Minkin v Cawdery Kaye Fireman & Taylor (A Firm)(trading as CKFT)
| Jurisdiction | England & Wales |
| Judgment Date | 2013 |
| Year | 2013 |
| Date | 2013 |
| Court | Court of Appeal (Civil Division) |
Legal advice – Solicitor – Retainer – Termination of retainer – Solicitor exceeding costs estimate supplied to client at time of engagement – Client refusing to pay fees in excess of costs estimate – Solicitor refusing to provide services until bill paid – Whether client having reasonable justification for withholding payment – Whether solicitor wrongfully terminating or suspending retainer.
M was engaged in divorce proceedings. His wife applied for a non-molestation injunction and ouster order to exclude him from the former matrimonial home. M engaged solicitors to act for him in those proceedings. The solicitors estimated that the costs would be £3,000. Their instructions were confirmed in a client care letter with their standard terms of business which were accepted in writing by M. Paragraph 2 of the letter stated that the costs estimate was not intended to be fixed or binding and that other factors might mean that the estimate would be varied from time to time. Clause 4 of the terms of business stated that the costs estimate was only a guide. Clause 6 provided that the solicitors could suspend or terminate their services if an account was overdue for payment without reasonable justification. Clause 13 provided that a client could terminate his instructions in writing at any time; but that the solicitors could only decide to stop acting for the client on reasonable grounds and on giving reasonable prior written notice. M paid the solicitors £2,000 on account. The day before the hearing of the applications it was discovered that the wife had left the matrimonial home and had let it to tenants. As a result, the application for the ouster order was dismissed, and the application for the non-molestation order was adjourned. The solicitors sent a bill to M which stated that their fees, including disbursements, were in the sum of £5,472.50, out of which £2,000 had already been received on account, leaving an outstanding balance of £3,472.50. The bill stated that if the client was not satisfied with the amount of the fee, he had the right to ask them to obtain a remuneration certificate from the Solicitors Regulation Authority, or he could have an assessment of costs by the court. M complained to the solicitors about the extent of the fees and the fact that they had exceeded the estimate. The solicitors explained that they had exceeded the estimate because of the very large amount of work that had been undertaken shortly
before the hearing because of the situation changing dramatically. M subsequently paid the solicitors a further £1,000. However, he refused to pay the remaining amount of the bill. In the course of further correspondence, the solicitors stated that they would not carry out any further work for the client until the account had been satisfied. M maintained that he could not pay the bills, and required the solicitors to continue to act for him in order to recoup moneys from his wife, which he would then use to pay them. The solicitors, however, continued to maintain their stance that they would not carry out any further work until M had paid the fees included in the bills submitted. Subsequently, M wrote to the solicitors complaining that they had failed to be proactive and had failed to achieve noticeable benefits for him. He stated that the solicitors had been ‘out-thought and manoeuvred’. He complained that he had trusted the solicitors to help him but felt badly let down. He stated that he wished the matter to be referred to a senior partner, and that he would have liked to have continued to work with the solicitors but felt that the matter had not proceeded. In response, the solicitors stated that a partner would review the matter thoroughly. In the meantime, the solicitors applied to come off the record, and sent M a final invoice. The bills eventually went for a detailed assessment by the court. The master held that the solicitors had been in breach of their retainer. He ordered that they were not entitled to further payments, and that they should repay the fees that they had already received back to their client. He found that M had a reasonable justification in not paying, since the bill had exceeded the estimate; the work had not reached a conclusion of the proceedings the estimate was intended to cover; and the client had raised objections promptly. He held that the solicitors had been wrong to suspend their work under cl 6 of the terms of business. That decision was affirmed on appeal, with the judge approaching the matter on the basis that the solicitors had not only suspended work under cl 6 but had also terminated the retainer. He held that M had had reasonable justification for withholding payment because the bill had exceeded the estimate by a considerable margin; no advance warning had been given that the estimate would be exceeded; and the bill had been questioned promptly on receipt. The judge accordingly found that the solicitors had not had a contractual right to terminate the retainer on the ground of non-payment under its terms of business, and that consequently, they had been in breach of contract when they had refused to act for M. The solicitors appealed.
