Nadarajah Vilvarajah v West London Law Ltd
| Jurisdiction | England & Wales |
| Judge | Master Gordon-Saker |
| Judgment Date | 19 May 2017 |
| Date | 19 May 2017 |
| Court | Senior Court Costs Office |
| Docket Number | Case No: AGS/1603489 |
[2017] EWHC B23
IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE
Royal Courts of Justice
Strand, London WC2A 2LL
Master Gordon-Saker
Case No: AGS/1603489
Mr Jonathan Trussler (instructed by J W Solicitors) for the Claimant
Mr Roger Mallalieu (instructed by West London Law) for the Defendant
Hearing date: 2 May 2017
Judgment Approved
The Defendant, a limited company, practises as solicitors from offices in Ealing. The Claimant instructed the Defendant in relation to a claim against him for professional fees of about £20,000 by other solicitors, Hodders Law Limited, in the County Court at Willesden (the Hodders Law claim).
The Defendant acted for the Claimant in the Hodders Law claim from September 2012 to August 2014. On 2 nd June 2014 the County Court transferred the Hodders Law claim to the Senior Courts Costs Office for a non-statutory assessment of the fees claimed by Hodders Law. It would appear that little work was done by the Defendant between the transfer and the determination of its retainer.
On 12 th April 2016 the Defendant delivered a bill to the Claimant in the sum of £31,945.48.
On 29 th June 2016 the Claimant commenced proceedings for an order that the bill delivered to him by the Defendant be the subject of detailed assessment under s.70 Solicitors Act 1974. On 15 th July 2016 I made an order for the assessment of the Defendant's bill. The hearing of that assessment was listed for 9 th February 2017 with a time estimate of one day. At that hearing it became apparent that there were significant discrepancies between the breakdown of the Defendant's costs, the Defendant's file and attendance notes and the Defendant's time recording ledger. Mr Walton, the Costs Lawyer who appeared on behalf of the Defendant, was unable to explain those discrepancies and nobody else was present on behalf of the Defendant. I decided to adjourn the detailed assessment part heard to 2 nd May 2017 to enable the Defendant to serve evidence explaining the inconsistencies and to enable the Claimant's costs draftsman to inspect the Defendant's files (although that had been directed in the order dated 15 th July 2016). It also became apparent at the hearing that the Claimant wished to challenge the fairness of the conditional fee agreement entered into between the parties and I directed that if an application under s.61(1) Solicitors Act 1974 were to be issued that should be done by 9 th March 2017 so that it could be heard at the adjourned hearing on 2 nd May 2017.
The Claimant did issue an application to set aside the conditional fee agreement under s.61(1). At the hearing on 2 nd May 2017 I concluded that the agreement was unfair and unreasonable and should be set aside. I did not give reasons for that decision, as we would not have concluded the detailed assessment in the day, but I indicated that I would give reasons in writing. The detailed assessment was concluded. The result was that the Defendant's bill dated 12 th April 2016, in the sum of £31,945.48 was assessed at £15,323.20. The Defendant was ordered to pay the Claimant's costs of the proceedings, save for the costs of the attendance on 9 th February 2017. I decided that the costs thrown away by the adjournment could have been avoided but for the late application under s.61(1) and the failure to inspect the Defendant's files. The Claimant's costs were summarily assessed in the sum of £20,000.
This judgment sets out the reasons for my decision on the s.61(1) application.
Solicitors Act 1974, s.61(1)
Enforcement of contentious business agreements.
(1) No action shall be brought on any contentious business agreement, but on the application of any person who —
(a) is a party to the agreement or the representative of such a party; or
(b) is or is alleged to be liable to pay, or is or claims to be entitled to be paid, the costs due or alleged to be due in respect of the business to which the agreement relates, the court may enforce or set aside the agreement and determine every question as to its validity or effect.
(2) On any application under subsection (1), the court —
(a) if it is of the opinion that the agreement is in all respects fair and reasonable, may enforce it;
(b) if it is of the opinion that the agreement is in any respect unfair or unreasonable, may set it aside and order the costs covered by it to be assessed as if it had never been made;
(c) inany case, may make such order as to the costs of the application as it thinks fit.
There is little recent judicial guidance on the application of s.61(1). In Bolt Burdon Solicitors v Tariq [2016] EWHC 811 (QB) Spencer J considered s.57, the parallel provision in relation to non-contentious business agreements. The learned judge referred to the decision of the Court of Appeal in In re Stuart, ex parte Cathcart [1893] 2 QB 201 which was concerned with a similar provision in the Attorneys' and Solicitors' Act 1870:
148. The outcome of the case provides no particular assistance, but in the course of his judgment Lord Esher M.R. gave the following guidance on the proper approach under those statutory provisions:
"By s.9 the Court may enforce an agreement if it appears that it is in all respects fair and reasonable. With regard to the fairness of such an agreement, it appears to me that this refers to the mode of obtaining the agreement, and that if a solicitor makes an agreement with a client who fully understands and appreciates that agreement that satisfies the requirement as to fairness. But the agreement must also be reasonable, and in determining whether it is so the matters covered by the expression "fair" cannot be re-introduced. As to this part of the requirements of the statute, I am of opinion that the meaning is that when an agreement is challenged the solicitor must not only satisfy the Court that the agreement was absolutely fair with regard to the way in which it was obtained, but must also satisfy the Court that the terms of that agreement are reasonable. If in the opinion of the Court they are not reasonable having regard to the kind of work the solicitor has to do under the agreement, the Court are bound to say that the solicitor, and an officer of the Court, has no right to an unreasonable payment for the work he has done and ought not to have made an agreement for remuneration in such a manner. On this question it is quite clear to me that we cannot arrive at any other conclusion than that arrived at by the Divisional Court. It is impossible to say that work which according to information given by the taxing master to the Divisional Court would be properly remunerated by a sum of £20 can be reasonably charged at £100. The decision of the Court below must be affirmed, and the appeal dismissed."
149. I find the analysis in that case helpful to the extent of identifying that the issues of fairness and reasonableness must be considered separately. Fairness relates principally to the manner in which the agreement came to be made. Reasonableness relates principally to the terms of the agreement.
The conditional fee agreement
In relation to the Hodders Law claim the Claimant initially instructed the Defendant in September 2012 on a conventional basis. The letter of retainer dated 19 th September 2012 (p.166 in the bundle) provided that the hourly rates of Mr Birang, Miss Yarranton and the trainee solicitors and paralegals would be respectively £350, £200 and £135 plus value added tax.
On 7 th January 2013 the Claimant and Defendant entered into a conditional fee agreement which was expressed to have retrospective effect from 5 th December 2012. The agreement provided for a discounted hourly rate of £150 in respect of "all fee earners including solicitors, trainee solicitors and paralegals" which was payable whether or not the Claimant succeeded and a "primary" rate of £420 for all fee earners in the event that the Claimant succeeded. "Success" was defined as "reducing the amount of costs claimed" in the Hodders Law claim. If the Claimant succeeded in that claim and an award of costs was made against Hodders Law he would also be liable to pay a success fee of 64 per cent of the primary rate.
The calculation of the success fee was explained in paragraph...
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