Helen Sellers v Steven Simpkins

As sometimes happens, by the time of the hearing of the preliminary issues, the actual issue between the parties is rather different to that which the parties agreed when directions were given.

The original preliminary issues in this case were whether the Defendant had a valid and enforceable retainer with the Claimant and, if so, what were the terms of it. Shortly before the hearing, the Claimant conceded that there was a valid retainer which entitled the Defendant to deliver his bill and, implicitly, that the terms were those set out in a conditional fee agreement dated 21^st May 2015. At the outset of the hearing, the parties agreed that what remained to be decided was:

(1)

Whether the termination of the conditional fee agreement by the Claimant limits the entitlement of the Defendant to charge costs in excess of the amount of costs recovered from the defendant in the underlying proceedings.

(2)

If so, whether the Defendant’s entitlement is limited to the amount shown in respect of his costs in the schedule of costs produced at the joint settlement meeting.

This judgment sets out my decisions on those issues.

The Claimant was seriously injured in a road accident on 4^th November 2014. She instructed the Defendant, a solicitor practising in Lyndhurst in Hampshire, to pursue the other driver and the Defendant agreed to act under a conditional fee agreement dated 21^st May 2015. There is no issue as to the Claimant’s capacity to enter into the agreement. No success fee was payable under the agreement.

The Defendant conducted the Claimant’s claim until March 2021 when, it is not in issue, the Claimant terminated the retainer and instructed Fieldfisher. On 26^th March 2021 the Defendant wrote to the Claimant indicating that he would require payment of his costs under the terms of the conditional fee agreement.

The claim was settled at a joint settlement meeting on 11^th August 2021. In advance of the meeting, the Defendant was asked by Fieldfisher for details of his costs, but he did not provide them. The claim was settled on a global basis inclusive of costs.

On 16^th August 2021 the Defendant was informed of the settlement, but he did not deliver his bill until 10^th November 2022. The bill is in the sum of £496,983.96, of which £48,000 had been paid on account, leaving a balance of £448,983.96.

On 9^th December 2022 the Claimant commenced proceedings for an order for the detailed assessment of the bill under s.70(2) Solicitors Act 1974. As the existence of a retainer was in issue, directions were given for the exchange of witness statements and a preliminary hearing as to that issue. Further directions for further evidence were given on 8^th June 2023, including an agreed order that the bill should be the subject of a detailed assessment.

Witness statements have been filed by the Defendant and by Mr Boote, on his behalf, and by Mr Crowther, Mr Barrett and Mr Blackburn, on behalf of the Claimant. Mr Crowther was counsel instructed on behalf of the Claimant in the underlying proceedings and Mr Barrett was the partner at Fieldfisher with conduct of those proceedings. In the event, none of this evidence was relevant to what became the preliminary issue.

Initially the Claimant’s position was to put the Defendant to proof of the retainer. Unusually, when the Claimant instructed Fieldfisher the Defendant had declined to hand over his files. Once the conditional fee agreement had been disclosed, as an exhibit to Mr Boote’s first witness statement, the Claimant’s arguments became, first, that the wording of the agreement prevented the Defendant from charging the Claimant anything and, secondly, that the agreement was unenforceable because it provided for a 7 day cancellation period, rather than the 14 days required by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

Shortly before the hearing, both arguments made in the Claimant’s position statement dated 28^th March 2023 were abandoned. In their place, the Claimant argues that the agreement limits the Defendant’s entitlement to costs to those recovered from the opponent in the underlying proceedings. That is the principal issue which this judgment addresses.

Whatever the outcome of that issue, the Defendant’s bill will still be the subject of detailed assessment and, at the hearing in October, I gave directions up to a detailed assessment hearing in April 2024.

The agreement incorporated the standard Law Society conditions and included the following terms:

The Law Society conditions included the following terms:

Claim

It is not in issue that the “overall cap on your liability for costs” makes the agreement a “CFA lite”; that is, the client would not be liable to pay more costs, even if she wins, than are paid by the opponent. The issue is whether that applies when the client terminates the agreement.

In Higgins the client and solicitors entered into a conditional fee agreement which also incorporated the standard Law Society conditions. One of the issues was whether, when the client died, the solicitors’ entitlement to costs was capped by a term in schedule 2 which, in that case, limited the liability to the solicitors (net of any costs paid by the opponent) to a maximum of 25 per cent of the damages received.

Saini J. held that the overall cap did not apply:

61.

If the [client’s] arguments on construction were correct, then each of these clauses (not merely the Clause which is concerned with the situation of death) in this section make little sense. In particular, those clauses which expressly provide the solicitor with an option of taking immediate payment of basic charges or agreeing instead to keep the contingency alive and take basic charges and a success fee on a win make no sense at all. Counsel for the [client] rightly and realistically accepted that this was the result of his argument on construction.

62.

In my judgment, the clear effect of the relevant clauses concerning the end of the CFA before the end of a claim for damages, including specifically the Clause, and the proper construction of their interaction with the overall cap is plainly that the cap only operates if the client wins, and not if the client is liable in other circumstances. How can a cap – calculated by reference to damages received – apply in a situation which expressly deals with a liability arising in a situation where the claim has not concluded? It cannot.

63.

Were it necessary to find further support for this construction, the fact that the cap only applies where costs are payable because the client has won is expressly provided for on page 1 of the CFA. The cap is introduced in the penultimate paragraph on that page:

“The overall amount we will charge you for our basic charges, success fee, expenses and disbursements is limited as set out in Schedule 2 below.”

64.

This clause is under the express heading of ‘Paying us if you win’. It is not addressing any other situation. Nor is the explanation of this cap, set out in Schedule 2, intended to apply in any other situation.

