The Winros Partnership (Formerly known as Rosenblatt Solicitors) v Global Energy Horizons Coporation
| Jurisdiction | England & Wales |
| Judge | Mr Justice Trower |
| Judgment Date | 16 December 2021 |
| Neutral Citation | [2021] EWHC 3410 (Ch) |
| Docket Number | Case No: CH-2020-000234 |
| Court | Chancery Division |
[2021] EWHC 3410 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEALS
ON APPEAL FROM
THE SENIOR COURTS COSTS OFFICE
MASTER JAMES (Costs Judge)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Trower
Sitting with Master Gordon Saker (Senior Costs Judge) as Assessor
Case No: CH-2020-000234
Alan Gourgey QC and Dan Stacey (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP) for the Appellant/Defendant
Benjamin Williams QC and Nico Leslie (instructed by Eversheds, Sutherland (International) Ltd) for the Respondent
Hearing dates: 13 and 14 October 2021
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE Mr Justice Trower
Introduction
This is an appeal against an order made by Master James sitting as a Costs Judge in the Senior Courts Costs Office on 28 August 2020. The order was made on the hearing of two preliminary issues and an application she had directed to be tried in the course of proceedings brought by Global Energy Horizons Corporation (“GEHC”) against its former solicitors, The Winros Partnership, formally known as Rosenblatt Solicitors (the “Solicitors”).
The proceedings before the Master had been commenced on 31 March 2016 and were brought by GEHC under section 70 of the Solicitors Act 1974 (“section 70” and “SA 1974”). The bill with which the claim was concerned is the Solicitors' invoice number 39618 dated 21 December 2012, in the sum of £3,269,131.54 (the “December Bill”). It was rendered for the provision of legal services to GEHC in respect of proceedings against one of GEHC's former associates, Mr Robert Gray. GEHC's claim (“the Gray Action”) alleged misappropriation of an opportunity to develop innovative technology. The Gray Action was commenced on 8 December 2010, alleged breaches of fiduciary duty by Mr Gray and included allegations that he was liable to account to GEHC for sums received, together with appropriate accounts and inquiries.
The two preliminary issues ordered by the Master relate to (a) the enforceability of the conditional fee agreements (the “CFAs”) which governed the terms of the Solicitors' retainer and (b) what was said by GEHC to be the wrongful termination of that retainer. The third matter relates to the scope of the application of section 70, which makes provision for the assessment of a solicitor's bill on the application of the party chargeable with the bill.
Where an application is made within one month from the time of the bill's delivery, section 70(1) entitles the party chargeable to an assessment as of right. After one month from the time of the bill's delivery, section 70(2) gives the court a discretion to make an order that the bill be assessed, but section 70(3) provides that the discretion can only be exercised in special circumstances after the expiration of 12 months from the time of delivery (section 70(3)(a)) or after the bill has been paid (section 70(3)(b)). Where a bill has been paid, section 70(4) further provides that the power to order an assessment under section 70(2) can no longer be exercised on an application by the party chargeable with the bill after the expiration of 12 months from the payment of the bill. The application of section 70(4) to these proceedings is one of the principal issues with which this appeal is concerned.
The partner at the Solicitors who was responsible for managing the Gray Action on behalf of GEHC was subject to serious criticism and adverse findings in the Master's judgment. Those findings included a conclusion that where the only evidence of something having happened was the partner's unsupported recollection, the Master was unlikely to accept their version of events. It is considered by both the Solicitors and the partner concerned that this finding has the potential seriously to damage their professional reputation. The Master therefore granted an order that the references to the partner in her judgment be anonymised until after determination of the permission to appeal application and, if granted, the substantive appeal. The partner has therefore been referred to throughout by the initials ABC. I propose to continue to adopt that course for the purposes of this judgment, although it will be necessary to reconsider the position at the consequentials hearing once this judgment has been handed down.
The Conditional Fee Agreements
The terms of the Solicitors' retainer by GEHC were contained in three CFAs. The first of the CFAs was dated 8 December 2009 (“CFA1”). It covered pre-action work, including an attempt at early mediation, which did not in the event succeed. It did not cover any work subsequent to the mediation process.
