Emw Law LLP v Scott Halborg
| Jurisdiction | England & Wales |
| Judge | Master Clark |
| Judgment Date | 14 October 2016 |
| Neutral Citation | [2016] EWHC 2526 (Ch) |
| Docket Number | Case No: HC-2014-001191 |
| Court | Chancery Division |
| Date | 14 October 2016 |
[2016] EWHC 2526 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Master Clark
Case No: HC-2014-001191
Vikram Sachdeva QC (instructed by EMW Law LLP) for the Claimant
Robert Marven (instructed by Deals & Disputes Solicitors LLP) for the Defendant
Hearing dates: 13 April, 18 August 2016
The applications
This is my judgment in two applications:
(1) the claimant's application dated 29 October 2015 for specific disclosure ("the disclosure application");
(2) the defendant's application dated 18 November 2015 for an order that there be a trial of a preliminary issue.
Claim and parties
The claimant is a firm of solicitors. The defendant is a solicitor who at all material times traded as a sole trader under the trading name "Halborg & Co".
On 19 December 2008, the defendant entered into a CFA ("the underlying CFA") with Albert and Eileen Halborg (who were in fact his parents) and Halborg Ltd (then wholly owned by the defendant) (collectively referred to as "the Halborg claimants") in respect of their claim against a firm of architects, Savage Hayward ("the architects"), for negligent advice in relation to a development scheme at Mr and Mrs Halborg's residential property ("the substantive claim").
The defendant contacted the claimant to carry out work on his behalf in the substantive claim.
On 25 March 2009, the defendant entered into the agreement with the claimant that is the basis of this claim, ("the agency CFA") under which the claimant was to carry out work as the defendant's agent, also on a conditional fee basis, under which the claimant was entitled to be paid its basic charges, disbursements and a success fee, provided these had first been recovered in full from the defendants in the substantive claim. The claimant's agreed hourly rate was £300 and the success fee was 95%.
The claimant pleads that it started work on 7 April 2009 and continued until 6 August 2010, and that the total hours spent were 179.8.
The substantive claim was brought in the Queen's Bench Division on 15 September 2009 (under claim no HQ 09 X04098).
On 6 August 2010 the Halborg claimants accepted a Part 36 offer of £350,000, which amounted to a "win" under the underlying CFA. The defendant prepared a bill of costs totalling some £1,357,714 plus interest. The bill included a claim for the claimant's costs totalling £123,590 plus interest described as "agency charges". The bill also included charges claimed by the defendant for liaising with the claimant, amounting to £18,815.
The solicitors for the architects, Berrymans Lace Mawer ("Berrymans"), served points of dispute on 16 September 2011, in which they stated that the claimant's work was in its entirety duplicative of the defendant's work, was of no value and that they were offering nothing in respect of it.
There was then correspondence between the claimant and the defendant as to who would manage costs recovery, in which there were disputes as to a number of matters.
On 21 November 2011, the claimant wrote directly to Berrymans expressly withdrawing the defendant's authority to negotiate costs on its behalf and offering to accept £65,000 plus VAT for its costs. The defendant's position is that this was a repudiatory breach of contract disentitling the claimant to any payment for its costs from the defendant.
The claimant's case is that in about November 2011, the defendant settled the claim for costs in the substantive claim, and that it has not provided the claimant with details of that settlement, nor has it paid the claimant. The defendant denies that the claim for costs was settled on that date, but his Defence is unclear as to whether the costs claim has been settled (but on a different date) or whether it has not settled at all. However, in his witness statement dated 18 November 2015 in opposition to the claimant's application, the defendant states unequivocally that there has been no settlement of the costs claim.
The claim is for breach of contract, in particular, for breach of various implied terms set out at para 14 of the Amended Particulars of Claim:
"a. The Defendant would use all reasonable efforts to negotiate recovery of the Claimant's costs from the Defendants to the Substantive Claim.
b. The Defendant would not prevent the Claimant from the recovery of its costs from the Defendants to the Substantive Claim.
c. The Defendant was obliged not to prefer his own costs recovery over that of the Claimant.
d. The Defendant was obliged to ascribe to the Claimant a fair proportion of any global costs settlement.
e. The Defendant was obliged to pursue a costs settlement on behalf of the Claimant if all costs apart from those attributable to the Claimant's work had been settled.
f. The Defendant was obliged to keep the Claimant informed of all relevant developments in the recovery of the Claimant's costs.
g. The Defendant was obliged to disclose to the Claimant any documents relevant to the recovery of the Claimant's costs.
h. The Defendant was obliged to seek instructions from the Claimants to the Substantive Claim in relation to any issues arising in the recovery of the Claimant's costs."