65.

In accordance with the express terms of the Clause, where the Clause is triggered, basic charges (not capped by reference to the cap which applies to basic charges, expenses and success fees in the different situation of a ‘win’) are payable forthwith.

(emphasis added)

The term referred to in paragraph 63 is identical to the term in the present case.

In Higgins, following the death of the claimant, the solicitors decided not to offer a new agreement to his personal representatives, but instead served a bill. At the time of the assessment of that bill, and at the time of the appeal to Saini J., the underlying claim had not been concluded. Therefore, there had been no “win”.

While Higgins was concerned with the termination by death provision, Saini J. made absolutely clear that his view applied to all of the termination provisions.

However, Ms Bedford sought to draw the distinction between the situations where the solicitor’s entitlement crystallized on the termination of the retainer and those where the entitlement awaited the outcome.

She described the termination by client provision as enabling the solicitors to “stick” or “twist”. They could either ask for immediate payment of their basic charges or they could wait to see if the client won and, if so, seek their basic charges and success fee.

If they “twisted”, she submitted, then the provisions consequent on a “win”, including the overall cap, would apply.

Clearly that would not be the case where the retainer was determined by death (as in Higgins). Nor would it be the case where the solicitors terminated under clause b(iii) (client’s failure to follow advice to accept settlement) because then the solicitor is entitled to their basic charges immediately and to await the result to claim a success fee. Following Higgins, the overall cap could not apply in circumstances where the basic charges were payable before the claim had concluded.

It seems to me that there is a distinction between the situation where the solicitor is entitled to payment before the claim had been concluded (when the overall cap would make no sense) and the situation where the solicitor waits to see the outcome. In the latter case, the overall cap would make sense.

I do not read the judgment in Higgins as being inconsistent with that. Saini J. draws the same distinction in respect of “the relevant clauses concerning the end of the CFA before the end of a claim for damages” because “the proper construction of their interaction with the overall cap is plainly that the cap only operates if the client wins” [para 62].

The Defendant’s argument is that the overall cap cannot apply where the client terminates the agreement before the case is won. Alternatively, it does not apply where there is no express costs recovery or ascertainable sum recovered in respect of costs.

Putting that latter argument to one side for the moment, if the solicitor elects to wait for the outcome of the case and the claim succeeds, while the agreement has been terminated before the case is won, there is no difficulty with applying the overall cap,

In my judgment the overall cap does not apply where the solicitor elects to claim their charges before the conclusion of the claim (for the reasons stated in Higgins), but it does apply where the solicitor elects to await the outcome of the claim.

On 9^th March 2021 Fieldfisher wrote to the Defendant informing him that they had been asked to take over the Claimant’s claim and attached her authority to release their files.

For reasons which are not entirely clear, the Defendant did not view that as terminating his retainer until an exchange of emails on 26^th March 2021. In response to an email from the Claimant’s litigation friend that they had lost confidence in the Defendant, he replied:

I have considered this carefully but once formal termination of my CFA has occurred in these circumstances I shall seek payment of the costs and disbursements due as per the agreement term indicated above.

The “term indicated above” was that quoted in paragraph 13 under the heading “Ending this agreement”.

The Claimant replied: “You are terminated from my case”.

The Defendant responded:

I shall proceed on the basis that formal termination of our retainer occurred today.

…

There is real risk my firm faces concerning the costs it has incurred. It is therefore entirely reasonable that now my firm is no longer instructed and risks apparent, the issue of costs owed to the firm must be resolved prior to the file transfer.

Ms Bedford submits that this was not sufficient to trigger the first bullet point in clause (a). There had to be a demand for payment which, in the context of a solicitor, would have to be a bill which complied with s.69 Solicitors Act 1974.

I think that ignores the factual matrix. There was no advantage to elect to await the outcome of the case, or in Ms Bedford’s words to “twist”, because no success fee would be payable in the event of a win. It seems to me that while the Defendant did not “ask” for payment until he delivered a bill, in March 2021 he had exercised his right to decide that the Claimant must pay his basic charges, expenses etc without waiting for the conclusion of the claim. Effectively, he had said “I’ll stick”.

Had a success fee been payable under the agreement, in view of the emails, the Defendant would have had no prospect of arguing that he had exercised his election to await the outcome.

Following Higgins, the overall cap did not apply because the Defendant had elected to claim his basic charges before the case was won.

In the event that is wrong, it would be necessary to decide what the overall cap should be. Given that there was no separate agreement as to costs with the defendant in the underlying claim, Ms Bedford contends for £354,496.51. That was the figure given for the Defendant’s costs in the schedule produced at the joint settlement meeting (less £41,800 paid directly to counsel).

Mr James, on behalf of the Defendant, submits that the cap does not apply because no ascertainable sum was paid by the opponent. However, in the alternative, he contends for the figure set out in the costs schedule (£396,296.51).

If, contrary to my view, the overall cap does apply then it seems to me that the court must do its best to arrive at a figure. The highest figure which could have been taken into account in the settlement in respect of the Defendant’s costs would have been the figure presented to the opponent, namely £396,296.51, as against which the Claimant should have credit for £41,800 already paid.

Ms Bedford did advance, as an alternative, a figure of £84,026.44 based on the proportion to which the costs bore to the total sum of damages claimed. However, in my experience, damages are generally more amenable to reduction than costs. It may be, for that reason, that this was the Claimant’s alternative figure.

The difference between the Defendant’s bill and £354,496.51 is about 20 per cent. It may well be therefore that, whatever the outcome of this interesting preliminary issue, it will make no difference to the final result.