Prior to the commencement of the Gray Action, the Solicitors entered into a second CFA with GEHC dated 31 October 2010 (“CFA2”). It contained the terms of the retainer pursuant to which the Solicitors delivered the December Bill. It was a single page written agreement which provided that it was to be read in conjunction with the Law Society document ‘What you need to know about a CFA’, a bespoke form of which was attached.
CFA2 stated that it covered the Gray Action, any enforcement proceedings brought by GEHC and any cost assessment proceedings. It did not cover any appeal (by either side) against any final judgment or order. The way in which this was expressed was as follows:
““ What is covered by this agreement”
• The claim brought by you against Robert Gray and others (if appropriate and arising out of the same subject matter) (“your opponent”)
• Any proceedings you take to enforce a Judgment, Order or agreement.
• Negotiations about and/or a court assessment of the costs of this claim. What is not covered by this agreement
• Any appeal you make against a final judgment or order.
• Any appeal your opponent makes against a final Judgment or Order”
The remaining substantive parts of the single page were as follows:
“ Paying us
You agree to pay us the sum of £1,000,000 as an advance fee (“the Advance Fee”), which will be retained by us whether or not you are successful in the claim. We are responsible for the payment of disbursements as and when they are incurred, during the course of this retainer. We are also responsible for the payment of Counsel's fees up to the due date for the payment of Brief fees for the Trial. You will pay all Brief fees and refreshers for the Trial.
If you win your claim, you pay our basic charges from 30 September 2009, our disbursements and a success fee. You are entitled to seek recovery from your opponent of part or all of our basic charges, our disbursements, a success fee and insurance premium as set out in the document “What you need to know about a CFA”. Credit will be given for the Advance Fee already paid, which will be set-off against the total of our basic charges and the success fee.
If you lose you remain liable for the other side's costs.
The Success Fee
The success fee is set at 95% of basic charges. In addition 5% relates to the postponement of payment of our fees and expenses and can not be recovered from your opponent. The Success fee inclusive of any additional percentage relating to postponement cannot be more than 100% of the basic charges in total.”
The Law Society document in conjunction with which the single page was to be read, provided for the circumstances in which the success fee was to be payable. It stated that “ If you win your claim, you pay our basic charges our disbursements and a success fee” and it defined the word ‘Win’ as meaning:
“ You achieve a settlement or any other benefit arising out of the Claim, or if you do not achieve a settlement and you go on to issue proceedings, the court orders in your favour and orders your opponent to pay you costs.”
It also provided that a success fee would not be payable in the event that GEHC loses the claim, but that:
“ If you end this agreement before you win or lose, you pay our basic charges and disbursements. If you go on to win, you also pay a success fee.”
This part of CFA2 also recited a number of factors which were said to reflect, and therefore justify, the success fee percentage (i.e., the maximum allowed of 100%). They included:
at (a) “ the fact that if you lose, we will not earn anything beyond that portion of the Advance Fee, which we have been able to retain against our costs and not gone to pay disbursements and Counsel's fees” and
at (d) that “ the fact that if you win we will not be paid our basic charges until the end of the claim”.
The language of the ‘Paying us’ and ‘The Success Fee’ parts of CFA2 was the same as the equivalent parts of CFA1. The only material differences were that in CFA1 the amount of the Advance Fee was described as CAN $350,000 converted at an agreed exchange rate and the references to Counsel's fees, brief fees and refreshers were not included.
The third CFA (“CFA3”) was dated 6 March 2013. It was drafted in a different form from CFA1 and CFA2 and covered the costs of GEHC's claim against Mr Gray “ in relation to accounts and enquiries and other relief ordered by Mr Justice Vos on 17 January 2013”. The reference to Vos J's order was to an order he had made after handing down a judgment on liability in the Gray Action on 21 December 2012 ( [2012] EWHC 3703 (Ch)).
In that judgment, Vos...
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