Held – The fact that the client had complained promptly could not assist him if his complaint was not a reasonable justification in itself. The complaint that the bill had exceeded the estimate could not stand in the face of the fact that the letter enclosing the terms of business, the contents of which the client had accepted in writing, made plain by para 2 that estimates were not intended to be fixed or binding and that other factors might mean that the estimate would be varied from time to time. Clause 4 of the terms of business informed the client that estimates were given as a guide only. There
was no guarantee that the final charge would not exceed the estimate because there were many factors outside the solicitors’ control which might affect the level of costs. Refusal to pay could not be justified on that ground. Moreover, the client had been fully informed as to his right to challenge any bill which he felt was excessive, but he had not exercised his right to do so. The client therefore had no reasonable justification for not meeting the bill presented to him. Consequently, the solicitors were entitled to and, on the evidence, did suspend under cl 6 of the terms of business the operation of the retainer pending receipt of moneys on account of costs, both those incurred and those to be incurred. The retainer remained suspended unless and until the suspension was lifted and it never was. On the evidence, the retainer had not been terminated by the solicitors, who had merely suspended it pending payment. Instead, the retainer had been terminated by the client on the ground of loss of confidence in his solicitors. The client’s termination of the contract absolved the solicitors from doing any further performance of the contract but it did not absolve the client from paying the costs properly incurred to that date. Accordingly, the costs judge had been wrong not to order payment of the costs, and to order the solicitors to make repayment to the client. The appeal would be allowed (see [36]–[38], [43]–[45], [48], below).
Case referred to in judgmentsUnderwood, Son & Piper v Lewis [1894] 2 QB 306, [1891–4] All ER Rep 1203, CA.
AppealCawdery Kaye Fireman & Taylor (CKFT), a firm of solicitors, appealed from the judgment of Cranston J dated 7 February 2011 ([2011] EWHC 177 (QB), [2011] All ER (D) 82 (Feb)), affirming the decision of Master O’Hare in a detailed assessment of costs under the Solicitors Act 1974 dated 16 September 2010 by which he ordered CKFT to pay their client, Gary Minkin, the sum of £1,437.50 plus the costs of the assessment in the sum of £17,650. The facts are set out in the judgment of Ward LJ.
Bernard Livesey QC and Joshua Munro (instructed by CKFT) for CKFT.
Nicholas Bacon QC and Mark James (instructed by Routh Clarke Solicitors, Leighton Buzzard) for Mr Minkin.
1 May 2012. The following judgments were delivered.
WARD LJ.[1] Every solicitor will encounter, in one way or another, the kind of problem which gives rise to this appeal. The solicitor is instructed to conduct certain litigation on the client’s behalf. He gives his best estimate of the cost of doing so. He asks for a payment on account. The litigation becomes more complicated than had been envisaged. The estimate is exceeded. More money is requested on account. The client is by now dissatisfied with the
service he has been receiving and believes that the costs are excessive and that the solicitor is achieving nothing. The fractious relationship is terminated and the solicitor’s bill is assessed. Then—and this may be the unexpected turn of events, at least from the solicitor’s perspective—the costs judge conducting the assessment concludes that it was the solicitor who wrongfully terminated the retainer and did so before the litigation had come to its end. Not having performed an entire contract, the solicitor is entitled to no further fees: indeed he must repay the fees he has already received on account. That was the thrust of the judgment of Master O’Hare Costs Judge made on 16 September 2010 in favour of the client Mr Gary Minkin against the solicitors Cawdery, Kay, Fireman & Taylor trading as CKFT, upheld on appeal by Cranston J, sitting with assessors, on 7 February 2011 ([2011] EWHC 177 (QB), [2011] All ER (D) 82 (Feb)). It seemed to me that clarifying what solicitors can and what they cannot do was a compelling enough reason to grant permission for this second appeal.
[2] Let me first set the background. Underwood, Son & Piper v Lewis [1894] 2 QB 306, [1891–4] All ER Rep 1203 is an established authority. Lord Esher MR said ([1894] 2 QB 306 at 309, [1891–4] All ER Rep 1203 at 1204):
‘When one considers the nature of a common law action, it seems obvious that the law must imply that the contract of the solicitor upon a retainer in...
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