David Rees and Another v Gateley Wareing (A Firm)and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 03 December 2013 |
| Neutral Citation | [2013] EWHC 3708 (Ch) |
| Docket Number | Case No: HC09C04659 |
| Court | Chancery Division |
| Date | 03 December 2013 |
[2013] EWHC 3708 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Morgan
Case No: HC09C04659
Mr Justin Fenwick QC and Ms Lucy Colter (instructed by K & L Gates LLP) for the Claimants
Mr John Randall QC and Mr Dominic Roberts (instructed by Clyde & Co LLP) for the Defendants
Hearing dates: 17, 18, 21, 22, 23, 24 and 30 October 2013
Introduction
In this case, I am asked to decide various defined issues in relation to a contingency fee agreement entered into by a firm of solicitors with their clients. In summary, the issues relate to the interpretation and application of the agreement and its enforceability, having regard to section 58 of the Courts and Legal Services Act 1990, Rule 8 of the Solicitors' Practice Rules 1990 and the common law rules as to champerty.
The Defendants in this case are Gateley Wareing (a firm) and Gateley LLP. On 1 September 2003, the practice of Gateley Wareing (a firm) was taken over by the LLP.
The LLP was originally known as Gateley Wareing LLP and it changed its name, first, to HBJ Gateley Wareing LLP and then to its current name of Gateley LLP. Between around April 2002 and 1 September 2003, Gateley Wareing (a firm) and then, from 1 September 2003 to March 2007, the LLP acted as solicitors for Mr and Mrs Rees. No distinction has been made in these proceedings between Gateley Wareing (a firm) and Gateley LLP and I will refer to them both interchangeably as Gateley Wareing.
In these proceedings, issued in 2011, the Claimants, Mr and Mrs Rees, sued Gateley Wareing for damages for alleged negligence in relation to the advice given or not given by them to Mr and Mrs Rees. Gateley Wareing counterclaimed for fees which they said were due to them under agreements recorded in letters dated 23 May 2002 and 5 August 2002. On 18 September 2013, the parties settled the claim for damages but expressly agreed that the settlement did not deal with the Counterclaim. On 19 September 2013, Norris J gave directions for the trial of the Counterclaim. Although the Counterclaim was for an inquiry as to the fees payable and an order for payment of such fees, Gateley Wareing undertook that if it were determined that they were, in principle, entitled to fees under the above-mentioned agreements, then they would raise and deliver a bill of costs within the meaning of section 69 of the Solicitors Act 1974 in respect of any such entitlement and this would allow Mr and Mrs Rees to require an assessment of the fees claimed.
Accordingly, Norris J directed that the trial of the Counterclaim should be limited to the determination of a number of specified issues. I will set out those issues later in this judgment but first I will comment on the reliability of the witnesses who gave evidence before me and then make my findings as to the facts which are relevant to the matters which are to be determined.
Mr Randall QC and Mr Roberts appeared on behalf of Gateley Wareing and Mr Fenwick QC and Ms Colter appeared on behalf of Mr and Mrs Rees.
The evidence and the witnesses
Before making my findings of fact in this case, I ought to comment on the evidence, in particular, the oral evidence which I was given. Most of the factual matters which are now relevant can be derived from the contemporaneous documents without there being much need to rely on oral evidence. However, I heard evidence from Mr Patel and Mr Wilson on behalf of the Defendants and from the Claimants, Mr and Mrs Rees.
Mr Patel was the principal witness for Gateley Wareing. He is a litigation solicitor. He was involved in the relevant matters from May 2002 to March 2007. He has since left Gateley Wareing and is now a member of another solicitors LLP. He gave evidence in accordance with a detailed witness statement which he signed in September 2013. Because the relevant events were many years earlier, Mr Patel obviously and properly relied on the contemporaneous documents which were available to him. Indeed, the witness statement of September 2013 says very little which is not set out in the contemporaneous documents. In the circumstances which I will explain later in this judgment, Mr Patel was recalled and for that purpose he signed a second witness statement (dated 28 October 2013). As it happens, the most material parts of his second witness statement referred to discussions he said he had with Mr and Mrs Rees which were not referred to in the contemporaneous documents. Indeed, if those conversations had taken place one would have expected that there would have been some reference to them in the contemporaneous documents.
