Global Energy Horizons Corporation v The Winros Partnership (Formerly Rosenblatt Solicitors)

JurisdictionEngland & Wales
JudgeGordon-Saker
Judgment Date29 February 2024
Neutral Citation[2024] EWHC 441 (SCCO)
Year2024
CourtSenior Courts
Docket NumberCase No: SC-2016-DAT-002725
Between:
Global Energy Horizons Corporation
Claimant
and
The Winros Partnership (Formerly Rosenblatt Solicitors)
Defendant

[2024] EWHC 441 (SCCO)

Before:

SENIOR COSTS JUDGE Gordon-Saker

Case No: SC-2016-DAT-002725

IN THE HIGH COURT OF JUSTICE

SENIOR COURTS COSTS OFFICE

Royal Courts of Justice

Strand, London, WC2A 2LL

Mr Benjamin Williams KC and Mr Nico Leslie (instructed by Eversheds Sutherland (International LLP)) for the Claimant

Mr Alan Gourgey KC and Mr Dan Stacey (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP) for the Defendant

Hearing dates: 24th to 26th January 2024

Approved Judgment

This judgment was handed down remotely at 10.30am on 29 th February 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

SENIOR COSTS JUDGE Gordon-Saker

Gordon-Saker Gordon-Saker Senior Costs Judge
1

This judgment sets out my decisions on:

1) The Defendant's application to strike out Objection 1 in the Claimant's points of dispute as an abuse of process.

2) Objection 1: that the Defendant's bills, which are the subject matter of these proceedings, should be assessed at nil because the Defendant had no right to payment when they were delivered.

3) Objection 3: whether the Defendant is entitled to payment for work done in the period between December 2012 and March 2013.

4) Objections 6 and 7: whether the Claimant is liable under the second conditional fee agreement for work done during the currency of, but which was outside the scope of, the first conditional fee agreement.

5) Whether the 5 per cent postponement success fees under the first and second conditional fee agreements are reasonable.

2

These issues are not preliminary issues as such. Over what was listed as an 8 day detailed assessment, it had been intended to cover the first 8 objections in the first 3 days, which would then leave 5 days for the line-by-line assessment. In the event the line-by-line assessment had to be adjourned until March. Of the other general objections: Objection 2 was disposed of by an agreement that the Defendant's bill dated 1 st February 2013 should be the subject of detailed assessment at the adjourned hearing; Objection 4 (misconduct) was abandoned; and Objections 5 (interest) and 8 (the success fee under the third conditional fee agreement) were stood over to the adjourned hearing.

A brief history of these proceedings

3

The Defendant, a firm of solicitors then practising as Rosenblatt, acted for the Claimant in proceedings in the Chancery Division against one of its former associates, Mr Robert Gray, in respect of the alleged misappropriation of an opportunity to develop innovative technology (“the Gray action”). The Claimant was successful in the Gray action, but less successful than it had hoped. In December 2012, Vos J (as he then was) granted declarations that Mr Gray was in breach of fiduciary duty and liable to account to the Claimant. In July 2015, Asplin J (as she then was) ordered Mr Gray to pay £3.6m to the Claimant and ordered further enquiries as to the value of certain assets. However Arnold J (as he then was) valued those assets at nil and found that no further sums were payable by Mr Gray. On an appeal in these costs proceedings, Trower J commented that “the limited recoveries so far made, appear to have played no small part in the breakdown of the relationship between” the Claimant and the Defendant. 1

4

The Defendant was retained under 3 conditional fee agreements: 2

1) The first (“CFA 1”) is dated 8 th December 2009 and covered the drafting of a letter of claim, review of the letter of response, drafting of a reply and mediation. It is not now argued by the Claimant that CFA1 did not result in a “win”.

2) The second CFA (“CFA 2”) is dated 31 st October 2010 and covered “the claim … against Robert Gray”. Despite the standard definition of “win” 3, the parties treated the liability judgment of Vos J as a watershed for funding.

3) The third CFA (“CFA 3”) is dated 6 th March 2013. That covered “the claim”, which was defined as “the client's claim against the opponent in relation to accounts and enquiries and other relief ordered by Mr Justice Vos on 17 January 2013”.

5

Each of the agreements provided for an advance payment which would be retained by the Defendant whether or not the Claimant succeeded in the claim. Under CFA 1 it was CAN$315,000, under CFA 2 £1m, and under CFA 3 £300,000. Each of the agreements also provided for a success fee of 95% plus 5% for deferment of payment.

