended reply which was not settled by Counsel, the Respondent averred that the retainer and payment obligations under the client care letter extended to work carried out before the 11 November 2016, and that this was clear from the reference to “ongoing advice”. Furthermore, the Standard Terms referred to the effective date being the earlier of the letter of engagement or “our beginning to render services”. The amended reply set out, at paragraph 2(a), that:
“It is averred that the Claimant was instructed to act on behalf (sic) the Defendant by the designated members of the LLP; …”
There was no express or (to use HHJ Sephton QC's term) ‘explicit or specific’ reference in the claim form or in the amended reply to an implied contract and /or a quantum meruit claim.
Following an unsuccessful summary judgment application, the claim was set down for trial on 3 rd and 4 th February 2021.
Skeleton arguments at trial
In his skeleton argument at trial, counsel for the Respondent, Mr Raffin, submitted somewhat optimistically that this was a very simple case about an unpaid invoice.
He addressed the issues of authority of Mr Nichols and Mr Fields to bind the LLP at some length. He then dealt with the scope of the express written retainer set out in the Engagement Letter of 11 th November 2016, submitting that:
“Once again, this is a matter that is dealt with promptly by reference to the express terms of the retainer. The retainer self-evidently covered both work that had been carried out prior to that date, and work carried out thereafter.” [footnotes omitted].
Mr Raffin's footnote to the second sentence in that extracted paragraph referred to an extract from Chitty on Contracts (33 rd edn, Sweet & Maxwell), para 4–026 and 4–030. This extract would become relevant at the hearing.
It was Mr Raffin's submission that the Engagement Letter incorporated the Standard Terms, which stated that the agreement to provide services was effective from the earlier of the Engagement Letter or the beginning of the rendering of services. He argued that the work between February and November 2016 fell squarely within this term. I pause to observe that the Judge at first instance found that this argument was incorrect.
Importantly there was again no express reference in Mr Raffin's skeleton argument to either an implied contract of retainer or a quantum meruit claim.
Mr Stockler, who represented the LLP in the trial at first instance, also provided a skeleton argument by way of written opening submissions. He dealt with the authority of Mr Nichols before turning to the meaning of the Engagement Letter. He submitted that the Engagement Letter was clearly only designed to cover services which were to be provided in the future. Not surprisingly, he did not address the existence of an implied contract and/or quantum meruit as neither had yet been raised.
Evidence
The trial bundle contained witness statements from Mr Thomson...
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