Where Mr Patel's evidence is supported by the documents, then there is no difficulty as to the reliability of his evidence. However, in relation to the matters in his second witness statement I must be more careful. I will discuss his evidence in his second witness statement in greater detail later in this judgment. As will be seen, I accept his evidence on those matters. I do this for a number of reasons. First, I found Mr Patel to be generally reliable; he answered the questions which were put to him in a way which was intended to be helpful and informative rather than defensive and evasive. Secondly, he is no longer with Gateley Wareing and he has no particular reason not to give his evidence to the best of his recollection. Thirdly, so far as his evidence in his second witness statement is concerned, there was no rebutting oral evidence and his evidence is not contradicted by any document. Fourthly, for a reason which I will later explain, I think it is inherently probable that Mr Patel did have the discussions with Mr and Mrs Rees which are described in his second witness statement.
Mr Wilson of Gateley Wareing is an insolvency lawyer. He had only limited evidence to give in relation to the Counterclaim. He was not involved before the relevant agreement as to fees was signed on 5 August 2002. His involvement began in October 2002. There was no significant challenge to Mr Wilson's evidence.
Mr Rees made a lengthy witness statement. As with Mr Patel, Mr Rees quite properly described the events which were shown in the contemporaneous documents. When Mr Rees referred to something which was not revealed by the documents, he often said that he "did not recollect" or that he "did not remember" whether he had been told something. That evidence did not amount to an assertion that he had not been told that thing but only that he did not remember. This point is of particular importance in relation to the subject matter of Mr Patel's second witness statement (which I will describe in detail later in this judgment). When that statement was put to Mr Rees, he said that he did not remember the matters described by Mr Patel. When Mr Rees' evidence accurately referred to the contemporaneous documents, there is no issue as to its reliability. As to the matters which Mr Rees could not remember, I accept that he genuinely could not remember them. The result is that Mr Rees had very little evidence to give as to matters which were not recorded in the contemporaneous documents. If and insofar as Mr Rees did purport to give evidence as to matters which were not disclosed by the documents, then I am very cautious about accepting that evidence in view of the fact that Mr Rees genuinely could not really remember the same. Further, Mr Rees is a party to these proceedings and is significantly affected by the outcome of them. Further, he feels aggrieved (whether rightly or wrongly I need not decide) as to the service provided to him by Gateley Wareing and that has affected his attitude to this dispute and his readiness to make adverse comments about Gateley Wareing. In addition to these comments as to the reliability of Mr Rees' evidence, I make these further findings about Mr Rees. When he went to Gateley Wareing in 2002 and for some time afterwards, Mr Rees felt under considerable pressure, financial and otherwise. Further, when he gave instructions to Gateley Wareing in 2002 about events which had happened in the 1990s, his instructions were sometimes wrong. That comment particularly applies to the instructions he gave about the ownership of the shares in a company called Neyland Properties Limited ("Neyland"). In 2002, he did not really understand what had happened in that respect and he gave misleading instructions as to the arrangements which had been made some years earlier.
Mrs Rees gave evidence in support of her husband's evidence but without dealing with the detailed history. I do not think that her evidence needs to be separately assessed. My conclusions as to Mr Rees' evidence generally apply to her also.
The facts
Before 1992, Mr and Mrs Rees owned about 100 acres of land known as Coton Farm South ("the land"). As the name suggests, the land was the southern part of Coton Farm which had originally been all one farm. The construction of the M6 motorway divided the land into two sections, north and south of the M6. Coton Farm was inherited by Mrs Rees from her father. Mr and Mrs Rees had always been farmers and they farmed Coton Farm together with other land. From the early 1970s, Mr and Mrs Rees became interested in exploiting the development potential of the land.
Neyland was incorporated on 8 November 1989 and was registered under the laws of the Isle of Man. At all material times, the shares in Neyland were held by nominees for the trustees of the Dummer Trust (to which I refer below). Until 1999, the registered shareholders were CT Nominees Ltd (20 shares) and Fiducia Trust Co Ltd (1980 shares) and from 1999 to 2007 were Mercator Trustees Ltd...
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David Rees [1] and Another v Gateley Wareing (A Firm)[1] and Another
...The judge dealt with the facts in meticulous detail. A reader interested in the full story should read his comprehensive judgment at [2013] EWHC 3708 (Ch) (available on BAILII). I hope that the following summary will be enough to put the issues into context. 3 Mr and Mrs Rees are farmers. ......