Mr ABU ISLAM v MRS AFROZA ALI
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE AULD,LORD JUSTICE MUMMERY |
| Judgment Date | 26 March 2003 |
| Neutral Citation | [2003] EWCA Civ 612 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | B1/2002/1483 |
| Date | 26 March 2003 |
[2003] EWCA Civ 612
Lord Justice Auld
Lord Justice Mummery
B1/2002/1483
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
(His Honour Judge Martineau)
Royal Courts of Justice
Strand
London, WC2
MR MARTIN HAUKLAND (instructed by England Palmer, London EC1V 1LR) appeared on behalf of the Appellant
MR DAVID PLIENER (instructed by Sykes Anderson, London E1 8EY) appeared on behalf of the Respondent.
Wednesday, 26th March 2003
This is an appeal by Mrs Afroza Ali, the defendant to a claim by Mr Abu Islam in the Central London County Court for remuneration for his services as a Chartered Accountant in running the accountancy business of her late husband. The judge, His Honour Judge Martineau, found for Mr Islam on his claim and gave him judgment for £12,746.41, inclusive of interest, and he ordered Mrs Ali to pay Mr Islam's costs of the action. It is against the costs order, not the judgment sum, that Mrs Ali appeals. She maintains that the judgment sum of over £12,000 does not truly represent a win for Mr Islam, but merely a relatively small balance in his favour between much larger sums in play and on an issue between them to the end.
To evaluate the rival contentions as to who won "the action", it is necessary first to summarise the facts, the issues raised in the action and the parties' respective without prejudice bargaining sallies as the matter proceeded to trial.
Mr Islam, at Mrs Ali's request, ran her late husband's accountancy practice for 26 months from May 1999 to July 2001. For the first 18 months he received all the monies of the practice into his account and paid all its outgoings, leaving him with a figure close to the net profit for that period of about £72,000. During the remaining eight months, at Mrs Ali's insistence, all the receipts and all the outgoings of the practice went through her account. For part of that period Mrs Ali, pursuant to an interim order in the proceedings which had then begun, paid Mr Islam according to the hours he worked at the rate of £3,000 for a full working month. She made two or three payments on that basis, but then failed to pay for the further five or six months during which Mr Islam continued to work, for which he should have received payment pursuant to the interim order. By his claim Mr Islam maintained that he was entitled to about £156,000, that is to say, in the region of £80,000 more than he had already received in net profits and monthly payments.
The basis of his claim was that he had agreed with Mrs Ali at the outset that he would in due course purchase the practice from her and that, in the meantime, he would run it for her and retain the net profits for himself. He also claimed that they had agreed that, if for any reason the purchase did not take place, she would pay him for his services in running the practice at his normal consultancy rate of £40 an hour for all the hours that he had worked in the practice, such basis, as I have indicated, producing a claim of about £156,000.
Mrs Ali, by her defence, disputed that she had agreed with Mr Islam that in due course he would purchase the practice, or that he could retain the profits of the practice while he ran it, or that she would pay him £40 an hour for his services in the event of the purchase not proceeding. She maintained that he had run the practice simply as her agent and that he was entitled to no more than reasonable remuneration for his services. However, it was only late in the day that her solicitors and counsel gave any indication of the basis upon which she asserted reasonable remuneration should be calculated, namely by reference to the net profits of the business. So she put Mr Islam to proof as to the amount of his claim and counterclaimed for an account of the monies she claimed he had received as her agent in running the practice.
Between January 2001 and October 2001, long before the trial of the action in July 2002, the parties respectively made various proposals and counterproposals with a view to settlement. Their most recent proposals before trial, each taking into account what Mr Islam had already received by way of net profits and monthly payments, showed that they were at least £60,000 apart. Mr Islam proposed that Mrs Ali should pay him £45,000, including interest, and £15,000 worth of costs. Mrs Ali, on the other hand, proposed that the matter should be disposed of by Mr Islam paying her costs of £15,000 plus disbursements. The amount awarded by the judge (£12,000 odd) was somewhat closer to Mr Islam's Part 36 offer than the offer or proposal of Mrs Ali, but they were both significantly distant in their opposite ways from the sum awarded.
In fixing on the sum of £12,746 by way of an award, after taking into account the monies already received by Mr Islam, the judge found against him on the various bases of his claim and for Mrs Ali on her contention that all he was entitled to was reasonable remuneration. Thus, he found that there was no agreement that Mr Islam could retain the profit of the practice pending any possible purchase of it by him. He found that there was no agreement contingent on that purchase not being effected that Mr Islam would receive £40 an hour for his services. All that he was entitled to, as Mrs Ali had conceded from the start, was a reasonable remuneration for his services in running the practice.
The only outstanding questions for the judge, therefore, were the basis of calculation of that reasonable remuneration and the amount of it.
As to the basis of the calculation of the reasonable remuneration, he again found against Mr Islam in his contention that it should be struck at an hourly rate. He found for Mrs Ali on her contention at trial that the appropriate method of calculation should have regard to the net profits that Mr Islam had been instrumental in earning for the practice during the time that he ran the business. The judge found, therefore, that Mrs Ali should have regard to the overall task that Mr Islam had undertaken in managing the business over the 26-month period and to the net profits that he had, as it turned out, achieved for it. On that approach, he considered that a reasonable remuneration for the first 18-month period would be a sum equivalent to the net profits for that period, identified in evidence as £71,067, and for the remaining eight months, when his input to the practice had been less, a sum of £18,394. That produced a total of £89,461 for reasonable remuneration, based on the net...
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