The relevant background includes that on 22 October 2013, the claimant commenced Part 8 proceedings in the Senior Courts Costs Office ("the SCCO proceedings"). The Re-amended Particulars of Claim in those proceedings alleged the following express or implied terms in the agency CFA, so far as relevant here:
(1) The claimant would be paid a reasonable sum by the defendant for its work, to be assessed if not agreed;
(2) If no costs at all were recovered from the defendants in the substantive claim, then that obligation would be extinguished;
(3) If some costs were recovered from the defendants in the substantive claim, then the defendant would pay the claimant a reasonable proportion of its costs;
(4) The defendant was under an obligation to use best endeavours, alternatively reasonable endeavours, to recover the claimant's costs in the substantive claim.
On 6 February 2014, the defendant applied for summary judgment and/or to strike out the claim in the SCCO proceedings. That application was dismissed by an order dated 24 October 2014 of Master Campbell, who held that the claimant had a real prospect of success in establishing the implied terms alleged in those proceedings. Master Campbell also refused permission to appeal, commenting that
"all the contentions put forward on behalf of Mr Halborg failed and all by a wide margin, none coming anywhere near satisfying me that the criteria for summary judgment had been met."
The defendant's application for permission to appeal on the issue of the implication of the terms was refused on paper by Nugee J, but granted after an oral hearing.
The appeal itself was dismissed by HHJ Charles Purle QC. The defendant sought permission (on points not directly relevant here) for a second appeal from the CA, and this was refused by Vos LJ who commented:
"As the Judge said, the claimant undoubtedly has an arguable claim for fees"
and continued
"There is no other compelling reason why the appeal should be heard. Indeed, quite the reverse. The claim needs to be resolved at a full hearing before further appeals are mounted."
Permission was granted on one point not relevant to this application (whether the claimant is a "litigant in person" for the purpose of quantifying the costs awarded to it on the defendant's unsuccessful strike out application) by Briggs LJ on 7 April 2016.
Disclosure application
This application is made under CPR 31.12, which provides:
"(1) The court may make an order for specific disclosure or specific inspection.
(2) An order for specific disclosure is an order that a party must do one or more of the following things –
(a) disclose documents or classes of documents specified in the order;
(b) carry out a search to the extent stated in the order;
(c) disclose any documents located as a result of that search."
Useful guidance as to the exercise of this power is to be found in the 2016 White Book at para 31.12. 2 2016 (p893):
"The court will take into account all the circumstances of the case and in particular the overriding objective in Pt 1 (see Practice Direction supplementing Pt 31, para.5.4 (para.31APD.5) and the concept of proportionality).
The rationale for the discretion to order specific disclosure is that the overriding objective obliges the parties to give access to those documents which will assist the other's case: Commissioners of Inland Revenue v Exeter City AFC Ltd [2004] B.C.C. 519. The court has a discretion as to whether it makes the order. It may make an order at any time, regardless of whether standard disclosure has already occurred; and it may make orders for specific disclosure against a claimant before the service of the defence where it would assist the defendant to plead a full defence rather than an initial bare denial: Dayman v Canyon Holdings Ltd January 11 2006 unrep. ChD, H.H. Judge Mackie Q.C.
The court will need to satisfy itself as to the relevance of the documents sought, and that they are or have been in the party's control, or at least that there is a prima facie case that these requirements will be met. The relevance of documents is analysed by reference to the pleadings, and the factual issues in dispute on the pleadings: Harrods Ltd v Times Newspaper Ltd [2006] EWCA Civ 294; [2006] All E.R. (D) 302 (Feb) at [12]. Where a claim is likely to turn on particular documents there is a stronger case for an order to be made: Chantrey Vellacott v Convergence Group plc [2007] EWHC 1774 February 6, 2006, ChD Rimer J. (Lawtel LTL Doc. No.AC9100857 (in that case particular...
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...Clark considered the law on disclosure of without prejudice communications in his recent decision in EMW Law LLP v Scott Halborg [2016] EWHC 2526 (Ch). He concluded that, where the documents were relevant to an issue in dispute, they could be admitted into evidence even though they were sub......
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When Will The Court Order Disclosure Of Without Prejudice Communications?
...EMW Law LLP v Scott Halborg [2016] EWHC 2526 (Ch), Master Clark concluded that, where the documents were relevant to an issue in dispute, they could be admitted into evidence even though they were subject to without prejudice privilege, because appropriate arrangements could be made to ensu......