6

Relations between the Claimant and the Defendant deteriorated in early 2016 with an argument about whether the Defendant was entitled to retain sums paid by Mr Gray and the instructions by the Claimant to the Defendant to fund disbursements and to follow the instructions of another firm of solicitors appointed by the Claimant. Trower J concluded 4 that the Defendant was entitled to terminate CFA 3 by reason of the Claimant's repudiation, which it did by a letter dated 24 th February 2016 (“the termination letter”). 5

7

In April 2016 the Claimant commenced these proceedings, seeking an order for the detailed assessment of 4 bills (the first of which was said to incorporate 4 earlier bills). These included a bill dated 21 st December 2012 in the sum of over £3.2m (“the 2012 bill”) and a bill dated 29 th February 2016, shortly after the termination letter, in the sum of over £3m (“the 2016 bill”). In essence the 2012 bill was for work done under CFA 2 (including work done in the period covered by CFA 1) and the 2016 bill was for work done under CFA 3.

8

Following the standard procedure in the Costs Office, the claim was listed for a directions hearing on 16 th June 2016, before which the parties filed their skeleton arguments. Recognising that the Claimant's case was that it was not liable to pay any fees, the Defendant sought a stay of these proceedings pending a transfer to the Chancery Division. The Claimant resisted that and sought a “trial of preliminary issues”, identifying three: which bills the court could assess, “the enforceability of the CFAs” and the reasonableness of the success fees. 6 It is clear from the first witness statement of Mr David Flack, of the Claimant's solicitors, 7 that the issue on enforceability was whether the success fee exceeded 100 per cent, contrary to s.58 Courts and Legal Services Act 1990.

9

According to the Claimant's solicitor who attended the hearing, 8 following submissions, Costs Judge James adjourned the hearing to enable her to consider the position and deliver a judgment. In the event, no judgment was given, but an order was sent to the parties (dated 16 th June 2016 but sealed on 20 th June 2016) directing the determination of 2 preliminary issues (with a time estimate of 1 day):

1) Whether the CFAs entered into between the Claimant and Defendant were valid.

2) Whether the Defendant was entitled to determine the retainer.

10

The order included directions for the service of pleadings and witness statements and provision for cross-examination.

11

The pleadings were extensive. The re-amended Particulars of Claim ran to 53 pages and pleaded the breach of s.58, various issues of misconduct, and that the Defendant's termination of CFAs 2 and 3 was wrongful.

12

Following a 10 day hearing and extensive oral evidence, Costs Judge James concluded 9 that the CFAs were unenforceable and that the Defendant had wrongfully terminated CFA 2 and CFA 3. The hearing also dealt with the issue of whether the 2012 bill was a final statute bill (“the scope issue”). The judge concluded that it was not.

13

On the Defendant's appeal, Trower J concluded 10 that CFA 2 and CFA 3 were enforceable and that the Defendant had terminated CFA 3 following the Claimant's repudiation. He decided that the 2012 bill was not a statute bill, but for different reasons from the Costs Judge. The matter was then remitted to me for detailed assessment.

14

No points of dispute or replies were filed before the hearing before Costs Judge James. Following the appeal, the parties agreed that there should be a detailed assessment “of all invoices” in the Gray action “as claimed in the claim form” in these proceedings 11 and agreed directions for the service of breakdowns, points of dispute and replies.

Objection 1

15

As pleaded in the points of dispute, the Claimant contends that the Defendant's bills should be assessed at nil because, when they were delivered, the Claimant was not liable to pay them and/or they were delivered after the termination of the retainer when the Defendant had asserted a claim for damages. (The Defendant has issued proceedings against the Claimant for damages in the Chancery Division.) As at the dates of the bills, the fees were contingent. Trower J had found that the 2012 bill was not a statute bill because, at the time it was rendered, the Defendant was not entitled to payment under CFA 2. Applying the principle that a non-statute bill becomes a statute bill only when a final bill is served, 12 and given that the Claimant was not liable to pay the 2016 bill, both bills must be assessed at nil.

Objection 1 – abuse of process – the submissions

16

The Defendant contends that these points should have been taken, if at all, at the preliminary issues hearing, which was intended to cover the issues as to the Defendant's liability for the bills. Further, these are new points and contradict the Claimant's previously pleaded case.

17

The Re-Amended Particulars of Claim pleaded an alternative case 13 that, if CFA 3 was found to be enforceable and the Defendant was found not to have terminated it wrongfully, pursuant to clause 14.3 the Defendant would be entitled to its basic charges (subject to assessment), but not a success fee. That was rehearsed in the Claimant's skeleton argument for the preliminary issues hearing 14 and the Claimant's written closing...

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